Follow Us:

Healthier India~II

To raise the standards of our public hospitals to those levels will need extraordinary focus, efforts and financing.


Our taxpayer-financed, insurance-driven model of private healthcare for the public is not only expensive and wasteful, but also amoral. Public policy calls for state intervention when there is a market failure, of which two major causes are existence of a monopoly or a cartel and asymmetry in information between the buyer and the seller, both of which characterise the unregulated private healthcare market in India. There is clear evidence of cartelisation as most private healthcare services are priced similarly regardless of their actual costs. For example, before February 2017, a bare metal stent (BMS) used to cost Rs 45,000 and the drugeluting stent (DES) used to cost Rs 1.21 lakh before the National Pharmaceutical Pricing Authority (NPPA) put a cap of Rs 8,261 and Rs 30,080 for the BMS and DES respectively. There are countless examples of such exorbitant pricing. Pharmaceutical companies in India, like elsewhere, constitute one of the strongest lobbies and determine market price of their products regardless of government regulations and guidelines, and governments are powerless to act against them.

Besides, in the absence of state capacity, the market power of the private players cannot be curtailed by regulation alone. As regards asymmetric information, when a private doctor prescribes an expensive diagnostic test, the patient has no way of knowing if that test is really needed for treatment or is being prescribed only to get more business for the laboratory in exchange for a payback which is a common practice, just like the private hospitals and nursing homes putting a target for each doctor to generate income by prescribing drugs, steroids, procedures and even operations that are completely unnecessary. The state not only exercises no control on such unethical behaviour, but indirectly encourages the same by driving patients to avail their services through taxpayer-financed insurance or subsidy.

Global best practices point out that the world is slowly shifting towards a universal healthcare system, and for a poor, diverse and populous country like India, there is practically no alternative. The need is to include the vulnerable ~ and that means an overwhelming majority of Indians ~ in a healthcare security net and reduce the heavy out-of-pocket expenses on health which pushes households into poverty. For this we need significant constitutional, structural and administrative reforms. The first requirement is an explicit recognition of the right to health as a fundamental right in the Constitution. Article 21 of the Constitution guarantees a fundamental right to life and personal liberty. Article 47 under the Directive Principles of State Policy also enjoins upon the state the responsibility to promote public health and nutrition.

The right to health is inherent to the right to life with dignity under article 21, but is not recognised explicitly in the Constitution as a fundamental right, unlike education (Article 21-A), despite numerous Supreme Court judgments repeatedly affirming this position, like Bandhua Mukti Morcha v Union of India & Ors (1997), Rakesh Chandra Narayan vs State of Bihar (1989), State of Punjab and Ors vs Mohinder Singh Chawla (1996), Kirloskar Brothers Ltd. vs. Employees State Insurance corporation (1996), etc. Reiterating this position, the 15th Finance Commission also recommended that health should be shifted from the State List to the Concurrent List, putting an obligation also on the Union government to provide accessible health care for all. The right to health remains a forgotten Constitutional right for us. Global experiences also tell us that any efficient healthcare system has to be based on decentralisation, unification and active community participation to manage all the complexities of healthcare including preventive, curative and specialised healthcare services.

This calls for reduced bureaucracy, increased flexibility, and better synergy along with an efficient financing mechanism. In India, healthcare remains the primary responsibility of states which are perpetually lacking in resources and often also in imagination due to their excessive obsession with vote bank politics which divert resources from the core areas like health and education to populist measures; the Centre also equally indulges in such practices. The delivery points, the PHC, CHC, district and block hospitals and state hospitals, etc., lack capacity and resources, while health services and institutions remain distributed between Centre and the states. The Central Government runs a CGHS which mainly serves as a referral point for its employees and pensioners to private hospitals. The Central and some state governments run similar health insurance or other health schemes, without any credible assessment of their impact or viability in terms of expenditure, leading to obvious lack of synergy.

Inefficiency, inequity, and lack of economy characterise such a highly fragmented and leaky system that benefits only a few at the cost of many, while creating strong, entrenched, and vested interests all along. To replace such an inefficient system by a decentralised model practiced by the advanced countries will not be easy. Decentralisation requires that public institutions become as efficient as private ones. To raise the standards of our public hospitals to those levels will need extraordinary focus, efforts and financing. But we can take a cue from the GST, a success story for the country, for reforming our decrepit healthcare system. In the GST model, both the Centre and the states have voluntarily agreed to sacrifice their respective taxing powers under Schedule VII to the federal body of GST Council in order to facilitate implementation of a single unified pan-India tax.

Similarly, if healthcare responsibilities are transferred to a newly created centralised body, to be funded jointly by the Centre and the states, then a level of synergy can be achieved which can address many of the inefficiencies of our existing system. Delivering healthcare across the country in a decentralised manner will then be the sole responsibility of this unified body that will include representatives of the Centre, states, private healthcare and pharmaceutical industries as well as the community. It can then standardise the services now being offered and found lacking in many respects. Through the initiatives of such a body, a robust pan-India public health infrastructure can be created to cater to the primary and secondary healthcare needs of citizens. Such a body can prescribe standards in public hospitals and monitor the improvement in their infrastructure and services to make them competitive to their private counterparts. Side by side, it can create an ecosystem for the community to get proactively involved in promoting healthier living and design an incentive structure for people to inculcate good and healthier lifestyle habits.

Without quality support from public hospitals, no public healthcare system can ever become economical and costeffective. A universal healthcare coverage will necessitate some insurance model. Presently such models like the PM-JAY are skewed heavily towards the private sector. Once the public health network attains the necessary robustness, a level playing field will be created in which competition between public and private healthcare providers will reduce prices and increase efficiency. It will also reduce the current pressure on public finances. Quality assurance will remain important for any healthcare system, and can be assured through a system of accreditation, both for private as well as public healthcare providers. For the success of such a model, the community must be actively involved not only to promote healthier living in society but also in healthcare surveillance through regulating, monitoring, and ensuring the quality and cost of services. Finance of course remains the crux of the matter since there is no alternative to increasing expenditure on healthcare. Since all financing will go to the overarching central body, the very act of unifying diverse schemes presently being run separately by the Centre and the states will create synergy and release funds for expansion and improvement of existing services by plugging leakages.

The private sector also must be made responsible and accountable for the healthcare needs of their employees and their dependents through legislation, to make them responsible for contribution towards the health insurance of their employees and dependents, and such contributions may be made fully taxdeductible. This will take off the pressure from the government in respect of these employees. Every working citizen should be made liable to make a mandatory contribution towards health insurance, whether working for private of public employers, with the level of contributions being linked to the pay. Even the unorganised sector should be incentivised to come on board ~ incentives do work in public policies. It is only a question of designing a suitable incentive scheme. Incentive schemes may also be designed to attract investment in the healthcare sector with appropriate regulation. The idea should be to provide quality public healthcare coverage to at least 50 per cent of the population including the vulnerable sections and leave the rest to private health insurance.

The CGHS can be disbanded or converted into public dispensaries, and needs of government employees and pensioners can be addressed through other insurance schemes, private or public. Only systemic thinking and reengineering of our heath architecture including institution of a strong regulatory architecture for the private sector can address our sick healthcare system. Nothing is impossible in public policy and even the most formidable problem can be overcome if we have the determination, vision, and drive. The only thing needed is the political will necessary to drive a transformational reform. While enacting the GST, the government has demonstrated its capability in bringing the states on board. It can rise to the occasion once again to bring our ailing public healthcare system back to life.