Why we won't have ManmohanCare, or ModiCare, anytime soon

Health care has never been high on the politicians’ agenda in India. And that truly explains why in the last 66 years our healthcare system has grown like a malnourished child, deficient on various parameters, be it delivery or quality. But around this time last year, as the ObamaCare debate raged in the US, we heard a similar promise from Prime Minister Manmohan Singh: That India will move towards Universal Health Coverage (UHC) by 2017. But as they say, a few months is a long time in politics, the PM’s promise rings hollow today.

No chance of Manmohan Care

To get a more nuanced view on this you’ll have to read the set of healthcare stories we carry in the latest issue of Forbes India which hits the stands today. I provide here some teasers and highlight a few issues at play which, given the limited space in the magazine, we couldn’t accommodate.

The idea of UHC is not Utopian  Many countries have adopted it, South Korea and Thailand being recent success stories. At least 30 emerging economies are moving towards it. To inject more energy into this, in December the UN General Assembly adopted a resolution on universal health care and exhorted countries to hasten their transition to this goal. For India, where the government’s health spending is paltry 1.04 percent of GDP as against citizens’ out of pocket spending of 3.16 percent, UHC could address many issues of access, social equity, and economic growth. After all, as many as 39 million people fall below poverty line in India every year due to healthcare expenses.

But as the magazine story will tell you, it’s not going to be reality anytime soon. And the simple explanation is nobody thinks healthcare is critical for votes. After roti-kapda-makaan, the slogan we've heard for long is bijli-sadak-paani (electricity-roads-water). For that to convert into naukri-hawaa–swasthya (job-clean air-health), is no less than a mega evolutionary process. It may take decades.

A 2013 McKinsey report recommended health spending of 5.5 percent, whereas the High Level Expert Group, set up by the Planning Commission to draw the UHC framework recommends, 3.5 to 3.8 percent of GDP if India is to provide an essential package to all. Yes, basic healthcare to all. Because international experience shows if the wealthy/well-to-do population is included then there’s pressure on the system to perform.

None of that looks possible in near future. Meanwhile, here’s what is happening: insurance penetration is increasing because people are individually (or through employer) buying more health insurance and governments (both state and central) are allocating more money to sponsored insurance schemes. As one former health secretary of a northern state told us: “Just give money in their hands, let them buy what they want…” Clearly, he was equating food with healthcare. Many politicians and bureaucrats subscribe to this thinking.

But free market principles don’t quite apply to medicine. If anything, this industry is known to play a game of blind man’s buff. Patients are made to make critical choices without having the expertise or full information needed to evaluate things - from doctors to therapies. This was best explained back in 1963 when economist Kenneth Arrow wrote his classic paper, “Uncertainty and the Welfare Economics of Medical Care”. He showed how medicine is the extreme example where the market fails to insure against uncertainties. Health economists since then have termed pricing of hospital services as “chaos behind a veil of secrecy.” Which is why the United States, one of the adopters of insurance-led healthcare, spends over 16 percent of its GDP on health (9-10 percent is public money), and ranks lowest among developed nations on its health system performance.

As the magazine story on Labour Ministry’s Rashtriya Swasthya Bima Yojana shows, it is hailed by many as the panacea. On the face of it, this looks like a good thing. By 2015, the World Bank estimates, nearly 600 million Indians will have some kind of health insurance. But when you look at the rising cost of health cover – Indian insurance regulator, IRDA, announced 25% increase in health insurance premium earlier this year and the cost of government-funded schemes are shooting through the roof as well—it’s not hard to imagine we could find ourselves in the unenviable position where the US is today. For an amazing insight on this, read this latest Time magazine report, ‘Why Medical Bills are Killing Us’.

In short, if you bypass primary care (offered by public provisioning in most successful health systems across the world) and let the insurance rule the roost, you get a system that is not only expensive but also doesn't care if you are necessarily healthy. (This Economist special report shows people are living longer, but are not healthier.)

That should worry us. Because policy makers are linking health to vote bank politics and apportioning state budgets towards government-sponsored schemes that fund secondary and tertiary care. Because people get some financial protection, both parties think the job is done. In reality, this is damaging the already creaking public health system. Andhra Pradesh, where YSR Reddy showed healthcare can help you return to power, spends over 68 percent of its state health budget on Arogysri, the tertiary care health insurance. Other states are following this; there are differences only in running them, not in the intended outcomes. An AP state official I spoke to, lamented the rising cost of the schemes and wanted the Centre to cap drug prices, but didn't seem bothered about analyzing where the fault actually rests.

By the same logic, Labour Ministry’s Rashtriya Swasthya Bima Yojana (RSBY) is picking up failures of the public health system. It is treating cases of diarrhea, malaria, appendicitis and hysterectomies, which shouldn't come to RSBY in the first place. “If, as we’re dreaming, there is free UHC at least up to secondary level then there would be no reason to have RSBY,” says Mirai Chatterjee, a member of Sonia Gandhi-led National Advisory Council and of the High Level Expert Group.

The moot point is how we see primary care in this country. What we have in the name of public health system is grossly inadequate; what we could have as complementary service from the private sector won’t come unless some fresh rules of the game are set. India is the world’s most fragmented and unregulated healthcare market, with no standard of care, cost or fee. (More than 80 per cent of outpatient and 60 percent of inpatient treatments take place in private sector.) A malaria treatment can range from Rs 5000 to Rs 20,000.

“Some basic regulation has to be in place. It’s true the Clinical Establishment Act is passed but not many states have taken it on board, including my state ofGujarat. It’s clear the lobbies are very powerful, we understand that,” says Chatterjee, who, as a NAC member, wants to go slow and build bridges with the medical lobbies.

Time is running out to devise a continuum of care that incorporates primary, secondary and tertiary services. “It’s not the mandate of the private sector to look at social returns, at least not at this point…it’s still fast growing industry,” says Ashwin Naik, founder-CEO of Vaatsalya Healthcare, when asked if the private sector would enter primary care. He points to the low margins in the unorganized primary care. (More on that from other industry leaders in the magazine.) Secondly, he says, we pay taxes so it’s the government’s mandate to ensure right to healthcare.

(Here’s an interesting example how the govt and the private sector in the US are solving this problem: When the doctor is not needed.)

If in all these years the government didn't care about health, it’s naiveté to think it will do so now, in times fiscal conservatism. But making regulation (not over regulation) and enforcing them doesn't cost much, especially if it unleashes the creative energies of the industry.

But as one principal secretary told me, “We have a classic case [in bureaucracy] where the government runs its own business [of governance], competing with all other businesses around.”