By Razi Iqbal

Edited by Liz Maria Kuriakose, Associate Editor, The Indian Economist

It’s time for a peep into statistics regarding the healthcare system of our country. 70% of households in urban areas and 63% in rural areas prefer the private healthcare system. 83% of the revenue generated in this system goes to the private sector. Our government spends about 2.1% of the GDP on the healthcare system, well below the global average of 5%. Government share of health care spending is 17%, much lower than even China and Brazil (the average for G7 countries is 70%). 20 million people in India fall below poverty line each year because of debt arisen from meeting health care needs. Amidst the growing clamour that privatisation is good for the economy and working of the markets, healthcare sector is an exception where privatisation will slowly paralyse the whole system, bringing it to its knees. Let’s understand why.

First of all, private hospitals and health care centres run on the basic motive of profit maximization. The economics of healthcare says that providing medical services are not cheap hence the cost is more or less shifted to the consumer. Without any insurance cover (roughly one in ten people of our country have any kind of medical insurance), the medical bills go so high that these services become a privilege restricted to the rich. Secondly, many private hospitals neglect diseases like diarrhoea because the treatment is cheap and instead focus on expensive revenue generating procedures. The private sector does not want to do basic things like providing vaccination, improving nutrition, tackling sewage problems, solving water scarcity or providing medical services in rural areas because that’s not where the money is. The potential viability of the private sector providing a comprehensive healthcare system is severely handicapped by these facts. It can be said that the private healthcare system will treat a particular disease but take no effort to make sure that the disease does not break out in the first place. In India, we cannot live without a strong public healthcare system.

This is exactly what the problem is. We simply don’t have a sound public healthcare system. In many parts of the country, the public sector is poor to non-existent. Clinics are badly maintained and ill-equipped. Staff absenteeism is high. There is long waiting periods. Diagnosis for many diseases is not available. There is dearth of thousands of doctors and lakhs of nurses. Not to forget the rampant corruption which is now synonymous with any sector vaguely termed as ‘government’ or ‘public’. There is huge preference for private doctors especially as primary consultations (the cost of primary care in the private sector is not as high as secondary or tertiary care). Even for technical procedures, people have to opt for the private sector because such procedures are not available in the government hospitals .Even for procedures which are available in the public system at a highly subsidized rate; many patients prefer private hospitals (despite the generously proportioned medical bills). The message is clear- if we want the public to have faith in the public healthcare system, we will have to revamp the system as a whole.

A study conducted by the IMS Institute for Healthcare Informatics suggested that 85-90% of the patients are willing to shift from the private sector; if the situation in the public health care facilities is improved. India needs to be prepared to spend on health but the subject always spawns debate about costs. We don’t have the same debate when we spend billions on arms. Expenditure on healthcare should reach at least 4% of the GDP. The focus should be on minimizing the out of pocket expenditure of patients which often destroy their life savings in one go. Doctors graduating from government colleges often end up joining the private sector or go abroad (often cited as morally wrong because there doctors were educated by the government and are supposed to work for the public). Incentives for doctors should be increased if we want to keep them within the public system. More government colleges and hospitals should come up to cater for the growing demand of doctors and healthcare (India has one doctor for every 1700 people).

The private sector, however efficient, cannot be expected to cater to the all round development of the healthcare system. This is because the profit motive will not always overlap with the service motive. The public healthcare system will not work unless the ‘public’ has faith in it. The Singapore healthcare model is considered the most successful in the world whereby 70-80% of Singaporeans obtain their medical care within the public system. Our numbers are just the opposite! It all comes down to the priority the government assigns to this sector. After all, in the race for economic supremacy, we will lag behind if we are too sick to work.

Razi is a first year economics student at Shri Ram College of Commerce, Delhi university. A cricket fanatic and an avid reader, Razi believes that ‘the big bang theory’ and his passion for biking provide him the necessary fuel in his life. His interests in economics lie in psychology based subjects like game theory and behavioral economics. His focus in life right now is on the subject ‘how to best enjoy college life’.

Posted by The Indian Economist | For the Curious Mind