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China has recently unfolded the blueprints of its new healthcare reform measures, when will India do so?

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Early April, 2009, China, a country with 1.3 billion people, unfolded a plan for a new healthcare reform process for the next decade to provide safe, effective, convenient and affordable healthcare services to all its citizens. A budgetary allocation of U.S $124 billion has been made for the next three years towards this purpose.
China’s last healthcare reform was in 1997:

China in 1997 took its first reform measure to correct the earlier practice, when the medical services used to be considered just like any other commercial product, as it were. Very steep healthcare expenses made the medical services unaffordable and difficult to access to a vast majority of the Chinese population.

Out of pocket expenditure towards healthcare services also increased in China…but…:

The data from the Ministry of Health of China indicate that out of pocketl spending on healthcare services had doubled from 21.2 percent in 1980 to 45.2 percent in 2007. At the same time the government funding towards healthcare services came down from 36.2 percent in 1980 to 20.3 percent in the same period.

A series of healthcare reforms was effectively implemented since then like, new cooperative medical scheme for the farmers and medical insurance for urban employees, to address this situation.

The core principle of the new phase of healthcare reform in China:

The core principle of the new phase of reform is to provide basic health care as a “public service” to all its citizens. This is the pivotal core principle of the new wave healthcare reform process in China where more government funding and supervision will now play a critical role.

The new healthcare reform process in China will, therefore, ensure basic systems of public health, medical services, medical insurance and medicine supply to the entire population of China. Priority will be given for the development of grass-root level hospitals in smaller cities and rural China and the general population will be encouraged to use these facilities for better access to affordable healthcare services. However, public, non-profit hospitals will continue to be one of the important providers of medical services in the country.

Medical Insurance and access to affordable medicines:

Chinese government plans to set up diversified medical insurance systems. The coverage of the basic medical insurance is expected to exceed 90 percent of the population by 2011. At the same time the new healthcare reform measures will ensure better health care delivery systems of affordable essential medicines at all public hospitals.

Careful monitoring of the healthcare system by the Chinese Government:

Chinese government will monitor the effective management and supervision of the healthcare operations of not only the medical institutions, but also the planning of health services development, and the basic medical insurance system, with greater care.

It has been reported that though the public hospitals will receive more government funding and be allowed to charge higher fees for quality treatment, however, they will not be allowed to make profits through expensive medicines and treatment, which is a common practice in China at present.

Drug price regulation and supervision:

The new healthcare reform measures will include regulation of prices of medicines and medical services, together with strengthening of supervision of health insurance providers, pharmaceutical companies and retailers.

As the saying goes, ‘proof of the pudding is in its eating’, the success of the new healthcare reform measures in China will depend on how effectively these are implemented across the country.

Healthcare scenario in India:

Per capita public expenditure towards healthcare in India is much lower than China and well below other emerging countries like, Brazil, Russia, China, Korea, Turkey and Mexico.

Although spending on healthcare by the government gradually increased in the 80’s, overall spending as a percentage of GDP has remained quite the same or marginally decreased over last several years. However, during this period private sector healthcare spend was about 1.5 times of that of the government.

It appears, the government of India is gradually changing its role from the ‘healthcare provider’ to the ‘healthcare enabler’.

High ‘out of pocket’ expenditure towards healthcare in India:

According to a study conducted by the World Bank, per capita healthcare spending in India is around Rs. 32,000 per year and as follows:

- 75 per cent by private household (out of pocket) expenditure
- 15.2 per cent by the state governments
- 5.2 per cent by the central government
- 3.3 percent medical insurance
- 1.3 percent local government and foreign donation

Out of this expenditure, besides small proportion of non-service costs, 58.7 percent is spent towards primary healthcare and 38.8% on secondary and tertiary inpatient care.

Role of the government:

Unlike, recent focus on the specific key areas of healthcare in China, in India the national health policy falls short of specific and well defined measures.

Health being a state subject in India, poor coordination between the centre and the state governments and failure to align healthcare services with broader socio-economic developmental measures, throw a great challenge in bringing adequate reform measures in this critical area of the country.

Healthcare reform measures in India are governed by the five-year plans of the country. Although the National Health Policy, 1983 promised healthcare services to all by the year 2000, it fell far short of its promise.

Underutilization of funds:

It is indeed unfortunate that at the end of most of the financial years, almost as a routine, the government authorities surrender their unutilized or underutilized budgetary allocation towards healthcare. This stems mainly from inequitable budgetary allocation to the states and lack of good governance at the public sector healthcare delivery systems.

Health insurance in India:

As I indicated above, due to unusually high (75 per cent) ‘out of pocket expenses’ towards healthcare services in India, a large majority of its population do not have access to such quality, high cost private healthcare services, when public healthcare machineries fail to deliver.

In this situation an appropriate healthcare financing model, if carefully worked out under ‘public – private partnership initiatives’, is expected to address these pressing healthcare access and affordability issues effectively, especially when it comes to the private high cost and high quality healthcare providers.

Although the opportunity is very significant, due to absence of any robust model of health insurance, just above 3 percent of the Indian population is covered by the organised health insurance in India. Effective penetration of innovative health insurance scheme, looking at the needs of all strata of Indian society will be able to address the critical healthcare financing issue of the country. However, such schemes should be able to address both domestic and hospitalization costs of ailments, broadly in line with the health insurance model working in the USA.

The Government of India at the same time will require bringing in some financial reform measures for the health insurance sector to enable the health insurance companies to increase penetration of affordable health insurance schemes across the length and the breadth of the country.

Conclusion:

It is an irony that on one side of the spectrum we see a healthcare revolution affecting over 33 percent population of the world. However, just on the other side of it where around 2.4 billion people (about 37 percent of the world population) reside in two most populous countries of the world – India and china, get incredibly lesser public healthcare support and are per forced to go for, more frequently, ‘pay from pocket’ pocket type expensive private healthcare options, which many cannot afford or just have no access to.

In both the countries, expensive ‘pay from pocket’ healthcare service facilities are increasing at a greater pace, whereas public healthcare services are not only inadequately funded, but are not properly managed either. Implementation level of various excellent though much hyped government sponsored healthcare schemes is indeed very poor.

Moreover, despite various similarities, there is a sharp difference between India and China at least in one area of the healthcare delivery system. The Chinese Government at least guarantees a basic level of publicly funded and managed healthcare services to all its citizens. Unfortunately, the situation is not the same in India, because of various reasons.

Over a period of time, along with significant growth in the respective economies of both the countries, with China being slightly ahead of India for many reasons, life expectancy in both India and China has also increased significantly, which consequently has lead to increase in the elderly population of these countries. The disease pattern also has undergone a shift in both the countries, mainly because of this reason, from infectious to non-infectious chronic illnesses like, hypertension, diabetes, arthritis etc. further increasing the overall burden of disease.

High economic growth in both the countries has also lead to inequitable distribution of wealth, making many poor even poorer and the rich richer, further complicating the basic healthcare issues involving a vast majority of poor population of India.

A recently published report indicates that increasing healthcare expenditure burden is hitting the poor population of both the countries very hard. The report further says that considering ‘below the poverty line’ (BPL) at U.S$ 1.08 per day, out of pocket healthcare expenditure has increased the poverty rate from 31.1 percent to 34.8 percent in India and from 13.7 percent to 16.7 percent in China.

To effectively address this serious situation, the Chinese Government has announced its blueprint for a new healthcare reform measures for the coming decade. How will the Government of India respond to this situation? It will indeed be interesting to watch.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Increasing socio-economic inequality within the healthcare delivery systems of India

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Increasing inequality between the wide diversity of population of ‘haves’ and ‘have-nots’ in the socio-economic and cultural set up of India, clearly gets reflected in the healthcare delivery system of the country. Many research studies on this subject have established a clear relationship between healthcare services and socio-economic inequality. Several lakh of Indians still perish in the country because of this reason.
Economic growth needs to be inclusive – better said than done:
Initiation of financial reform measures since 1990 and the process of globalization during this period have spurred the economic growth of the country, the rate of which comes just next to China in the global scale of comparison for the same. However, many people strongly believe that this reform process has not been as inclusive as it should have been. Otherwise why will the country continue to witness worrisome instances of abject poverty within a large section of the society with an abnormally high rate of mortality?

Healthcare sector in India – huge socio-economic inequality:

According to the Investment Commission of India, the healthcare sector of the country has experienced rapid growth of around 12% since last 4 years and is expected to be of U.S. $ 280 billion industry by 2022.

However, due to socio-economic inequality, this growth has not been evenly distributed. As a result, 65% of the population of India still do not have access to modern medicines and a vast majority of the population experience poor healthcare facilities. Around 10 lakh women and children die in India either due to poor access to healthcare services or they cannot afford the healthcare expenses.

Centers of excellence – but not for all:

In the healthcare sector, despite having many centers of excellence of global standards, which are also attracting ‘medical tourists‘ from across the world, healthcare needs of a large number of population of the country are not being addressed adequately. About 700 million of population have no access to specialists’ care even today. The Government of India alone will not be able to address this problem of gigantic proportion without workable and time-bound Public Private Partnership (PPP) initiatives with an investment of over U.S $ 20 billion at least for next five years. For example, in terms of availability of hospital beds per 1000 population, India stands at 0.7 against 3.96 of world average.

“Fortune at the bottom of the pyramid” – anybody follows in India?

Professor C. K. Prahalad’s famous dictum, “Fortune at the bottom of the pyramid” has not been realised yet by many within the global healthcare industry, perhaps with the solitary exception of Andrew Witty, the young CEO of GlaxoSmithKline.

As per data available from the Government publications, the bottom of the pyramid where a large proportion of the Indian population is located, reflects a huge socio-economic inequality even in the healthcare sector as follows:

• Overall spending on healthcare in India is around 6% of GDP (Public and Private sectors put together). However the public expenditure is only 0.9% of the total spending.

• In rural areas per capita expenditure on healthcare is seven times lower than urban areas.

• In rural areas the ratio of hospital beds to population is fifteen times lower than the urban areas.

• In rural areas the ratio of doctors to population is almost six times lower than the urban areas.

• The rate of Infant Mortality in the 20% of the poorest population is 2.5 times higher than the richest 20% of the population in rural areas.

• Despite more health issues an individual from the poorest quintile of the population is six times less likely to access hospitalization than a person from the richest quintile in rural areas.

• From the poorest quintile of the population, the child delivery of a mother is over six times less likely to be attended by a medically trained person than during child delivery of a mother from the richest quintile of the population in rural areas.

• On an average 78% healthcare expenditure in India comes as ‘out of pocket payments’ by the people, whereas only 18% of the same is borne by the state followed by 4% by medical insurance.

• Towards public healthcare spending, only five other countries in the world (Pakistan, Burundi, Myanmar, Cambodia and Sudan) are worse off than India.

• Only 38% of all Public Health Centres (PHCs) have essential manpower and only 31% have the essential supplies with only 3% of PHCs having 80% of all critical inputs.

As a result of inadequate and unequal spending on the healthcare infrastructure, healthcare systems, healthcare financing and healthcare delivery, both by the public and private sectors in the rural areas, such inequalities towards access and affordability of the healthcare services,especially in rural India where over 70% of the country’s population reside, have now assumed an alarming proportion .

Access to healthcare is fundamental in many countries of the world:

Most of the developed countries of the world extend comprehensive healthcare access to its citizens. Even our close neighbour Thailand and Fidel Castro’s land, Cuba along with many other developing countries of the world extend basic healthcare facilities to all their citizens.

Urban poor also face the harsh reality of healthcare affordability issue:

Survey results indicate the following facts so far as urban poor are concerned:

• Healthcare facilities though skewed towards urban India, the healthcare cost, lack of culturally appropriate services; social prejudices etc prevent access to healthcare even to the urban poor.

• Infant and under-five mortality rates in the urban slums for the poorest 40% are as high as is prevalent in the rural areas.

• Because of mainly poverty, poor hygienic and almost non-existent sanitation conditions, urban slums have now become the breeding ground for diseases like cholera, malaria, hepatitis, tuberculosis, HIV – AIDS and a large variety of infectious disease.

All these conditions coupled with almost total lack of health education in slums further aggravate the healthcare situation.

Has the National Health Policy delivered?

It is widely believed that Infant and Maternal Mortality rates of a country are the most important indicators of the health of any society. For the year 2000 The National Health Policy of India had set a target to bring down the Maternal Mortality Rate to below 200 per 1 lakh live births. However, even today around 407 mothers die every year due to pregnancy related complications. So far as infant mortality is concerned the figure remain as high as 22 lakh every year.

A very sad state of public healthcare delivery system gets reflected through these very basic numbers, despite various government initiatives and mushrooming private and corporate investments towards healthcare. The privileged class of the society, as a result, is getting better and better private healthcare services and the under-privileged class is denied of, in many cases, even the very basic healthcare facilities. All these bring out to the open the social and economic inequality in our civil society even for the very basic healthcare needs of its citizens.

Growth of Private Healthcare initiatives is welcome, but are they maintaining an urban-rural balance?

Urban centric private healthcare sector in India is growing at a faster pace. However, overwhelming dominance of this sector in absence of robust PPPs will further increase the urban bias with focus on higher profit margin being more important than offering primary and secondary healthcare services to a large number of the deprived population with lesser profit margin. Following published facts may help understand the prevailing situation:

• The increasing cost of healthcare paid predominantly through ‘out of pocket’ is making healthcare unaffordable to a large number of the population.

• The number of people who are unable to seek healthcare services due to affordability issue is growing, despite rapid economic growth of the country.

• The number of people who cannot afford to basic healthcare services has doubled compared to just a decade ago.

• One in three people who need hospitalization and paying ‘out of pocket’ are forced to borrow money or sell assets to cover healthcare expenses.

• Because of ‘out of pocket’ spending on healthcare, over 20 million Indians are pushed below the poverty line every year.

• A World Bank report acknowledges the facts that doctors recommend unnecessary investigations and over-prescribe drugs in private healthcare sector.

• The same report acknowledges the relationship between the quality and cost of healthcare services in the private healthcare system with high priced services being excellent but unaffordable to many.

Conclusion:

All these facts will further establish the prevalent socio-economic inequality within the healthcare delivery systems of India. Rapidly growing urban centric private healthcare initiatives are welcome but these are now just catering to the privileged few, keeping the pressing healthcare issues of India unanswered. Only well planned time-bound PPP initiatives, in my view, are capable to address the humongous healthcare issues of India.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

65% of Indians do not have access to affordable modern medical treatment – why?

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India is indeed a country of many paradoxes. Not just peaceful co-existence of luxurious sky scrapers and dilapidated shanties side by side. In the healthcare sector as well, we witness on one side booming medical tourism of foreign nationals to get various types of ailments treated with the best possible medical amenities, just when on the other side common diseases like, malaria and tuberculosis are taking the common man on a rampage. Is India, therefore, ignoring the crying need to strike a balance between extending cost competitive healthcare benefits to the ‘haves’ of the world without neglecting the domestic ‘have nots’?Another paradox, when India caters significantly to the growing needs of the world for low cost generic medicines, 65% of Indian population cannot afford the same and do not have access even to a doctor.In a situation like this, what sort of equitable distribution of healthcare benefits are we then talking about? Isolated attempts of opening low cost generic medicine shops, enforcing rigorous non-transparent price control, attempt to divert the debate on the price of patented medicines which contribute miniscule decimal points on the total pharma market in India, can at best be termed as populist measures, instead of trying to look at the macro picture to address the pressing healthcare issues of the country.

When we talk about affordability, why do we not talk about affordability of medical treatment as a whole and not just affordability of medicine, for one or many ailments that the common man suffers from? Will our government try to address this bigger issue in a holistic way?

What could possibly be the reasons for such inaction? Is it because improper co-ordination, if not lack of co-ordination, between various Government departments, the ultimate victim of which is the common man?

Such a situation reminds me of an old story of three blind men and an elephant. After touching the trunk of the elephant, one blind man describes the elephant as a large Python, touching a leg of the elephant, the other blind man describes it as a pillar. The third blind man while touching the body of the elephant describes it as a strong wall. Unfortunately no one could describe the elephant as it really is and no one in this particular case was helping them to do so, either.

Could it be that various departments of our Governments are acting like these blind men and are not seeing the big picture – the elephant of the above story? It appears that the Pharmaceutical department of the Ministry of Chemicals and Fertilizers believes that only the price of medicines is the key issue for an ailing patient while going for a medical treatment and not the cost of total treatment. Thus, they seem to be working full time to drive down only the price of medicines.

The Ministry of Health is also trying to do a little bit of something in some not so known areas. The Ministry possibly believes that they are effectively helping everybody to address the pressing healthcare issues. It does not so appear that the Ministry realizes that majority of our population does not have access to affordable modern treatment for the ailments that they are suffering from. Number of doctors, nurses, hospital beds etc. per 1000 of Indian population is still abysmally low even compared to some developing nations. Cost of getting a disease diagnosed even before any medicine is prescribed is sky rocketing, at a break neck speed. Which Government department is trying to address the cost of disease burden and trying to alleviate it for all of us, in a holistic way?

Here comes another paradox. While the Pharmaceutical Department intends to bring down the price to make the drug affordable, the Finance Ministry keeps the transaction cost of medicines at a high level by levying various taxes to improve its revenue collection, ultimately making the same medicine less affordable.

In the developed nations and also in many emerging markets healthcare financing or health insurance for all strata of the society is being successfully implemented to address the key issue of improving access to affordable modern treatment to a vast majority of the population. Even after 61 years of independence we have not been able to address this critical healthcare financing issue effectively.

Piece meal approach of our Government has not succeeded much to address this important issue of the country. Taking one-off populist measures of various types and creating media hype may not help sorting out this issue, at all.

The way forward, very broadly speaking, is to bring the entire healthcare policy making and implementation functions under one ministry. If that is not possible, the concerned ministries should work in unison, with effective procedural interfaces being put in place for proper co-ordination with a clear goal of improving access to affordable modern treatment to all.

Is it not a shame on us that even today, 65% of Indian population does not have access to affordable modern medical treatment?

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.