Recently President Barack Obama, by enacting historic healthcare reform legislation, fulfilled his election campaign pledge to provide healthcare to all in the United States of America. This piece of legislation will provide health insurance benefits to another around 34 million poor and uninsured Americans. The key highlight of this health insurance scheme is that it will compel the insurers to extend insurance to even those with any pre-existing illness and impose stringent criteria on expenditure towards medical treatment to cut healthcare costs. The new healthcare reform will cost around US $940 billion over 10 years to the US Government. To partly recover this cost, President Obama administration will levy new fees to the healthcare and pharmaceutical companies along with a new tax for the high income groups.
So far as healthcare reform in the US is concerned, President Obama, has therefore, ‘walked the talk’.
Closer home, just prior to the US healthcare reform, our Prime Minister Dr. Manmohan Singh reiterated in his speech delivered at the 30th Convocation of PGIMER, Chandigarh on November 3, 2009, the dire need of the country to strike a right balance between preventive and curative healthcare for the common man. The Prime Minister articulated his thoughts as follows:
” We must also recognize that a hospital centered curative approach to health care has proved to be excessively costly even in the advanced rich developed countries. The debate on health sector reforms is going on in US is indicative of what I have mentioned just now. A more balanced approach would be to lay due emphasis on preventive health care”.
However, the Prime Minister has not walked the talk, not just yet.
The key issues of Indian healthcare system:
Access: mostly due to inadequate healthcare infrastructure and affordability issues
Affordability: Socio-economic complexities and lack of adequate healthcare financing model in the country
Some key research findings on ‘Public Health’:
Interesting research studies on public health highlight two very interesting points:
- Health of an individual is as much an integral function of the related socio-economic factors as it is
influenced by the person’s life style and genomic configurations
- Socio-economic disparities including the educational status lead to huge disparity in the space of
Tweaking of the existing system is not enough:
An increase in allocation of Rs. 27,000 for healthcare, over the previous year, in the Union Budget 2010-11 covering as large as 1.13 billion population, is just not enough. The public expenditure towards healthcare, as indicated by Dr. Manmohan Singh should be around 2.5% – 3% of the GDP, against the current expenditure on the same of just 1%. To effectively address the key issues of affordability and access to healthcare the country will need a radical reform in its healthcare space with a sharp focus on preventive healthcare of the population of the country, education and related critical socio-economic issues, as has already been enunciated by the Prime Minister of our country.
Where does India stand in the ‘World’s Health Systems’:
The WHO ranking of the ‘World’s Health Systems’ was last produced in 2000. This report is no longer produced by the WHO due to huge complexity of the task.
In this interesting report, the number one pharmaceutical market of the world and the global pioneer in pharmaceutical R&D, the USA features in no. 37, Japan in no. 10, UK in no.18 and France tops the list with no.1 ranking. Among emerging BRIC countries, India stands at no. 112, Russia in no.130 and China in no. 144.
In a relative yardstick, although India scored over the remaining BRIC countries in year 2000, one should keep in mind that China has already undertaken a major healthcare reform in the last year. As stated before, earlier this year, we all have seen how President Obama introduced a new healthcare reform for the USA, despite all odds. India’s major reform in its healthcare space is, therefore, long overdue, which will require similar leadership passion to make it happen.
No need to reinvent the wheel:
When we look at the history of development of the developed countries of the world, we observe that all of them had invested and are continuously investing to improve the social framework of the country where education and health get the top priority. Continuous reform measures in these two key areas of any nation have always proved to be the most effective drivers of economic growth. This is a work in continuous progress. Recent healthcare reforms both in China and the USA will vindicate this argument. In India we, therefore, do not require to reinvent the wheel, any more.
It has been observed that reduction of social inequalities ultimately helps to effectively resolve many important healthcare issues. Otherwise, the minority population with adequate access to knowledge, social and monetary power will always have necessary resources available to address their concern towards healthcare, appropriately.
A recent report from KPMG also reiterates “One of the major challenges remains the need to develop scalable and sustainable healthcare delivery models to deal with India’s diversity and changing socio-economic population profiles”.
Path breaking medicines are desirable, but just not enough:
Regular flow of newer and path breaking medicines in India to cure and effectively treat many diseases, have not been able to eliminate either trivial or dreaded diseases, alike. Otherwise, despite having effective curative therapy for malaria, typhoid, cholera, diarrhea/dysentery and venereal diseases, why will people still suffer from such illnesses? Similarly, despite having adequate preventive therapy, like vaccines for diphtheria, tuberculosis, polio, hepatitis and measles, our children still suffer from such diseases.
Reducing socio-economic inequalities is equally important:
All these continue to happen in India, over so many decades, because of socio-economic considerations, as well. Thus, together with comprehensive healthcare reform measures, time bound simultaneous efforts to reduce the socio-economic inequalities will be essential to achieve desirable outcome for the progress of the nation.
Proper focus on education is critical for a desirable health outcome:
Education is of key importance to make any healthcare reform measure to work effectively. Very recently we have witnessed some major reform measures in the area of ‘primary education’ in India. The right to primary education has now been made a fundamental right of every citizen of the country, through a constitutional amendment process.
Sharp focus on both education and healthcare is very important to realize the economic potential of any nation. India will not be able to realize its dream to be one of the economic superpowers of the world without this focus and significant resource allocation in these two critical areas – Health and Education, simultaneously.
Progress in the healthcare space of India:
It sounds quite unfair, when one comments that nothing has been achieved in the area of healthcare in India, as is usually done by vested interests with a condescending attitude in various guises. Since independence, India has made progress, may not be highly significant though, with various government sponsored and private healthcare related initiatives, as follows:
- Various key disease awareness/prevention programs across the country, for both communicable and
- Eradication of smallpox
- Excellent progress in polio eradication program
- Country wide primary vaccination program
- Sharp decline in the incidence of tuberculosis
- Significant decrease in mortality rates, due to water-borne diseases.
- Good success to bring malaria under control.
- The mortality rate per thousand of population has come down from 27.4 to 14.8 percent.
- Life expectancy at birth has gone up to 63 years of age.
- Containment of HIV-AIDS
- India has been recognized as the largest producers and global suppliers of generic drugs of all
categories and types.
- India has established itself as a global outsourcing hub for Contract Research and Contract
Manufacturing Services (CRAMS).
- The country has now been globally recognized as one of the fastest growing emerging markets for
Recent healthcare initiatives in India:
There are various hurdles though, to address the healthcare issues of the country effectively. However, these are not definitely insurmountable. ‘National Rural health Mission (NRHM)’ is indeed an admirable scheme announced by the Government. Similar initiative, like, ‘Rashtriya Bima Yojana (RBY)’ to provide health insurance program for below the poverty line (BPL) population of the country, is also equally commendable. However, effectiveness of all such schemes will warrant effective leadership at all levels of their implementation.
Per capita public expenditure towards healthcare is inadequate:
Per capita public expenditure towards healthcare in India is (please see below) much lower than China and well below other emerging countries like, Brazil, Russia, China, Korea, Turkey and Mexico.
Although spending on healthcare by the government gradually increased in the 80’s, overall public spending as a percentage of GDP has remained quite the same or marginally decreased over last several years. However, during this period private sector healthcare spend has increased to around 4.5 per cent of the GDP.
It appears, the government of India is gradually changing its role from the ‘healthcare provider’ to the ‘healthcare enabler’.
High ‘out of pocket’ expenditure towards healthcare in India:
According to a study conducted by the World Bank, per capita healthcare spending in India is around Rs. 32,000 per year and as follows:
- 75 per cent by private household (out of pocket) expenditure
- 15.2 per cent by the state governments
- 5.2 per cent by the central government
- 3.3 percent medical insurance
- 1.3 percent local government and foreign donation
Out of this expenditure, besides small proportion of non-service costs, 58.7 percent is spent towards primary healthcare and 38.8 percent on secondary and tertiary inpatient care.
Role of the government:
In India the national health policy falls short of specific and well defined measures.
Health being a state subject in India, poor coordination between the center and the state governments and failure to align healthcare services with broader socio-economic developmental measures, throw a great challenge in bringing adequate reform measures in this critical area of the country.
Healthcare reform measures in India are governed by the five-year plans of the country. Although the National Health Policy, 1983 promised healthcare services to all by the year 2000, it fell far short of its promise.
Underutilization of funds:
It is indeed unfortunate that at the end of most of the financial years, almost as a routine, the government authorities surrender their unutilized or underutilized budgetary allocation towards healthcare. This stems mainly from inequitable budgetary allocation to the states and lack of good governance at the public sector healthcare delivery systems.
Encourage deep penetration of ‘Health Insurance’ in India:
As I indicated above, due to unusually high (75 per cent) ‘out of pocket expenses’ towards healthcare services in India, a large majority of its population do not have access to such quality, high cost private healthcare services, when public healthcare machineries fail to deliver.
In this situation an appropriate healthcare financing model, if carefully worked out under ‘public – private partnership initiatives’, is expected to address these pressing healthcare access and affordability issues effectively, especially when it comes to the private high cost and high quality healthcare providers.
Although the opportunity is very significant, due to absence of any robust model of health insurance, just around 3 percent of the Indian population is covered by the organized health insurance in India. Effective penetration of innovative health insurance scheme, looking at the needs of all strata of Indian society will be able to address the critical healthcare financing issue of the country. However, such schemes should be able to address domestic and hospitalization costs of ailments, broadly in line with the health insurance model working in the USA.
The Government of India at the same time will require bringing in some financial reform measures for the health insurance sector to enable the health insurance companies to increase penetration of affordable health insurance schemes across the length and the breadth of the country. It is encouraging that the Deputy Chairman of the Planning Commission of India, Mr. Montek Singh Ahluwalia has recently commented to the media that the commission is working on it.
A 10 pronged strategy prescribed:
In my view, the country should adopt a ten pronged approach towards a new healthcare reform process:
1. Government should assume the role of provider of preventive and basic primary healthcare across the
nation to ensure adequate access to healthcare for the entire population of the nation.
2. At the same time, the government should play the role of enabler to create public-private partnership
(PPP) projects for secondary and tertiary healthcare services at the state and district levels.
3. The issue of affordability of medicine can best be addressed by putting in place a robust model of
healthcare financing for all sections of the population of the country. Through PPP a strong and
highly competitive health insurance infrastructure needs to be created through innovative fiscal
4. These insurance companies will be empowered to negotiate all fees payable by the patients for getting
their ailments treated including doctors/hospital fees and the cost of medicines, with the concerned
persons/companies, with a key objective to ensure access to affordable high quality healthcare to all.
5. Create an independent regulatory body for healthcare services to regulate and monitor the operations
of both public and private healthcare providers/institutions, including the health insurance sector.
6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.
7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation
through the healthcare services regulatory authority.
8. Make the regulatory authority accountable for ensuring access to affordable high quality healthcare
to the entire population of the country.
9. Make operations of public healthcare services transparent to the civil society and cost-neutral to the
government, through innovative pricing model based on economic status of an individual. The US
model of Medicare and Medicaid could be examined in this regard..
10. Allow independent private healthcare providers to make reasonable profit out of the investments
made by them
A comprehensive healthcare reform in India is long overdue. The magnitude of the task is equally daunting. The pace of change in the healthcare space of the country has been very slow over the last six decades, despite sharp ascending GDP growth trend of the nation. Private sector can play the role of the game changer, provided government plays the role of an effective enabler through various policy measures, fiscal/ other incentives and by creating enough competition within the healthcare providers. Such healthy competition will trigger introduction of innovative healthcare solution models, the ultimate beneficiary of which will be none other than the patients. Health being a state subject in India and as the respective state governments control healthcare spending, quality of involvement of all the states in this reform process will determine its success or failure.
Right to education has now become a fundamental right of the citizens of the country. Will right to health continue to remain far behind?
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.