XIII

Healthcare in India: Looking back, looking ahead

A.K. Shiva Kumar

India’s most notable achievement over the past twenty-five years has been the country’s impressive economic growth record. After 1991, its per capita income grew nearly two-and-a-half times faster in real terms compared to the preceding three-and-a-half decades.¹ By 2014, India’s contribution to global economic growth (in Purchase Power Parity terms) stood at 14.4 per cent, and its share in the world GDP was around 7 per cent.² Medium- and long-term prospects of further economic expansion remain bright.

India’s performance in health, however, has not kept pace with the country’s remarkable economic expansion.³ Policies have failed to effectively convert economic growth into better health for its people. In 1990, for instance, India’s life expectancy at birth (sixty-six years) was lower than that of Sri Lanka and the Maldives, but higher than the rest of the neighbouring South Asian countries. Today, India’s life expectancy at birth (sixty-eight years) is still lower than that of Sri Lanka (seventy-five years) and the Maldives (seventy-seven years), but has fallen behind that of Bangladesh (seventy-two years), Nepal and Bhutan (both seventy years). This is in spite of India’s per capita gross national income in 2015 (PPP USD 6030) being significantly higher than that of Bangladesh (PPP USD 3560) and Nepal (PPP USD 2500). And over the period 1990–2014, India’s GDP per capita grew, on average, by 5 per cent every year—much faster than the corresponding rates of 3.6 per cent for Bangladesh and 2.6 per cent for Nepal.⁴

This is not to undermine in any way India’s achievements in health over the past seventy years. Life expectancy at birth has more than doubled since Independence—from thirty-two years in 1950–51 to sixty-eight years in 2015. In 2015, the infant mortality rate was thirty-seven per 1000 live births—down from 139 in 1976. From 556 in 1990, India’s Maternal Mortality Ratio (MMR) fell to 167 per 100,000 births by 2011–13. The spread of HIV/AIDS has been successfully contained. The World Health Organization (WHO) officially declared India polio-free in March 2014 and free of maternal and neonatal tetanus in August 2015.

Despite these gains, India’s health burden is still huge. Non-communicable diseases contribute to 60 per cent of the entire disease burden, while communicable diseases contribute 28 per cent and injuries 12 per cent.⁵ A large burden of infectious diseases, reproductive and child health problems, and nutritional deficiencies coexists with a number of chronic diseases. The increasing Multi-Drug Resistant tuberculosis, the resistant strains of malaria, and the rise of viral encephalitis, dengue and chikungunya, particularly in urban areas, are matters of concern. In addition, occupational health needs of both the formal and informal sector, adolescent health, mental health, geriatric care and palliative care remain neglected. Unchecked pollution, unplanned urbanization, insufficient access to safe drinking water, inadequate food security and poor sanitation pose additional health burdens on India’s population.

Unhealthy Healthcare: The Key Factors

Health outcomes in India are also far from equitable. Caste, class, gender and geography continue to account for large differences in morbidity, mortality and nutritional status. The neglect of women’s health in particular is striking. For instance, in 2015–16, over half (53 per cent) of the women aged fifteen to forty-nine years were anaemic. Much of this neglect stems from the subordinate position of women and the strong anti-female biases that characterize Indian society. Men continue to outnumber women in India. Even more disturbing has been the decline in the female-to-male ratio among children aged zero–six years from 927 in 2001 to 914 in 2011, signalling the widespread prevalence of anti-female biases and discrimination against girls and women, including daughter aversion in Indian society.

Clearly, the healthcare system, as it has evolved in India, over the past seventy years has not been able to effectively meet the health needs of the people. There are many reasons why this is so.

One, nearly every country in the world that has achieved anything like universal health coverage has done it through the public assurance of primary healthcare. The basis of almost every successful health transition in the history of the world from Britain to Japan, China to Brazil, South Korea to Costa Rica has been the support of basic public health facilities.⁶

Unfortunately, the public sector in health has not grown to play a vital role in providing healthcare in India. The public sector has expanded enormously since Independence to include thousands of health sub-centres, primary healthcare centres, and community hospitals. However, the reach of the public sector even for primary healthcare remains grossly inadequate. For instance, in 2015–16, less than two-thirds (63 per cent) of children aged twelve to twenty-three months were fully immunized, and only 21 per cent of mothers had received full antenatal care.

The reasons for the underperformance of the public sector in health are not difficult to guess. Most public sector facilities tend to be under-staffed, under-resourced, over-crowded and poorly managed. Rural areas are especially poorly served. Location at a distance, inconvenient timings, poor quality of services, high absenteeism, inadequate supervision and the callous attitude of healthcare providers tend to discourage people from accessing public facilities even for outpatient care.

The extremely low level of public spending on health is a cause of and an exacerbating factor in the challenges of health inequity, inadequate availability and reach, unequal access, and poor-quality and costly healthcare services. In 2011, at USD 19 per capita, India’s public expenditure on health was half of that of Sri Lanka’s (USD 39) and significantly lower than that of China (USD 153) and Thailand (USD 166). A consequence of the low levels of public spending on health has been the high, private, out-of-pocket expenditures in India—69 per cent in 2011—among the highest in the world and much higher than in Thailand (22 per cent), China (44 per cent) and Sri Lanka (58 per cent).⁷ Such an unusually high burden of private health expenditure has been pushing over 63 million persons into poverty every year due to healthcare costs.⁸

A second reason for poor health outcomes is the extraordinary dependence of Indians on the private sector. Given the shortage of public sector facilities, most Indians have had no option but to access healthcare from a rapidly expanding private sector that has remained, by and large, unregulated. From 8 per cent in 1947, the private sector now accounts for 93 per cent of all hospitals, 64 per cent of all beds, and 80–85 per cent of all doctors. Between 2002 and 2010, the private sector contributed to 70 per cent of the increase in total hospital beds across the country.⁹

Unfortunately, people get very low value for money in both the public and private sectors. Poor-quality services, wastage, corruption, and weak management characterize many of the public healthcare institutions. The most commonly cited reason why people do not avail of public services is that they are not satisfied with medical treatment by a government doctor or facility. Other reasons include distance and non-availability of facilities and services. As a result, though treatment is almost free (except for some minor user fees), in 2014, more than 70 per cent of outpatient care (72 per cent in the rural areas and 79 per cent in the urban areas) and more than 60 per cent of inpatient care (58 per cent in rural areas and 68 per cent in urban areas) was in the private sector.¹⁰ But there is hardly any assurance of proper care. Many health centres and hospitals in the private and non-profit sector offer good quality healthcare services. However, with the virtual absence of effective regulation and oversight by the state, the quality of healthcare is mixed at best and the costs are often unreasonably high. In the virtual absence and enforcement of national regulations for provider standards and treatment protocols for healthcare, many private medical facilities over-diagnose, over-treat and maltreat. Many also dispense substandard and counterfeit medicines, prescribe unnecessary drugs and tests, avail of kick-backs for referrals, and manipulate hospital admissions and length of stay.¹¹

It is well known that private markets in healthcare are grossly inefficient given the large informational asymmetry (where the profit-oriented doctor can ‘cheat’ the patient by prescribing unnecessary medicines or unwanted treatment). Further inefficiencies are also generated by the ‘public goods’ nature of healthcare stemming from the interdependences involved.

Third, Indian policymakers do not seem to realize private healthcare, even if properly subsidized, or private health insurance, subsidized by the state, can simply not meet the challenge of universal health coverage. Both the Central and state governments have introduced a number of publicly financed health insurance schemes to improve access to hospitalization services and to offer financial protection to households from high medical expenses. For instance, by 2014, close to 370 million (almost one-fourth of the population) enjoyed coverage under the Government of India’s Rashtriya Swasthya Bima Yojana (RSBY),¹² which was launched in 2008. Nearly two-thirds belonged to families below the poverty line (BPL category). Those above the poverty line, and most in the informal sector (that employs close to 90 per cent of the workforce) are forced to rely on commercial health insurance markets.

There are serious incentive-incompatibility problems with commercial insurance as interests of providers, consumers and insurance companies do not align to maximize returns to consumers. Typically, insurance companies deny use, medical practitioners induce demand or encourage overuse, and patients themselves misuse the facility (commonly referred to as the ‘moral hazard’ problem). For instance, because inpatient treatment is ‘free’ and covered by health insurance schemes only if the patient is hospitalized for at least twenty-four hours, do insurance companies settle the bills, even when such a stay is not warranted. Furthermore, evidence suggests that quite apart from the problems of oversight to check malpractice and a high level of induced demand and inappropriate care, conventional insurance schemes siphon away large sums for tertiary care; they do not incentivize preventive and promotive care; and they do little to help with cost-containment.

Many of these shortcomings are observed in the Indian health insurance markets as well. Governments admit of low awareness among the RSBY beneficiaries about entitlements, denial of services by private hospitals for many categories of illnesses, and oversupply of some services. They also acknowledge that some hospitals, insurance companies and administrators resort to collusion and various fraudulent measures. For instance, in July 2015, the Competition Commission of India imposed a fine of Rs 6.71 billion on four public sector insurance firms after finding them guilty of involvement in anti-competitive practices in bidding for the Kerala government’s Rashtriya Swasthya Bima Yojna (RSBY).¹³ Furthermore, in May 2016, the Bihar Human Rights Commission directed the state government to pay a compensation of around Rs 150 million to 703 victims whose uteri were removed purportedly to gain incentive money under the RSBY.¹⁴ There have also been reports of major increase in certain operations like hysterectomies (surgical removal of uterus) due to coverage under the health insurance schemes.

Fourth, governments have not been able to put in place appropriate regulatory frameworks for ensuring the provision of high-quality healthcare services to people in both public and private sectors. For instance, in the case of institutional births (i.e. births in a hospital or healthcare centre), standard protocols are often not followed during labour and the postpartum (occurring immediately after birth) period. Poor quality of care has also been directly responsible for sterilization-related deaths. There are gaps in access to safe abortion services too, as well as in the care for sick neonates (a baby from birth to four weeks). Many self-declared ‘doctors’ practise without any qualifications. Informal care providers, with no formal medical training or registration with government for medical practice, are estimated to represent 55 per cent of all providers and are also frequently the first point of contact, especially in rural areas.¹⁵

Looking ahead

The country’s GDP is expected to grow, on average, by around 8 per cent per annum over the next fifteen years. By 2030, GDP is projected to more than triple to USD 7.25 trillion. Real per capita GDP is expected to triple by 2031–32.¹⁶ Translating economic expansion into better healthcare is one of the major challenges facing India over the coming decades.

This can happen only if, as a nation, India embraces the idea of Universal Health Coverage (UHC). UHC embodies specific health and social goals: it is the aspiration that all people can obtain the quality health services they need (equity in service use) without fear of financial hardship (financial protection).

Adopting UHC has five major implications. First, the commitment to Universal Health Coverage would require ‘to stop believing, against all empirical evidence, that India’s transition from poor health to good health could be easily achieved through private healthcare and insurance.’¹⁷ Commitment to expanding government-provided health services should become a priority. Second, entitlement to healthcare should be independent of the specific financial contributions made by individuals. In other words, every individual, regardless of their ability to pay, should be entitled to a package of essential healthcare services. Third, healthcare should be cashless at the point of service delivery. User charges and fees for any kind for use of healthcare services should be done away with. Government should ensure availability of essential medicines and diagnostics free of cost. Fourth, general taxation should be used as the principal source of healthcare financing—complemented, to the very limited extent possible given India’s large workforce in the unorganized sector, by additional mandatory deductions for healthcare from salaried individuals and taxpayers. Finally, the government should make a firm commitment to step up public expenditures on health.

The recently announced National Health Policy 2017 (NHP 2017) embraces some of the UHC principles. It calls for increasing health expenditures by the government as a percentage of GDP from the existing 1.15 per cent to 2.5 per cent by 2025; increasing state sector health spending to more than 8 per cent of their budget by 2020; and ensuring a 25 per cent decrease in the proportion of households facing catastrophic health expenditure from the current levels by 2025. Two other features of the NHP 2017 are noteworthy. One, it calls for allocating a major proportion (up to two-thirds or more) of resources to primary care followed by secondary and tertiary care. And two, it also calls for viewing public hospitals as part of a tax-financed single-payer healthcare system, where the care is pre-paid and cost-efficient.

Three constraints, however, need to be addressed for meeting the financial targets specified under the NHP 2017. First, without significantly expanding the tax base, India is unlikely to generate the kind of resources needed not only for health, but also for education, water and sanitation, nutrition, infrastructure and other priorities. Expenditure on social sectors has hovered between 6 and 7 per cent, and public expenditure on health at around 1.2 per cent of GDP for over two decades. For public expenditures on health to be stepped up, India will have to increase its tax-to-GDP ratio, which now between 16 and 17 per cent is significantly lower than that of China (19–20 per cent) and Brazil (35–36 per cent). In a nation of over 1.25 billion people, 36.5 million individuals filed their tax returns for the assessment year 2014–15.¹⁸ In addition, the state needs to ensure that benefits of public spending reach the poor. According to the Economic Survey 2015–16,¹⁹ an estimated Rs 100 billion spent on subsidies continues to go to the well-off, not to the most deserving; and tax benefits have not reached the middle class, but the mega rich.

The second constraint to address is the limited competence and capacity of human resources, especially at lower levels of governance. Health being a state subject under the Constitution of India, state governments are primarily responsible for the funding and delivery of health services. As acknowledged by the Economic Survey 2016–17,²⁰ with increasing devolution of responsibility to state governments, capacity constraints at lower levels pose serious implementation challenges. For instance, even if national regulation of healthcare is introduced, the lack of capacity at the level of state governments, and particularly in districts, will pose serious challenges to effective implementation.

Above all, it is important for India to firmly, and not half-heartedly, embrace the concept of Universal Health Coverage. This calls for a new political commitment and a determination to make UHC succeed. Policymakers and politicians seem mesmerized by targets of economic growth. They do not seem to realize that if India’s growth has to be sustained, good health has to be assured to all Indians.