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Article No. 8
Rajiv Aarogyasri Community Health Insurance (RACHI) Scheme in Andhra
Pradesh, India: A comprehensive analytic view of PPP model
Sunita Reddy* and Immaculate Mary**
*Assistant Professor in Center of Social Medicine and Community Health, School of Social Sciences, Jawaharlal
Nehru University, New Delhi. Contact author: sunitareddyjnu@gmail.com
**Public Health researcher, based in Hyderabad.
Conflict of interest: none
Word count: abstract- 139; text- 3902
Rajiv Aarogyasri Community Health Insurance (RACHI) Scheme in Andhra Pradesh,
India: A comprehensive analytic view of PPP model
Abstract
The Rajiv Aarogyasri Community Health Insurance (RACHI) in Andhra Pradesh has been very
popular social insurance scheme with a Private Public Partnership model to deal with the
problems of catastrophic medical expenditures at tertiary level care for the poor households. A
brief analysis of the RACHI scheme based on officially available data and media reports has
been undertaken from a public health perspective to understand the nature and financing of
partnership and the lessons it provides. The analysis of the annual budget spent on the surgeries
in private hospitals compared to tertiary public hospitals shows that the current scheme is not
sustainable and pose huge burden on the state exchequers. The Private hospital associations’ in
Andhra Pradesh, further acts as pressure groups to increase the budget or threaten to withdraw
services. Thus profits are privatized and losses are socialized.
Key words: Rajiv Aarogyasri Community Health Insurance (RACHI) Scheme, PPPs,
sustainability
Rajiv Aarogyasri Community Health Insurance (RACHI) Scheme in Andhra Pradesh,
India: A comprehensive analytic view of PPP model
Introduction
Many Private Public Partnerships (PPP) were created during late 1990s focusing on specific
diseases such as HIV/AIDS, Tuberculosis, and Malaria. Now PPP models are also being used to
improve the delivery of health and welfare services in developing countries. However, to
understand the PPPs, it is pertinent to understand the nature of partnership, where the common
goal is health care provisioning. In any partnership, there should be joint provision of
complementary resources, finances, expertise and joint sharing of risk between the public and
private actors. The objective of this paper is to present a critical view of the PPP in Rajiv
Aarogyasri Community Health Insurance (RACHI) scheme implemented for the below poverty
line families in Andhra Pradesh from a public health perspective. The paper is based on review of
relevant literature and data from the Aarogyasri website of the A.P government.
Given the overwhelming presence of the private sector in health, various state governments in
India have been exploring the option of involving the private sector and creating partnerships
with it in order to meet the growing health care needs of the population. The Tenth Five year plan
(2002-2007)[1] welcomed hi-tech tertiary sector market as a part of health reform and advocated
public private partnerships. The Eleventh Five Year plan coherently summarises the state’s agenda
for furthering PPP. ‘The approach to PPPs must remain firmly grounded in principles which ensure that
PPPs are formulated and executed in public interest with a view to achieving additional capacity and
delivery of public services at reasonable cost. Public private partnerships must aim at bringing private
resources into public projects, not public resources into private projects[2].
Subsequently the draft of the national Health Bill[3] and Twelfth Five year Plans[4] all saw the
need for private sector participation for the health care delivery system. The flagship National
Rural Health Mission (NRHM) since 2005-2006, committed to upscale government expenditure
on health and the central and state government devised various ways to generate additional
resources through innovative schemes and involve private sector for health care under PPP[5].
With inadequate public service systems, State governments in India are experimenting with
partnerships with the private sector to reach the poor and underserved sections of the population
in health care delivery through PPP. Andhra Pradesh pioneered in launching the Rajiv Aarogyasri
Scheme in 2007. However, the state has an obligation to make measures to provide universal
health protection and restoration to every citizen, while for any Private sector, profitability is the
bottom line ignoring equity and rationality. Justice Qureshi ‘s High Level Committee report on
Private Hospital[6] describes the violation of social commitment of the private hospitals. The
report directly points out how these corporate hospitals act like ‘money minting machines’, a
sector that is interested in making profit and least interested in the needs of epidemiological
investigation of the large majority of the population.[7]
Health Insurance as a panacea
Since 2003, the central and some governments have launched new medical insurance schemes,
all with different features, to extend coverage to workers in the informal sector, particularly those
who are poor; however, most of these schemes are still in experimental phase.[8] The largest is the
central government’s Rashtriya Swasthya BimaYojana launched in 2008, and specific to states
are Yeshasvini scheme in Karnataka launched in 2003, Kudumbasree in Kerala launched in 2006
and Aarogyasri in Andhra Pradesh in 2007.
Apart from the last three five year plans which advocated PPP in health care, other factors led to
starting of Aarogyasri in Andhra Pradesh. Jayati Ghosh committee on farmers suicide in Andhra
Pradesh[9] brought out the precarious health conditions due to economic distress in agriculture
sector and suggested free care of the poor by the private hospitals which have benefitted from
state subsidies. These recommendations of the report became convenient support to the Chief
Minister Y S. R Reddy, being a medical doctor himself, to provide this innovative health care
scheme for all, through corporate hospitals. Earlier CM relief fund had spend Rs. 168.52 crores
to help 55,362 BPL patients needing hospitalization. Simultaneously Dalit Movement
highlighted problems of young children with heart ailments in the state. Soon Chief Minister
announced free heart surgeries for these children, by Aug. 2006, 4600 children were operated
under the CM relief fund. This magnanimous gesture set the stage for aarogyasri scheme[9].
Thus Rajiv Aarogyasri Community Health Insurance (RACHI) Scheme started as a PPP model
for all the families below poverty line from 1st April 2007. The aim of this scheme was to ensure
health care at the time of critical and catastrophic illness for the poor who live below poverty
line. The beneficiaries for the RACHI scheme are identified through the White ration cards
provided as part of Annapoorna and Anthyodaya Anna Yojana Scheme, for the families living
below poverty line. It is estimated that about 80 percent of the population has BPL ration cards,
and are considered eligible to utilize the benefits provided by RACHI Scheme. This scheme
currently covers nearly eight crore people who live Below Poverty Line (BPL) in 23 districts of
Andhra Pradesh.[10]
The State government is the sole funding agency for this health insurance scheme. The
government takes care of the entire premium on behalf of the beneficiary. In the first financial
year 2008-2009, the budget allocation was only Rs. 3474000/- which rose to Rs. 925 crores in
2010-2011[11] and recently asked for 30% hike, estimated to be Rs. 1300 crores. [12]
Nearly 350 hospitals from government and private sector across the state have been involved in
implementing the health insurance scheme. Statistical figures mentioned in the Aarogyasri
website[13] (see table 1) since inception of the programme i.e., 1st April 2007 till Sep 21st , 2013 a
total of 7090728 people have been screened and of those 4569087 treated as outpatients and
2319669 treated as inpatients under RACHI. Of these, only 549173 underwent surgeries in
government hospital and 1537836 underwent surgeries in private hospital. The preauthorized
amount received by the private hospital is Rs.4256 crores, whereas the government hospitals
received Rs. 1322 crores only.
Table- 1- Vital Statistics of the aarogyasri schemes since inception in Arpil 2007 till 21st Sep.
2013
Sl. No. Vital Statistics Provisioning- Private/
Public
Since April 2007 till 21st
Sep. 2013
1. Health Camps 36394
2. Preauthorization Government
Private
Total
556108
1548260
2104368
3. Outpatients Government
Private
Total
559884
4009203
4569087
4. Inpatients Government
Private
Total
660468
1659201
2319669
5. Patients Screened
Registered
7090728
7390739
6. Surgeries/ Therapies Government
Private
Total
549173
1537836
2087009
7. Amount Preauthorized Government
Private
Total
Rs.1322 Cr.
Rs. 4256 Cr.
Rs. 5579 Cr.
Source: www.aarogyasri.gov.in/ASRI accessed on 21 Sep. 2013
Critical view of the RACHI
Even though the scheme may look fool proof, well designed and well implemented there is scope
for misuse by the patients as well as providers in this system. An instance of misuse has been
captured by the media[14] where it was found that the scheme for free treatment for the
underprivileged was being misused by the non-poor. It was found that some of the hospitals in
the city had admitted patients who could afford treatment, under the RACHI scheme. In
November 2009 the media highlighted, how the health providers, the private hospitals have
violated the norms by collecting consultation fees, not providing medicines and performing
unwanted operations like hysterectomy for the women.[15] A clear violation against the MoU they
signed with the Aarogyasri trust. A survey done by Center for Action Research and People’s
Development (CARPED) in 225 villages, in 5 districts shows rampant hysterectomies being
prescribed for everything including irregular periods and cramps, forcing menopause on women
as young as twenty years.[16] Another case study by a doctor couple explored the ethics of medical
malpractice using instances of un-indicated hysterectomy as a case in point, where women were
being actively pushed towards unnecessary hysterectomies especially by private practitioners
along with RMPs in the villages.[17] This shows how the state led insurance scheme can be
detrimental to woman’s health, as seen in population control programs. However, now seeing the
misuse in the private hospitals, the hysterectomy surgery has been removed from the list of
aarogyasri services.
Other problems were reported, where the hospitals discharged the patients who underwent
surgeries earlier than the stipulated time required for recovery. TV9 a news channel in Andhra
Pradesh has been raising unethical practices under Aarogyasri scheme through their news
channel and You Tube films. The films online shows the malpractices; unnecessary surgeries like
lumbar surgeries for simple back pain, not providing post-operative care. However, the
government has been tracking and monitoring the network hospitals and 51 hospitals, who
indulged in malpractice or flouted rules were de-listed. 22 hospitals were suspended from their
service to Aarogyasri patients for faking medical bills.[18]
The RACHI scheme has no doubt created access for the rural poor for specialized health
services. But there is a clear shift in focus in terms of setting priorities for providing health
care for the poor. Category wise surgeries / therapies till 2012 prioritizes tertiary level
super specialty healthcare that requires surgery and hospitalization.[19] Around 938
procedures/ surgeries are listed in the Aarogyasri scheme in the official website of
Aarogyasri Health Care Trust, Govt. of Andhra Pradesh along with the package cost.
[13] There are pressing concerns, as the primary healthcare delivery system for the poor in
rural areas needs to be strengthened. Majority of the poor continue to suffer frequently
from infectious diseases like malaria, gastrointestinal disorders and anemia.
Diverting Public Health resources for private health systems
The Aarogyasri Scheme was strongly criticized by a former Director of Nizam Institute of
Medical Sciences (NIMS), Hyderabad. He pointed out how the scheme was feeding into the
priorities of the private healthcare industry enabling profit making through the soaring numbers
of surgeries conducted as compared to those in government hospitals. Dr. Raja Reddy also
highlighted that 59,000 surgeries were performed with the Rs. 274-crore Aarogyasri budget
(mostly in the corporate sector), the Gandhi Hospital could conduct 2.56 lakh operations with a
meagre budget of Rs 12 crore.[20] 108 Ambulance services also came in sharp criticism.[21] He
referred that the health sector is going through major crisis in the state due to misplaced priorities
of the government which was manifest in the neglect of tertiary Government facilities like
Osmania hospital. [20] However, the trend of more number of patients getting admitted in the
corporate sector for treatment compared to government hospitals continued as per the recent
statistics published by the government under Aarogyasri scheme as on 22.09.2013. Table 1
shows that 74% (1537836) of the surgeries are done in private hospitals and only 26% (549173)
are done in government hospitals, Of the total Rs. 5579 crores pre authorization till 22 Sep. 2013,
claimed, the corporate hospital has the highest share of almost 76% (Rs. 4256 crores), and the
share of the government hospitals is only 24% (Rs.1322 crores).
The huge cost paid by the state, the media (you tubes/ TV9) is full of reports ‘aarogyasri as
corporate dhanasri’ (God of Laxmi- money), ‘corporate hospitals loot aarogyasri funds’,
‘aarogyasri has turned in to anarogyasri (illhealth)’ ‘aarogyasri is a ‘Kalpavriksham’ (tree of
boon) for corporate hospital. The whole logic of spending crores of rupees under aarogyasri for
surgeries / tertiary care is also spoken as ‘gorantha labam, kondantha avinithi’ meaning ‘for a
nail size profit it is mountain size corruption’.
Neglect of Public Health Care System
It is important to utilize optimal resources within the public health system by correcting the
systemic deficiencies, which will enable the system to reach a large number of the poor.
Contrary to this, it is seen that the cardiology wing of the Gandhi Hospital (a government
hospital) was inaugurated on October 2008 with a capacity to perform 1,000 surgeries in a
year, where only 85 surgeries were performed between January and May 2009.[22] In spite
of world class operation theatre facilities set up at Gandhi Hospital, the system is still
limping without a pool of specialist doctors to conduct critical surgeries. This situation is
exacerbated by the diversion of funds to the private sector instead of attracting doctors into
the public system. It is not only at this government hospital even at the level of CHCs in
rural areas, many operation theatres remained underutilized due to lack of skilled
manpower.
Question of Sustainability
The purpose of the RACHI scheme is to cut down out of pocket expenditure for the people living
below poverty line and to provide financial protection for the catastrophic illness. It is still
unclear whether this intention is achieved; it has serious implications and consequences. The
state government is finding it difficult to financially sustain and wanted to approach the central
government for support.[23] The Planning Commission rejected this request because it observed
that these insurance schemes are turning out to be a ‘cash cow’ for the corporate hospitals.[24]
Sustainability is also questioned, when AP Private Hospitals and Nursing Homes (APNA) and
Andhra Pradesh Super Specialties Hospitals Association (ASHA) with 270 hospitals as members,
formed a pressure group to bargain and lobby around to restore all Aarogyasri tests some of which
are for only government hospitals and 30% hike in the tariffs or else threatened to stop treating the
poor under the aarogyasri. [25] Finally the lobbying and pressure tactics did work and the
government succumbed to APNA and ASHA by increasing the tariff by 30% in May 2013.[26]
This leads to a major question of sustainability of the whole scheme, for it will continue to
encash from the government and public money and will be at the whims and fancy of the private
hospitals. The moment funding stops, the services will be ceased.
Discussion
Bennet[27] and others identified five main problems associated with private-for-profit provision of
health services. They are related to the use of illegitimate or unethical means to maximize profit,
waning concern towards public health goals, lack of interest in sharing clinical information,
creating brain drain among public sector health staff and the lack of regulatory control over their
practices. All these can be seen in the implementation of the Aarogyashri scheme.
RACHI has been an impressive popular scheme, but it is skewed towards tertiary care and there is no
provision for outpatient treatment of everyday illnesses that affects the working capacity of the majority
of patient. Thus, it provides for a smaller population at the cost of the majority and focuses on certain
chronic diseases at the cost of communicable diseases. Mahapatra[28] analysed the leading causes of
premature mortality and disability in rural and urban areas in Andhra Pradesh. He found that most of the
overall disease burden is constituted by conditions such as lower respiratory infections, diarroheal
diseases, low birth weight (malnutrition), tuberculosis, ischaemic heart disease and malaria, the leading
causes of mortality. Among the cause of disability accidents due to fall and fire, depression, epilepsy,
schizophrenia and protein energy malnutrition among children were among the leading causes. These are
the illnesses which curb daily functioning of the poor and have significant impact on their economic
condition. Many premature deaths and morbidity faced by the vulnerable sections in the rural areas is
merely because of deficient publicly provided primary care services and an ineffective referral system
coupled with lack of qualified health care providers. Hence , majority of the rural and urban poor may
require basic primary health care services and access to proper referral services to reduce their disease
burden and financial consequences. However, it is important to note that no health insurance scheme
focuses as much on curative care that is dependent on high medical technology as that of RACHI and
does not cover all kinds of illness that are experienced frequently by the poor that lead to their
impoverishment, disability and premature mortality. In every phase since 2007, we see that not more than
5 percent of the people were screened and less than one percent actually got hospitalized and treated for
the diseases for the huge amount paid from the public to the private sector.[29] The focus on tertiary
healthcare to the exclusion of all other forms of medical assistance leads to an inefficient medical care
model with a low level of real impact on meeting the needs of healthcare and the health of the population.
[30]
Scholars have analyzed why publicly financed health insurance schemes are ineffective in providing
financial risk protection. Analyzing RSBY and other State Insurance Schemes of AP, Karnataka and Tamil
Nadu, suggested that universal health coverage of the population needs thrust for primary health care and
move away from the current trend of piecemeal fragmented approach[31].
Further, RACHI shows that the corporate hospitals handle the biggest share of the cases and also
demand more and more public financing, to the detriment of the public system, which lies under
- utilized. So there is a double wastage of public funds. Further, community based health
insurance covers very small population so has a limited impact from a public health point of
view.[32]. Thus, it can be seen that this model of PPP is skewed where it is purely public financing
and private provisioning with commercial interest overriding all other concerns. It is un-
sustainable and threat of backing out by the private sector, when there are no profit margins.
There are contradictions in the policy documents of NRHM[5] promoting PPP models with out
looking into the dynamics of this partnerships on one hand and on the other hand, states that
health insurance can never be a substitute for well functioning, effective and efficient public
health care system. XIth Plan[2] too advocates PPP and aim at bringing private resources into public
projects, instead on ground it is the other way round, privatizing profits and socializing losses [33]. Health
insurance works best when services are available in the remote corners and poor households can
actually exercise choice.[5] What is required is developing an integrated public health system that
strengthens the primary, secondary and tertiary level care with due emphasis on inter-sectoral
linkages. The evidence from RACHI shows that it is not designed to contribute to this kind of
integrated and comprehensive vision of health care. Neither does it provide for reducing the costs
of majority of illnesses of the people of Andhra Pradesh.
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