BackFinding the right direction for India
In this market even after spending Rs4.5 lakh crore, in cash, one gets terrible health outcomes
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Nachiket Mor, country director, Bill and Melinda Gates Foundation, in his keynote address spoke of borrowing successful examples from other countries. Edited excerpts:
I have been in the health sector for about a decade now and the experience has not been an entirely happy one.
The overall healthcare industry is worth Rs6 trillion, a $100-billion sector. In term of annual expenditure, that’s about 4% of the GDP. The single largest entity is the government, which spends about Rs1.5 lakh crore, or about $20-22 billion on healthcare. This is largely spent on a healthcare system that they themselves run.
Now let’s look at the rest of the money. The formal sector on the collection of the money side is the insurance system; and on the spending side is the formal private sector (hospitals).
The first set of facts is that the bulk of the money we spend is completely disorganised. This is almost directly related to the second aspect. If you ask me if Rs6 lakh crore is enough to buy us good healthcare? It is quite a lot of money. It gives us an expenditure level comparable to Brazil in terms of healthcare.
Why is it in this market that even after spending Rs4.5 lakh crore, in cash, you are getting terrible health outcomes?
One aspect is that we tend to worry about the future much lesser than we ought to. So, for instance, we tend to under-purchase insurance. You know any mechanism in which one has to sell, it is difficult. So people bundle many things—savings and investments—with insurance.
What does one do to build a health market that responds to these concerns? One benefit that India has, because we are laggards in this space, is that we can learn from 70-75 countries that have done this successfully. Our tragedy is that not only are we not making much progress, we are not pointed in the right direction. Some countries have been able to transform their health systems by taking some very careful steps. One of these is execution.
The point of service payment goes away. So how does one finance healthcare? There are really only two choices—taxation and mandatory insurance. Both are coercive. Many believe that regulation is a better tool. But to regulate, I must have evidence of wrongdoing. Unfortunately, the doctor-patient conversation is highly invisible. Regulation is a weak tool. A bad hospital can get away because it bribed, while a good hospital may fail.
What works is a strong purchaser, who on behalf of the customer says that if you don’t comply with these laws, I won’t pay. In many countries the government is the provider. But this doesn’t work very well. In many places, people have created another body, a sort of a trust, which started to buy healthcare.
We need a wider suite of insurance products. In a Rs6-lakh crore market, if the total size of this (insurance) industry is Rs20,000 crore, it hasn’t even begun its journey.
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