Our health systems are creaking, but we can still fix them

The Economic Survey 2020-21 observed that India ranks 179th among 189 countries in prioritizing healthcare in the government budget. The public expenditure on health, which is often an exaggeration at 1.4% of the gross domestic product (GDP), is abysmally low, compared to most middle income countries (3.5% in Ghana) and even some lower income nations (2.5% in Bangladesh). This budgeted expenditure on health has actually fallen since the late 1980s. This is rather inexplicable given that fact that there are enough studies that show a direct correlation between additional government expenditure and health outcomes, just as in education. What is also intriguing is that India’s development trajectory shows a starkly differential treatment given to health in comparison to education. Public expenditure on education is at roughly three times that on health.

Meanwhile, for 17% of the world’s population, India also has a disproportionately high share of global disease burden at 20% coupled with one of the fastest growing non-communicable disease incidence. The low expenditure on health has resulted in India having one of the weakest health infrastructures. The system is also strained by rising costs and a shortage of physicians, nurses, and other human resources.

Some of these numbers are well-known. India has 1.3 beds per 1,000 people; roughly 0.5 pharmacists per 1,000 people; 0.8 physicians per 1,000 people–roughly less than half of the world average. It is estimated that India will require two million more doctors by 2030 to achieve a desirable doctor-to-population ratio of 1:1,000. The UN Millennium Development Goals set in 2000 pushed communities worldwide to make a remarkable undertaking: eliminate acute deprivation and poverty, thereby improving the well-being and health of the most underprivileged people across the world. The adoption of this pledge highlighted the crucial function of health in the link between poverty and development. This declaration provided a central agenda for development efforts and set standards against which countries could review their successes and failures.

The questions that arise are significant: who will bear the responsibility for this, with jurisdictions divided between the state and the Centre in a rather vague manner in India? And most importantly, in these times of resource crunch, does the Indian state have enough money to spend on ambitious targets of building world-class infrastructure to provide universal healthcare?

While we are deficient in all the tiers of healthcare, it is the primary healthcare facilities that require huge investments and reforms, as upgrading them and even providing them in some unserved locations will take away the pressure from in-patient care, expensive medication and transportation costs. Historically, this has been the guiding principle behind state expenditure. A little more than 52% of public expenditure on health goes to primary care, while secondary and tertiary care get 23% and 11%, respectively. The proportions are right, but the total itself is abysmally low. And as pointed out several times, the outlays usually are not even fully utilized.

Given that the budget provisions are not seeing any appreciable increase, the outlook remains bleak. At current levels, the situation is grim. We are looking for a scenario where only 7% of sub-centres, 12% of primary health centres (PHCs) and 13% of community health centres are functioning in some manner. While the reasons for other centres not working could be many, one important reason is the lack of money for supplies, repairs, and expansion of capacity. The Economic Survey itself has pointed out that “India was ranked 145th out of 180 countries (Global Burden of Disease Study 2016) on the quality and access of healthcare. Only few sub-Saharan countries, some Pacific islands, Nepal and Pakistan were ranked below India".

This imposes a disproportionate cost on the most vulnerable sections of society. It is an inarguable fact that the poor pay more for healthcare than the better off in India. The NSS Social Consumption of Health data shows that the average ‘out-of-pocket’ expenditure in public health facilities is unevenly spread out across the country. In Tamil Nadu, which boasts the best infrastructure facilities, the cost is the lowest. It is highest in Bihar and the out-of-pocket expenditure here is more than twice the amount a poor person in Tamil Nadu spends. Data shows that the poor in states that are relatively better off and have public facilities spend at least 50% less on each hospitalization compared to the poor in backward states who avail private facilities.

India, therefore, has no choice but to find money to fund healthcare infrastructure, facilities and staffing. But where is the money?

With GDP growth rates under strain, the government is hard pressed to release requisite amounts of money for addressing socio-economic indicators. States now have very little tax collection of their own after the GST, and the Centre is under stress. Under the National Health Authority, the central government’s spend as a percentage of gross health expenditure(GHE) is 31% whereas the contribution of state government health expenditure to the total GHE is 69%. With a wider jurisdiction and participation of the state government in subject matters of health, the effective execution of centralized schemes relies on the political will of the state parties.

New beginnings

A beginning, however, was made when Prime Minister Narendra Modi launched the Ayushman Bharat Health Infrastructure Mission (ABHIM) last month. This mission envisages wide-ranging initiatives and investments in building and strengthening healthcare infrastructure across the country. The ABHIM will work with the National Health Mission in building public health facilities, critical care infrastructure and PHCs across India’s cities and villages.

In its first phase, the mission will focus on 10 states with relatively weaker facilities and build 17,788 rural health and wellness centres. It will also build or strengthen 11,024 urban wellness centres across the country.

Each district in India that has more than half a million people will now have its own hospital block providing critical care. The smaller districts will avail referral services with the most convenient hospital. Recognizing the fact that diagnostic and testing laboratories were the first facility that simply caved in and couldn’t meet the demand during the covid waves, the mission will enable diagnostics in the state health system by building a large network of laboratories and testing facilities in all districts across the country. The plans are indeed ambitious and include the building of bio safety level 3 labs, five additional regional centres for disease control and four new virology institutes. The severe impact of unpreparedness for covid-19 is writ large on our future plans.

Given the abysmal performance of our PHCs—the private primary care provider is often just as poorly equipped as the public provider—patients are pushed to secondary care and specialist care where the expenses shoot up exponentially. That explains the current focus on big infrastructure funding to improve the PHCs.

The Ayushman gap

What has already been done is the launch of the Ayushman Bharat–National Health Protection Mission (AB–NHPM) in 2018. Ayushman provides health coverage of ₹5 lakh per family per annum for secondary and tertiary care hospitalization to nearly 110 million poor and vulnerable families, which is a total of about 500 million people. The funding for this scheme will be in the 40:60 ratio where the state bears 40% and the Centre the rest. The scheme has empaneled 16,000 hospitals, 7,500 in the public sector and 850 private institutions.

However, it has only been able to reach 4 million beneficiaries as the implementation is tardy and the money allocated is meagre. The allocation has been a consistent ₹6,400 crore, while what is needed is at least ten times that amount—if we must reach out to 500 million people.

While the scheme appears to work in the secondary and tertiary healthcare segments, it neglects the potential of primary healthcare facilities. The Ayushman Bharat -Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) does not cover the primary healthcare services. However, primary healthcare services form the first level of service where people continue to spend substantially on diagnostics and medicines. More importantly, free insurance cover is likely to divert the focus from primary healthcare services to the secondary and tertiary care because people with insurance would prefer to get treated in super specialty hospitals even if health requirements could be met at the primary care level.

This can lead to an unnecessary spike in the government expenditure that could have been directed more productively elsewhere. Additionally, the performance of such a scheme is largely dependent on the Centre-state partnership. Strains in the partnership may result in an inadequate provision of this centralized scheme by the state. The other rather facile step taken by the government was a tight control over drug prices and caps on retail pricing in 2018. Given that 70% of the total individual expenditure goes for buying medicines for non-hospitalized treatment, this was a populist measure that was strongly supported by most people. However, it has been counter-productive as studies have shown. This compromises our long-term health goals and access to modern drugs and technologies. Given the fiscal deficits and poor tax collection, it is a simplistic way out that targets a vulnerable drugs and pharmaceutical sector. There is indeed no substitute for a large investment in healthcare facilities including hospitals, research institutions, diagnostic laboratories and healthcare workers.

The way forward

The first step is to build an enormous amount of infrastructure in the public domain. There is no denying that the private sector plays a huge role in providing healthcare access to nearly two-thirds of our patients. Therefore, it will remain a major player in this sector. Approaches like imposing price caps on drugs and surgeries will only prove to be counter-productive. Instead, what we need is a strong public sector that must necessarily get upwards of 2.5% of our GDP and spend that on building better facilities and provide easier access. The competition from good public health centres brings down private sector costs almost immediately as evidenced in the better-equipped states such as Tamil Nadu and Kerala.

The second is to incentivize states to spend on healthcare. At the moment, the Finance Commission recommendations on an increased devolution of taxes to 42% does little to ensure that states spend that extra money on healthcare provisions. Different states have different imperatives and healthcare is often at the bottom of the priority list that includes irrigation, roads, housing, and education, each far more populist than healthcare.

Better performing states should be incentivized to open up their healthcare facilities for people from other states. Telangana is an example—patients visited from northern Karnataka and Madhya Pradesh during the covid waves to access better health care facilities and the Aarogyashree subsidies. The Aarogyashree scheme is a social insurance model that incentivizes the private sector to provide high-quality tertiary services to the poor with minimal out-of-pocket expenses.

The third is to emulate the examples set by countries such as Thailand and Cuba. Thailand passed and implemented an Affordable Care Act and brought down health insurance premium significantly while providing an optimal number of facilities across the country. Cuba ensured that it had one of the finest primary healthcare systems in the world with outpatient care available to all at no cost. Cuba did this with relatively smaller allocations to healthcare, with $980 per year per capita, compared to the US at $11,000, with far better outcomes. India’s expenditure stands at ₹250 a year and this must go up by at least three times.

What India must learn from Cuba is how to involve the community and focus on public health and sanitation— something missing in the Indian context. While increasing outlays on health is an unavoidable imperative, it is important for India to emulate these best practices. They have demonstrated that providing universal care with quality does not only need huge investments.

Amir Ullah Khan is research director at the Centre for Development Policy and Practice.