Effective universal healthcare – key to productivity and ending poverty.

In addition to quality education, effective universal healthcare without any out-of-pocket expenditure is critical to end poverty and enhance productivity. Much needs to be done to help the poor share the fruits of economic growth and enhance incomes. But quality education and effective healthcare must be on the top of the agenda, not short-term consumption subsidies and freebies.

Among large economies even in developing countries, India ranks at the bottom in healthcare delivery. Our life expectancy is 66 years, while that of Sri Lanka and Thailand’s is 74. Our infant mortality is 43 per 1000 live births (there are wide inter-state variations), whereas Thailand’s is 12 and Sri Lanka’s 9. Compliance rate of even the most basic vaccination like DPT remains at 72% (2012) and has not improved since 1990 (70%). Our public health expenditure, at 1.1% of GDP, is the lowest among large economies, and accounts for under 25% of total health expenditure (again lowest among significant economies). Share of public expenditure in total healthcare costs in the US is about 50%. Among other rich countries public spending accounts for 80-85% of total expenditure. In Thailand, it stands at 76%, in Malaysia – 55% and in Sri Lanka – 40%. About 90% of private health expenditure is out-of-pocket. Sickness and healthcare costs account for most cases of descent into poverty. Poor healthcare is the chief cause of intractable poverty.

Even the little that is spent on public health is often misdirected, and a large share goes to tertiary and hospital care, or for private tertiary care at public expense. Family health is largely neglected, and primary health centres in most parts of India are not trusted by the public. Over 80% of all out-patients and over 60% in-patients go to private sector.The poor pay large sums disproportionate to their incomes for consultation, diagnostic tests and purchase of medicines. The poor are often forced to sell their assets or borrow at usurious rates (sometimes in excess of 10% per month). Over a quarter of all those who are hospitalised become poor on account of healthcare costs.

The recent initiatives like NRHM did make a small difference, but the larger picture remains grim. A few populist initiatives involving private hospitals in an insurance-based, or fee-for-service model funded by government only ended up incurring significant expenditure, but with no improvement of overall healthcare status. Rampant overtreatment, malpractice and collusion between insurer and provider to make false claims and receive public funding have all become endemic features of outsourcing tertiary care to private hospitals at public expense. Despite increased expenditure, the burden on the poor in the form of out-of-pocket expenditure continued in most cases in the absence of a robust, effective family care.

Healthcare costs world over tend to rise faster than GDP growth. If a robust, competitive, integrated healthcare system is not in place, costs will rise dramatically with no commensurate outcomes. The US spends nearly 17% of GDP on healthcare, the highest in the world – about half of it from the government. But the healthcare outcomes in Norway, Japan, the UK, France and many nations which spend about 8 – 9% of GDP are much better than in the US.

Fortunately, India has several advantages that allow us to ensure reasonable care at moderate costs. We have sufficient healthcare personnel and if needed more can be trained (quality of training is sometimes unsatisfactory, but it can be corrected). Our physicians have excellent record of success in respect of most sophisticated interventions like heart surgery, kidney transplant or knee replacement at a fraction of the cost in the rest of the world. Increasingly, rich country patients are flocking to India to get quality care at low cost. Our pharma industry is of world class in terms of quality and cost. India’s entry into global AIDS drugs market reduced global prices dramatically, and made the medicines affordable in many poor counties. We can leverage all these strengths swiftly and radically transform our public health system.

India has about 680,000 registered physicians with IMC. If about a third of them are properly deployed at public expense (on per capita payment) with the right kind of incentives, monitoring and accountability, we will have one physician per 5000 population to provide family care including immunization, maternal and child care, out-patient care, simple diagnostics and prescription. If generic drugs are made available free of cost to the patient, the out-of-pocket expenditure will come down drastically and every Indian will have accessible family care. Each family can be free to choose its own physician among the available pool in each geographic area. The doctors will have the incentive to provide quality care and attract more registrations, and the families will have the choice of physician.

Similarly, a well-designed public-private-partnership for secondary care in hospitals based on referrals of primary care givers, and a largely public-sector driven tertiary care in improved district and teaching hospitals will meet the healthcare needs of the population at an affordable cost.

Back of the envelope calculations indicate that a robust universal healthcare system is possible at a very moderate public expenditure of below 2% of GDP.  Several technical, regulatory, managerial and accountability interventions and institutions are needed to make quality universal healthcare accessible at a moderate cost.

All parties are committed to improving the healthcare. The poor and middle classes increasingly recognize its importance.  Private, unregulated healthcare in the absence of a robust family care and monitoring is leading to high costs, mistrust, poverty and misery.  Our healthcare failure is increasing poverty, undermining productivity and causing untold avoidable suffering.  Failure to address healthcare needs will lead to escalating costs, increasing poverty, low productivity, greater income inequalities and political volatility.  The time for creation of a sensible, pragmatic universal healthcare system with public-private-partnership is now.

Jayaprakash Narayan

17th February, 2015