Reducing Financial Barriers for Households Due to COVID-19: The Case in India

ABSTRACT As countries all over the world grapple with containing the COVID-19 outbreak, Low- and Middle-Income Countries (LMICs) are particularly hard-pressed because on the one hand, the pandemic has created unforeseen high demand for health services which requires increased spending. On the other hand, the contagion and the public health measures taken to curb it have disrupted economies whilst creating additional spending pressures as well. This constrains the policy options available for LMICs to ensure an adequate and sustainable financing for the health sector’s COVID-19 response whilst maintaining routine supply of essential health services. Despite this, as demonstrated by India, many LMICs are undertaking many reform efforts to address both the health and economic hardships caused by the pandemic. In this commentary, we describe the policy tools that one such LMIC, India, has used to enable financing for the outbreak.


Introduction
For Low-and Middle-Income Countries (LMICs), the challenge of mounting an effective response to the COVID-19 outbreak is daunting because of resource constraints, weak health systems that are ill-prepared to respond adequately, and public health measures like lockdowns that have exacerbated macro-economic constraints. At the time of writing (18 October 2020), India is still experiencing widespread transmission with 772,055 active cases of COVID-19. 1 Some actions, such as the development of the India COVID-19 Emergency Response and Health System Preparedness Package, 2,3 travel restrictions, and a national lockdown, have been implemented to slow down the spread of COVID-19. 4 Contextual challenges to effective response to the outbreak include recent moderation in economic growth, coordination of the response in a fiscally decentralized context in which health is a state subject, health system gaps, and a predominance of a poorly regulated private health sector. 5,6 One of the challenges that the Government of India, at the Central and State levels, had to address was how to ensure no financial barriers to access for COVID-19 services. In this paper, we describe the steps that the Government of India has taken to address this issue and suggest some lessons that can be drawn from the experience.

Routine Budget for Health
Early in the response, before COVID-19 was notified as a disaster, the Ministry of Health & Family Welfare (MOHFW) relaxed the usual virement of 10% to enable states to reallocate resources within the health system flexipool and gave the states leeway to use untied funds for the development of isolation facilities. To facilitate this, new financial reporting codes were added to the information management system. Furthermore, the National Health Mission (NHM) granted flexibility to the states for utilization of appropriated funds without prior approval from the central level. This served to reduce delays in disbursement that would affect timely response. 7 It is difficult to determine, however, how much additional revenue was raised as a result of these actions.
Only 13.6 million USD had been allocated for response to emergencies in the Union budget 2020-21, 8 which was inadequate to meet the resource needs of the Emergency Response Package. Consequently, several additional actions were taken to raise more revenue including 1.5 billion USD mobilized under the State Disaster Response Fund following the notification of COVID as a disaster, [9][10][11] and 810 million USD for 14  In addition, publicly funded health insurance schemes such as Pradhan Mantri Arogya Yojana (PMJAY), the Central Government Health Insurance Scheme (CGHS) for the public-sector employees and some state health insurance schemes have also used their routine budgets to provide additional revenue for the response. 12,13

Supplementary Funding
Supplementary funding has been mobilized in phases as the epidemic has progressed. Over 2.45 billion USD has been mobilized for the creation of quarantine centers, dedicated COVID-19 hospitals and other medical equipment, treatment of patients and all other activities related to the management of COVID-19, and will fund health system strengthening activities over a period of 1-4 years. 14,15,16 Some states have also been able to raise supplementary funding at their level such as Odisha and Tamil Nadu. 17,18 In Tamil Nadu, 4 million USD was allocated to the health sector to bolster prevention and treatment efforts. Table 1 shows the details of funds provided by the Central and some State governments for the COVID-19 outbreak response.

Contingency Funds
Other states have used their legally mandated routine allocations to their contingency funds to augment the funds from the SDRF. For instance, in Odisha, the State government effected a five-fold increase in the corpus of the Odisha contingency fund to 270 million USD through the Odisha Contingency Fund (Amendment) 2020 of the Act. Funds have been applied to unmet needs for the prevention and treatment of COVID cases. 19 Similarly, in Jharkhand, 13.6 million USD was allocated from the contingency fund to the State Disaster Management Department for the response. 20

External Financing
Sources have also been used to support the response including fast-track loans obtained from external partners such as the World Bank (one billion USD) and the Asian Infrastructure Investment Bank (500 million USD) initially for the COVID-19 emergency response. [21][22][23] Mobilized funds have been prioritized for short-term actions related to the response and long-term actions related to health system strengthening.

Philanthropic Sources
Other non-government sources of revenue mobilized by the Union Government include a fund called "Prime Minister's Citizen Assistance and Relief in Emergency Situations Fund (PM CARES Fund)" to which citizens, companies, and other entities can donate for the COVID response. 24 At present, the government has allocated 272.5 million USD from the fund to purchase locally made ventilators. 25 Several states have used similar funds to mobilize funding for their response. States like Bihar, Kerala, and Odisha have raised additional revenue that has been spent on the prevention and treatment of COVID. [26][27][28] Having reviewed the reallocations and additional revenue raised for the COVID-19 response in India, the next section reviews the resource allocation and purchasing arrangements that have been implemented to reduce financial barriers to COVID-19 in India.

Purchasing of COVID-19 Services in India
In March, the Union government resolved to provide free care for testing and treatment of COVID-19 for all cases managed through the public sector. Care sought in the private sector would be at the cost of the household. Consequently, service provision for testing and treatment of COVID-19 has largely been through public facilities. Some states including Karnataka, Maharashtra, New Capital Territory Delhi, Odisha, and West Bengal have engaged the private-for-profit sector as well to increase service availability and capacity.
However, the central government and many states have taken some extra steps to ensure access to COVID-19 testing and treatment, particularly for the poor and vulnerable, including in the private sector. These include the inclusion of testing and treatment services within the benefit packages of health insurance schemes. The national health insurance scheme for the poor and vulnerable, called PMJAY, led the way in establishing health packages for COVID-19 that all beneficiaries can access in the empaneled public and private health facilities. AB-PMJAY is implemented in 32 states and Union Territories, resulting in broadened service access through the private sector for beneficiaries. Other health insurance schemes like the Central Government Health Scheme for civil servants and some state health insurance schemes like the Chief Minister's Comprehensive Health Insurance Scheme (CMCHIS) in Tamil Nadu have included COVID-19 packages in the Health Benefit Package (HBP) with no copayments required to access services. 13,31 While many states are involving the private sector in service provision for COVID-19, only a few like Odisha, West Bengal, and National Capital Territory (NCT) of Delhi (NCT Delhi) have elected to pay providers for the services, thus reducing financial barriers for households. In all these states, outside of PMJAY, no mechanisms existed prior to COVID-19 for the public sector to engage private providers. This has resulted in varied experiences amongst the states with regard to the mechanisms used and the effectiveness therein. For instance, in the state of Odisha, eight of the 51 laboratories providing testing for COVID-19 are private facilities while 6 of the 26 hospitals dedicated for treatment of COVID-19 are private hospitals. The State government however is using per diem payments for each bed irrespective of whether it has been used and monthly lump-sum payments to cover fixed costs. 32 On the other hand, in West Bengal, where 55 of the 92 COVID-19 dedicated hospitals and 34 of the 99 laboratories testing for COVID-19 are private facilities, fee-for-service payments have been used to reimburse private providers. 33 The concern has been to ensure that facilities have enough resources to meet the demands of service provision. In NCT Delhi, 46 out of the 69 laboratories providing testing are private facilities. In this Capital Territory, the engagement of the private sector, by the government, has been limited to testing for COVID-19. In this case, the government has established different payment rates for private laboratories based on whether they receive any supplies like test kits from the government or not. Payments are made on a feefor-service basis following verification of the received paper claim from the laboratory. Furthermore, public health insurance schemes like AB-PMJAY have given the states flexibility to develop payment models that suit their context. 34 Price-setting mechanisms have been used by states that have engaged the private sector to control costs and reduce out-of-pocket spending for households in some states. 33,35-39 States that negotiated rates later in the course of the epidemic have had challenges in guaranteeing continued service provision of good quality by private providers resulting in punitive action at times to ensure compliance with guidelines. [40][41][42][43][44] It is of note that negotiations drove down prices in states like Odisha compared to other settings where high prices presented significant barriers for patients. 45 Other factors that have affected service provision by private providers have included the price-setting process. In some cases, the pricesetting process has been unilaterally conducted by the government, 33,35,37 whilst in other cases, negotiations were between the purchaser and provider and in other collective bargaining approaches have been used. 38 Where unilateral measures have been used to set prices, states have had challenges in the performance of private providers with some of them denying care to patients in some cases resulting in death. 42,46

Early Lessons from Financing for COVID-19 in India for Reduction of Financial Barriers
Through additional revenue raised, reallocations of budgets, and purchasing of services from private sector providers, India has contributed to providing affordable access to COVID-19 testing and treatment services. As a result, cumulatively 95 million tests have been conducted to date with more than 950,000 tests conducted daily. 48 Despite this and other measures, India continues to face increasing cases of COVID-19 with the second highest case load in the world and the highest number of new cases daily. Nevertheless, the measures taken to reduce financial barriers to accessing services for COVID-19 provide useful lessons that in some cases reinforce earlier messages but in other cases provide additional insights into financing for emergency response.
First, health financing for emergency response should start during the steady state and not during the emergency itself. The legacy of chronic underinvestment in health systems creates significant challenges in mobilizing additional revenue for the response including contracting health workers and private service providers. Even though routine allocations at the Union level and some contingency funds exist at state level for emergencies, these were not adequate to address the funding needs required to rapidly increase service capacity.
Second, there is a need for a predominant reliance on public financing for emergency response. Public funding is necessary to guarantee access to care for COVID-19 and reduce financial barriers for access to health services given the high costs of management for COVID-19. For LMICs, this may require complimenting government funding with external financing, as occurred in the case of India. States that have provided public funding for services in the private sector have reduced financial barriers at the point of care. These mechanisms of contracting the private sector are crucial for LMICs where the private sector dominates service provision.
Third, flexibility in the public financial management (PFM) system is critical for ensuring that mobilized funds are available at the implementation level to enable frontline workers to mount the right response as has been argued by others. [29][30] In many cases rigidities created by PFM rules often affect the speed with which resources can be mobilized for the response. Relaxation of rules for appropriations whilst maintaining accountability for funds appropriated is essential to an effective and efficient response.
The process and practice of setting prices for services is critical for guaranteeing service delivery, especially in the private sector. Fixing prices in negotiation with providers can help achieve a balance between the purchasers' aim of reducing costs and increasing service availability through an expanded network of providers and ensuring cost recovery at the minimum for service providers and maintaining revenue stream that would otherwise be lost due to decreased demand arising from fear of infection in the context of an infectious disease outbreak like COVID-19. Provider payment mechanisms that account for foregone revenue enabling the service provider to continue operating, as was the case in West Bengal and Odisha, can help address this challenge. This has been the experience in other countries like Germany and Belgium where payments to providers helped ensure continued flow of revenue. [47][48][49][50][51] Another related lesson is the need to fix prices with providers early in the course and doing so in negotiation with the providers. Unilateral mechanisms for setting prices especially late in the outbreak are likely to discourage effective participation of the private sector which may result in denial of services or compromise quality of care.
Last, an enabling legal environment, such as is provided by India's Disaster Management Act 2005, is critical for triggering rapid measures for resource mobilization and disbursement. The act also provides the Central and State governments in India the mandate to act in the public's interests and coordinate the response across levels of government and across different sectors of government.

Conclusions
The COVID-19 outbreak has presented an unprecedented challenge to health systems the world over. The ability to mobilize funding for the response in a timely manner is a critical factor in ensuring an effective response to the outbreak whilst maintaining routine delivery of essential services. Early insights into the COVID-19 response in India show an agile system that has been able to rapidly mobilize resources for the response in the short term whilst planning for sustainability in the medium-to long term.