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India just announced a vast new health insurance program. But can it afford it?

A patient leaves a government hospital following eye treatment in Kolkata, India, on Thursday, the same day Finance Minister Arun Jaitley unveiled the government’s plan for a health insurance program that will cover 100 million low-income families. (Adhikar/Epa-Efe/Rex/Shutterstock)

NEW DELHI — India announced Thursday a program to give half a billion citizens free health insurance, a potentially transformative upgrade of the country's dilapidated public health-care services and a key element of Prime Minister Narendra Modi's government's last budget before national elections next year.

If the ambitious plan, dubbed "Modicare" by Indian media, is approved by Parliament and adequately funded and implemented, it could represent a first step toward universal health coverage, according to Finance Minister Arun Jaitley — a development that would be life-changing in a country where millions of people still rely on village quacks and ascetic healers for treatment. But economists are asking how such a vast program can be funded in just a year.

Under the plan, the government will cover health-care costs of up to $7,800 for 100 million poor families and spend some $188 million to create "health and wellness" centers, Jaitley announced to loud table-thumping in India's lower house. Spending on nutrition for tuberculosis patients, cleanliness drives and education will also result in significant improvements in public health, he said.

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"This will be the world's largest government-funded health-care program," Jaitley told lawmakers. 

Many health experts reacted positively to the plan. "This is a very proactive budget," said Vinay Aggarwal, former president of the Indian Medical Association. "Before this, hardly 5 percent of Indians were covered by health insurance. If you take into account private health care, it's hardly 10 percent. Now we're addressing 45 percent," he said, adding that the proposed coverage of $7,800 per family represents a very large amount in India, where spending on health care is much lower than in the United States. 

India spends 1.4 percent of its gross domestic product on health care compared with ­China's 3.1 percent and the United States' 8.3 percent, according to the World Bank.

Average life expectancy is 68, compared with 76 in China and 78 in the United States. In the absence of government help, 7 percent of Indians fell below the poverty line between 2004 and 2014 because of health-care costs, according to a report by Brookings India.

A string of tragedies in recent years has underscored the scope of the country's health-care crisis.

In the district of Gorakhpur in August, 60 children died after a government hospital ran out of oxygen supplies. In the state of Chhattisgarh in 2014, 15 women died in botched sterilization operations. 

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Economists estimate that the new program will cost many billions of dollars — money not accounted for in the finance minister's broad allocations. "How they're going to pay for this is puzzling all of us," said Dipa Sinha, professor of economics at Ambedkar University in New Delhi.

Jaitley did not give a ­breakdown of proposed health-care spending or a total for how much the various elements of the plan would cost, although he did introduce a health and education surtax that the Finance Ministry expects will raise about $1.7 billion next year.

The detailed plan is expected to be laid out in Parliament in the coming days.

Jaitley's "people-friendly" budget is being seen by analysts in India as a preelection effort to woo voters, who last year bore the twin economic shocks of Modi's demonetization initiative and a goods and services tax. 

Sinha noted that a previous health-care program introduced in 2016 by Modi's government never got funding.

"Going by their own past record, there's no way this can happen in a year," she said.  

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