Ventilators at BGS Hospital in Bangalore. | Photo credit: K. Murali Kumar
IIndia ranks poorly on several health financing indicators. Its public expenditure on health as a percentage of its GDP (1.28%) and its share of general public expenditure devoted to health (4.8%) remain close to the poorest countries. The growth in health expenditure per capita has not kept pace with the increase in income. Private spending still accounts for nearly 60% of overall health spending.
This is motivated by the dominant role of the private health sector. Yet the discourse on tackling high health care costs remains limited to what government can do to share the burden of out-of-pocket spending. It is automatically about increasing public spending to reduce personal spending.
Dispersed Sector
The private sector in India is inexorably dispersed, with marked inequalities between rural and urban areas and widespread market failure. The creation of organized networks of providers like Health Maintenance Organizations (HMOs), which can be easily regulated, has been contemplated in recent policy statements. However, unlike the United States, where managed care models emerged in response to cost pressures, the typical Indian context of income disparities, lag and under-regulation prompted the private sector to differentiate into a multitude of organizations of different sizes and scopes, each serving its own clientele. These often provide care at seemingly cheap rates but of dubious quality. Such contexts offer few natural incentives for consolidation. Achieving this through public health insurance alone is a daunting task.
In such a scenario, initiatives to make private health care more affordable without affecting the quality of care gain importance. This will likely encompass a wide range of policy instruments that change the conditions for the private sector to operate. Moreover, these policies must be enshrined in our national health policy. This should not be confused with directing public funds towards public-private partnerships. Rather, we need comprehensive policies that reduce the costs of private health care, even for the consumer who pays for themselves with little or no government subsidy.
Public health insurance schemes have often been criticized for imposing unreasonable flat rates on private providers set up without taking into account the real costs of care. A good start can be made by nurturing and propagating many of the business process innovations (BPIs) scattered across the healthcare landscape, such as the cost-saving innovations of Aravind Eye Clinic and Narayana Hrudayalaya. These BPIs are confined to a few philanthropic organizations and find little attention in policy or research. Again, although the healthcare ecosystem does not naturally drive such innovations, regulatory and economic policy signals can be facilitators. There is already an emerging drift towards value-based healthcare, which seeks to improve patient outcomes for the money spent. Task shifting in healthcare is an evidence-based instrument for containing costs, especially in low-resource settings. The National Commission for Allied and Health Professions Act 2021 can be a nudge in this direction. Expanding the scope of practice of nurses and paramedics should be a strong focus of health policy, along with the simultaneous integration of these practice roles into the private sector.
The provision of health care in cities bears witness to the glaring failure of the health care market. The explosion in the number of providers in cities has only increased prices, but this is not a necessary evil. For example, some countries like Canada have established regional health authorities that organize care equitably within regions, exploit economies of scale and reduce health care costs. These councils should have adequate community representation and sufficient power to determine local policy and resource allocation, impose caps on the maximum number of health care providers, and create functioning care networks. They can treat many illnesses in the healthcare system. Creating affordable and effective private health insurance products is another important option.
Double hit
The history of Indian healthcare has seen a double whammy of regulatory infirmity and unfulfilled economic promises. We cannot be lenient with the former even as the latter continues to falter. For example, many states have their own clinical facility laws that are not fully implemented. Strong political will and the removal of unnecessary restrictions are needed to quell resistance. High costs of medical education trigger cost recovery through resource-intensive practice methods. Although multiple measures have been taken recently to reduce barriers to entry into medical education, the costs of medical education have risen sharply over the past decade. This deserves political attention.
Comment | India needs a renewed healthcare system
As we strive to make private health care more affordable, care must be taken that it does not substitute for adequate public health spending. No country in the world has ever achieved universal health care through primarily private means. Affordable private health care should only complement a strong public health system, while having a complementary effect by improving the efficiency of public health spending.
Soham D. Bhaduri is a physician, health policy expert and editor of The Indian Practitioner
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