Stopping the slide of health care in India

Policymakers need to focus on the larger picture with steps being taken to reclaim the space under public care

Published - December 21, 2020 12:02 am IST

India’s health care is a dark echo chamber. It is 70% private and 30% public in a country where 80% people do not have any protection for health and the out-of-pocket expense is as high as 62%. With public spending at 1.13% of GDP and a huge shortage of health-care workers particularly nurses and midwives, policy moves and plans appear like a sound in emptiness. The novel coronavirus pandemic has revealed the mismatch between the overwhelming presence of the not so well-to-do and private health care with its revenue modelling that borders more on greed and rent gouging.

The system now

Whenever the market leaves out the majority or has an incentive to cream off, the public sector would have to step in for the allocation and production of health services. The fact is 85% of the population cannot afford high cost, corporate private health care. Where demand is created by the latter by homogenising all submarkets such as preventive, general, specialists, emergency and remedial services — where inducement is the norm — the exploitation of the unsuspecting is inevitable . While too little is being done too slowly to have any impact, private hospitals gain under the social insurance scheme in the interregnum..

Even with avowedly 12 crore card holders under Ayushman Bharat, only 1.27 crore people have taken advantage of the scheme. Private sector health care is driven by return on capital. What makes insurance and private health care an egregious combination is that the insurance backup incentivises hospitals to expand the bill but the patients do not get attended to in their best interests. The agents of the government, on the other hand, have an incentive for driving down the price of procedures; as a result, hospitals selectively offer some services and procedures (while denying some). But the ceiling level of the insurance gets claimed regardless in the interest of the hospital.

When the government adjudicates the claim without having the capacity to do so under a trust model, the system will unravel sooner rather than later. Under Obamacare, in the United States, where professionals with expertise in health-care cost carried out the scrutiny of unnecessary procedures and interventions, problems were encountered often despite inherent superiority in the match up.

Social insurance has solved the pooling equilibrium problem when the majority has an affordability problem. While the issue of asymmetric information gets ironed out, the inefficient behaviour which is associated with moral hazard still remains. The doctor and patient are not constrained by the ability to pay and while the marginal private cost is zero, the social cost can be high. Consumption is high for those health-care services which are often inefficient because of supplier-induced demand created and provided by doctors and hospitals which have superior knowledge, compared to patients. They encourage patients to demand tests and interventions, though the improved quality of care and outcomes are uncertain.

Health economics

This pervasive demand inducement has an impact in terms of increases in health expenditure. This results in an upward bias in insurance premium which in turn creates a fiscal externality in the long term. In health economics, where competitive equilibrium often does not exist, the behaviour of a private corporate hospital is skewed in favour of profitability. Any attempt to cover the non-poor and the rich will result in advantageous selection for those better-off crowding out the poor.

In any case, insurance of secondary and tertiary care pushes out long-term investment by the state and people and leads to the continued neglect of primary health care. Finally, a social insurance scheme of such type with our demographic profile only prospers at the cost of neglecting public hospitals. It is deeply erroneous and problematic.

India’s health problem has a 80:20 rule; 20% of people can afford modern health care, 40% cannot afford it at all and the other 40%, the so-called non-poor, pay with difficulty. Nearly 70 million of the non-poor slide into poverty on a year-to-year basis. Because of the problem of access, affordability, absence of quality manpower and the rent-seeking behaviour of staff, more than 80% of people routinely reach Registered Medical Practitioners who are not trained to treat patients. But they routinely prescribe antibiotics and steroids for quick relief. The country could be sitting on a dormant volcano of antibiotic and steroid immunity.

There are three options here. Ramp up the number of doctors with counterpart obligation to serve in rural areas. The result is uncertain with far greater career options in the private sector (with its better infrastructure which is required for job satisfaction). Second is to revive the Licentiate Medical Practitioner as we had before Independence in the rural areas. This requires starting it de novo with the attendant resistance. The third one is to empower graduates of BSc (Nursing) to be nursing practitioners — as prevalent in many countries. In any case, nurses have been able to deal with a large number of cases independently in government facilities in understaffed primary health centres (PHCs) where the doctor is either mostly absent or available for a few hours. From the gender perspective too, this is preferable from the angle of maternal and child health

The neglect of primary care

While the primacy of primary health care is emphasised by everyone, work on the ground does not bear it out. Admittedly, it is the critical piece of health care but government funding is disturbingly skewed against it. Primary health care should receive three times more allocation in the budget and doctor and paramedic strength should be doubled merely on the basis of population increase. If necessary, doctors can be given incentives in terms of extra salary and post graduate seat preference, but in parallel, given penalties for absenteeism for rural posting.

Staff ratio

But the most important thing is that States should be incentivised to carry out the appointments of health workers and doctors. It is not common knowledge yet that India’s public system has a shortage of nurses too. The ratio of 0.6 nurses per doctor while the World Health Organization specification is three nurses per doctor. In States such as Uttar Pradesh, Bihar and other north Indian States where the percentage of nurses is abysmally low, the health outcome is understandably the poorest. PHCs should be well-staffed and well-provisioned through a reasonable fee which will cover at least part of the cost. Once the services become predictable, people will return to these health facilities.

We lose sight of the wood because we have let trees come in the way and we are busy edifying them instead. Can we get real and work with the bigger picture of health care?

Dr. Satya Mohanty is a former Secretary, Government of India. The views expressed are personal

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.