Health in crisis by Mohan Rao

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published Published on Oct 7, 2011   modified Modified on Oct 7, 2011

There are fears that curative health care will be left to the private sector, while the public system will handle preventive and low-quality care.

AN issue of The Lancet earlier this year highlighted some of the problems with public health in India, acknowledging that “it is in crisis”. The robust economic growth over the past 20 years has not translated into better health indices; indeed the decline of infant and child mortality rates has been far less than expected and maternal mortality rates have plateaued. The nutritional situation is equally dismal. One important reason for this is the poor public expenditure on health: at about 1.2 per cent of the gross domestic product (GDP) it is among the lowest in the world. Out-of-pocket (OOP) expenditure has emerged as a major reason for pushing people below the poverty line. There are huge shortfalls in human resources in health with poor levels of training and governance.

Equally, India has the largest and the least regulated private health care industry in the world with wide variation within this sector: at one end are high-cost corporate sector establishments rivalling the best in the world and at the other end are a host of unqualified practitioners delivering poor quality care. It is in this context that the Government of India seeks to strengthen the public health infrastructure in the country. Preparations are under way in the Ministry of Health to formulate the Twelfth Plan document on health, with an Approach Paper being circulated.

The Approach Paper should be lauded for acknowledging the problems with India's public health. It recognises the need to provide comprehensive health care with greater emphasis on communicable diseases, preventive health care and the need for upgradation of rural health care services to Indian Public Health Standards (IPHS) with the district as the unit for planning, training and service provisioning. It has also acknowledged the need for capital investment and for bridging human resource gaps.

However, these proposals are not backed by the requisite commitments on investment. In this context it should be pointed out that the Eleventh Plan target of increasing health spending to between 2 and 3 per cent of GDP has not occurred. Even though the Approach Paper claims that as per the 2011-12 Budget Estimate spending would go up to 1.4 per cent of GDP, this looks highly unlikely given the trends in spending by the Centre and the States during the last few years. Although increasing the total health budget is not within the purview of the Planning Commission alone – more than half (55-60 per cent) of the total public spending on health is of the nature of non-Plan expenses – it should make concrete commitments with regard to capital investment, a large proportion of which comes from the Plan.

Although the Approach Paper acknowledges the lack of primary health care in urban areas, there are legitimate fears that curative health care responsibilities will be left to the private sector, while preventive and low-quality care will be provided through the public system.

Since there are no data on government primary health care infrastructure in urban areas, a comprehensive survey should be undertaken to understand the gaps. The findings from the study can form the basis for planning and strengthening primary health care in urban areas.

The Approach Paper draws attention to the serious problems with human resource and the need to address these urgently, including the establishment of more medical colleges. This is welcome indeed. However, what the Approach Paper is silent about is whether these are to be in the public or private sector. It is extremely important that all new medical colleges must be in the public sector and located in the districts of backward States and regions.

One primary reason for this is that doctors passing out of private medical colleges are extremely unlikely to take up public sector posts. For example, data reveal that Maharashtra, which has the highest number of medical colleges in the private sector, has more vacant posts in the public health system than West Bengal, which has fewer medical colleges and the majority of them in the public sector. In addition to doctors, attention must also be placed on training, in particular of auxiliary nurse-midwives (ANMs) and public health nurses (PHNs), whose training schools were virtually shut under the early years of the structural adjustment programme.

Insurance-based system

The Approach Paper proposes that a publicly financed health system be put in place where provisioning is done largely through the private sector. Though the details of the proposal have been left to the high-level expert group on health, there is a clear indication that a system based on insurance will be rolled out. International evidence suggests that an insurance-based system can be effective if – and only if – there is an extremely muscular role of the government in regulating as well as provisioning. Countries such as Thailand and Costa Rica, which have strong public systems, have been very successful in ensuring universal coverage of government health insurance at reasonable cost. In India, government provisioning is weak. In order to have a successful insurance model we need to build a public health system that provides good-quality care first.

In India, although the private sector dominates service provisioning, it is extremely heterogeneous, largely underdeveloped and completely unregulated. We do not even have basic statistics about the private sector, its spread and distribution, the quality of care, or indeed its “efficiencies”. Given the nature of the private sector, market failures would be rampant and moral hazard problems are likely to prevail, as anecdotal evidence from Kerala suggests. This would further drive up costs and lead to the use of unnecessary and unregulated technologies.

The global experience suggests that in private sector-dominated insurance systems the cost of administration and regulation is around a third of the total insurance cost. If that be the case, administrative costs alone will be more than what is being spent by the government currently on health. Clearly, we cannot adopt such expensive models. Furthermore, the likelihood of an insurance-based model being successful in India is rather low given the extremely high levels of income poverty, a huge proportion of the population in the informal sector with varying daily levels of wages, and high levels of underemployment and unemployment.

Though there has been a Bill to regulate the private sector, this only refers to enumeration and the basic quality of service, leaving out costs and technological considerations. One major reason for the crippling OOP expenditure, which the Approach Paper recognises must be dealt with, is the costs in the private sector and the unregulated use of technologies. The dismal child sex ratio is a startling reminder of the latter.

Anecdotal evidence suggests large-scale use of unnecessary high-end technologies and the widespread practice of “cuts” to referring doctors driving up costs. New Delhi has three or four times the number of full-body scanning centres that London has, all doing brisk business. The government will have to have strong political will to be able to negotiate lower costs and to regulate technologies. The Twelfth Plan provides an opportunity to think of institutional means to do so. The United Kingdom has such an institutional arrangement that has worked, although partially, given the overall trend towards privatisation there. Without a proper regulatory system in place, India should not jump into an insurance model.

Another glaring lacuna of the insurance-based model is that it does not generally cover outpatient illness. A study in 2006 showed that while per capita income grew at 3.76 per cent per annum, private health expenditure grew at the rate of 10.88 per cent per annum. A substantive portion of OOP expenses are for outpatient illnesses, and a major share of these go towards drugs, tests and consultation fee. In government facilities, drugs and investigations are major sources of OOP expenses.

The Approach Paper proposes the Tamil Nadu Medical Services Corporation (TNMSC) as a model to be followed for providing direction to ensure universal access to free medicines and tests. Robust drug supply and storage systems are extremely crucial, as is sufficient budgetary allocation for drug supply. Most of the States allocate insufficient amounts in their budgets for supply of drugs, and as a result supply often falls short of requirements of medicines. User fees and the contracting out of diagnostic tests also drive up costs. Many African countries have begun rolling back user fees, and India should take concrete steps in this direction.

Without a drastic improvement in public sector health facilities, poor people are forced to “vote with their feet” on the public sector. This is then used as an argument for more privatisation and more state subsidies to the private sector.

One of the problems with the Rashtriya Swasthya Bima Yojana (RSBY) is that it may well be seen as a subsidy to the private sector in medical care, creating “effective demand” in a section of the population that would not otherwise access private medical care. Official data show that the list of empanelled hospitals is predominantly in the private sector.

There is another strong case to be made for public provisioning, and that is the issue of social equity. Although there are no data – and we need these data – private medical colleges, hospitals, nursing homes, and so on, are largely upper-caste-controlled institutions. They are not only economically intimidating for the poor, the Scheduled Castes, the Scheduled Tribes, and Muslims, they are also socially exclusive. We therefore need good-quality public provisioning down the line, from the tertiary to primary, from preventive to curative. We also need good epidemiological data and surveillance systems, public health laboratories, and so on. The Approach Paper should not miss an opportunity to highlight these issues that only public services can provide.

Dr Mohan Rao is a Professor at the Centre of Social Medicine and Community Health, Jawaharlal Nehru University, New Delhi.

Frontline, Volume 28, Issue 21, 8-21 October, 2011,

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