THE end of a year in India’s capital brings with it a familiar problem – a cloud of dark, choking air that wreaks untold havoc on the lungs of Delhi’s residents. The city’s youngest inhabitants will be most hurt by the high levels of suspended particulate matter that has turned Delhi’s winter into a health hazard. The consequences for public health, not just during these troubled winters but also for decades to come, are incalculable but unquestionably severe. And yet, little is being done to combat it.

The pall of smoke that hangs over Delhi is not just a contributor to India’s looming public health crisis, it is in some important ways a metaphor for it: clearly visible to everyone, it affects rich and poor alike, and it should be a major priority. But tragically little action is being taken to address the problem – and even what is being done might well be going in the wrong direction.

First, the facts. India at Independence inherited the state structure of the British Raj, one that was outright callous about basic welfare provision for its people. As the government’s own Economic Survey for 2017 points out, ‘Public spending on health was an unusually low 0.22% of the GDP in 1950-51… This has risen to a little over 1% today, but well below the world average of 5.99%.’ In other words, over 70-plus years the Republic of India has increased its outlay on health just five times; when economic growth is taken into account, public spending on health is still just one-sixth of the world average. This is clearly a particularly poor record.

As a consequence, the slack is being taken up by private citizens. India has one of the highest proportions of out-of-pocket spending on health in the world. The National Health Accounts from the Union health ministry estimate that in 2015-16 (the latest year for which data are available) out-of-pocket spending – what individuals pay themselves, without recourse to insurance or to the government – is 62.6% of health spending in India (42% of that is spent on medicines alone). This is a frighteningly high percentage, especially in a country as poor as India, and with so many people perched precariously just over the poverty line.

Indeed, the World Bank and the World Health Organization have examined the effect of health spending – particularly ‘catastrophic’ health spending, presumably as a result of an accident or a sudden illness. Catastrophic spending is defined at two levels: exceeding 10%, and exceeding 25% of a household’s total income or consumption. The former is a danger to prosperity; the latter is the kind of spending that will certainly push lower middle class families below the poverty line. The World Bank and the WHO have estimated that in India one-sixth of households endure catastrophic health spending at the 10% level, and almost 4% of households have to deal with catastrophic health spending at the 25% level. This would mean, in effect, that about 50 million people are being impoverished – in the sense of dropping below the poverty line – due to health spending every year. The comparable proportion of households in danger for, say, South Africa is 0.1%. But then South Africa spends 8.7% of its GDP on health.

It should be clear, therefore, that poor healthcare is not just a moral but an economic crisis. It is sapping Indians’ resources, preventing them from saving and investing, and keeping them in poverty. Reducing catastrophic expenditure on health must be a major economic priority; yet there is no sign of it being one.

So what has gone wrong with India’s current approach to healthcare? How have these errors been allowed to persist for so long? What changes can be expected to be made in coming years? Will these changes be the right ones? If not, what are the right ones?

 

India’s founding generation made the decision, through its distribution of powers in the Constitution, to leave public health to the states. This was, presumably, because it was felt that the administration of public health requires accountability that can best be provided at the state level. With the benefit of hindsight we can perhaps admit that this has not turned out too well. Like many other powers devolved to the states, the level of accountability has not been as envisaged by the framers of our Constitution. Indian states are large and unwieldy, and the third or local tier of government, which could be genuinely accountable, has been starved of resources and power. This is particularly harmful when it comes to health and education. The powerful lobbies at work in these sectors have proven themselves eminently able to twist policy in state capitals.

Nor has the fact that powers are at the state level helped our progress towards universal healthcare. It is not difficult to imagine a counterfactual in which, had health been a central subject, it would long ago have been reformed and brought under a national administrative umbrella, as indeed has happened in many other countries that espouse social democratic ideals. In India, the interventions from the Centre have taken the form of handouts of cash to the states that New Delhi attempts to tie to various outcomes or programmes. This has not always worked to expectation.

 

Consider, for example, one of the flagship central interventions of the past decades – the National Rural Health Mission or NRHM. The money allotted to the NRHM by the central government was increased three-fold between 2006 and 2011 (to over Rs 30,000 crore) as part of the United Progressive Alliance’s spending on the social sector. This led to more outlays on the part of the states, who were the eventual beneficiaries of that increased spending.

This did indeed lead to major progress towards important goals – such as the attempt to ensure that Primary Health Centres (PHCs), the major contact point between the individual and the public health system, be kept open around the clock, seven days a week. At the time of NRHM’s initiation, only 2,243 of 30,431 PHCs nationwide – in other words, around 7% – were open 24/7. In the years of high spending on NRHM, that number jumped more than sixfold, to 14,676.

Yet this did not mean, necessarily, that patients were being better served. Writing in Mint in 2012, Yamini Aiyar of the Accountability Initiative pointed out that effectiveness and accountability remained the Achilles heel of a PHC focused policy: ‘The last national study on doctor absenteeism in 2006 placed attendance at 60%. A more recent 2009 NRHM evaluation by the Planning Commission focusing on four states found that attendance had actually declined. On a random visit to Rajasthan, only 36% and 31% of medical officers were present in PHCs and CHCs [community health centres], respectively.’

 

Such problems of implementation within the public health sector in general contrast sharply with some major successes in recent years. The sharp decline in polio cases to zero, for example, is entirely due to focused government policy and to sharp and responsive administration. Major gains have also been made – in collaboration with the private sector and with non-governmental organizations both Indian and foreign – in controlling the spread of HIV. What accounts for the difference? How is it that, in some cases, the Indian state appears to be so effective when it comes to health, and in other cases so ineffectual and incompetent, not to mention corrupt?

This is, in my opinion, just another example of what could be called the ‘mission mode’ syndrome, or perhaps the ‘Kumbh Mela exception’. It is often remarked upon that the mini-city of tents and supportive infrastructure that is created by the government for the Kumbh Mela is carefully and sensibly designed and run. In fact, the scale of that achievement is so great that it is often seen as puzzling that our urban planning and governance overall is so poor. This is not a paradox. It is a reflection of scarce administrative capacity. Because of the shortage of administrative capacity – not to mention competence and energy – at the middle management level of government, those goals that are set under ‘mission mode’ essentially cannibalize resources and individuals from the broader system. The polio mission did very well because it was a major political focus, was a narrow goal, and attracted the best talent within the government system; therefore, not a process that can be repeated for the healthcare system in general. Clearly some method of providing state support to healthcare that does not involve further stretching the existing state machinery is in order.

 

On a broader scale, it is worth noting that the NRHM and associated spending did work better to scale up public healthcare in those states that already had the more effective existing healthcare systems. In other words, Tamil Nadu may have benefited somewhat, but Uttar Pradesh benefited much less. The government in New Delhi struggled to balance the need to support the less developed states against a desire to reward performance. In the end, it turned out that central budgetary support to healthcare actually grew faster in the richer states than in the poorer ones. This perverse outcome of central policy making led to entrenched poor health indicators in many parts of North and East India in particular.

Meanwhile, politically, the problematic location of health rule making in state capitals, combined with health policy being sent down from New Delhi by fiat through programmes like the NRHM, has meant that attempting to fix accountability for poor health outcomes has not become a major part of Indian politics. Simply put, the average voter does not know which politician to hold accountable. Their MP? Their chief minister? Their MLA? The prime minister? It appears, justifiably, to most voters that the decisions that affect ‘life and death’ are made instead by unelected bureaucrats or by medical administrators. Only when there appears to be a major medical disaster, such as the tragic occurrences in Gorakhpur in 2017, does healthcare become a matter for political disputation. And even then it is hard for voters to ascribe political responsibility.

The fact that there is no pressure to assign political responsibility, together with the constitutional barriers on national coordination over health, means that there is neither an outstanding political demand for, nor an easily discernible path towards, a national health system of the sort that exists in Great Britain or Canada. The legal changes required for such a national system are in fact unclear, and as the long drawn-out process of reaching consensus on the Goods and Services Tax regime shows, it is a politically daunting task as well.

 

Yet, it is clear that some path forward towards a better organized healthcare system with deeper and more effective public provisioning must be found. Spending on healthcare cannot be the province of individuals; nor can the provision of healthcare be left entirely to the private sector.

However, a combination of the inability of the state machinery to provide accountability, the political barriers to a nationwide policy, and the scarcity of administrative resources has meant that methods that essentially rely on private provision are being prioritized. A clear and present danger is that India will sleepwalk into a system not unlike that in the United States. The suboptimality of that system is obvious to most of the world. The US spends much more money and far more resources on healthcare as a proportion of its gross domestic product than its peer countries such as the United Kingdom. One-fifth of national income is spent on health in the US, as compared to one-tenth in Britain. However, spending twice the resources does not mean that the outcomes are any better. In fact, they are worse. British life expectancy is higher than all but the best and richest few states in America.

 

This detachment between cost and outcome is a direct artefact of the largely privately run American healthcare system, as compared to the single-payer taxpayer-funded system in Great Britain. It turns out that healthcare is one of those sectors where market economy outcomes are simply not optimal. This should not come as a great surprise; few of the assumptions that economists make about markets are satisfied by the healthcare market. In particular, there are vast asymmetries of information. For one, healthcare providers are more unable than equivalents in other sectors to pinpoint how costs will develop in the future. For another, healthcare regulators typically fail to have information as to whether decisions made by private healthcare providers were in fact justified. More importantly, on a micro-economic level, patients do not know enough about their own condition in order to properly judge the level and cost of treatment that is appropriate. There is a tendency thus in a private system to both overspend and over treat.

This is visible in the differences between American and British outcomes. American healthcare not only costs more, it also provides a great deal of excess treatment at that higher price. The data when compared to other members of the OECD grouping of countries is instructive. It turns out that, in the US, almost three times as many MRIs and mammograms are prescribed for patients as in other OECD countries. There are not just far more elective surgeries in the US but even more procedures such as Caesarian sections – even though maternal and infant health indicators are comparable or better in the rest of the OECD. There is also a tendency to go for hospitalization instead of outpatient care. There are far more hospital days and even doctors’ visits in the US than in its OECD peers. In fact, even the National Health Service website that provides advice to patients would make startling reading for an American – given that it lists those complaints for which it is unnecessary to come to a doctor or to take any prescription medication.

 

Yet India is close to developing precisely the system that is working so poorly in America. The outlines of such a system would be as follows: private provision of care, particularly tertiary healthcare, supported by a bare-bones public healthcare system and emergency services. The access to care is then made ‘universal’ through the provision of cheap insurance – the insurance being rendered cheap enough to be affordable through a combination of regulatory steps and subsidies. This system was in any case falling into place through a combination of arbitrary and ad hoc measures over time. However, recent developments in the policy making sections of the government such as the NITI Aayog suggest that aspects of this system may even be consciously put in place, perhaps prior to the 2019 general elections.

For a country that does not believe that public provision can be scaled up, or even be marginally competent, private provision is tremendously tempting. Further, for a government that has many other calls on its purse, not having to make a major upfront investment in public healthcare is a relief. Clever insurance subsidies will look like being much easier on the fisc – though, of course, they will prove to be much more expensive in the long run. This is because such systems that combine public payment with private provision have an inbuilt tendency towards cost escalation. The healthcare provider can overcharge a confused and worried patient; the provider can overcharge the insurance company, which has insufficient incentives to hold down costs since it can overcharge the government in turn.

 

It is probably just icing on the cake that any such system will of course massively benefit private hospitals and medical schools, many of which are run by politicians or members of politically connected families. This sector is already growing at 15% a year – it’s perhaps the best performing sector in the country.

The theoretical outlines of the best-practices system are clear. As argued by Archana Srivatsan and Nachiket Mor, it should have essentially three main pillars. First, costs should be paid for beforehand, and all the payments collected into one single pool. These costs should come either from taxation or mandatory health insurance for those above a certain income level. Second, these pools of money must then be turned over to be managed by a single agency, such as the National Health Service in England or the National Health Security Office in Thailand, which will then commission other bodies such as the NHS Trusts in England to actually provide the health services. Finally, the entire health system and not just the public health system will have to be closely supervised and monitored by an independent state agency.

Such a system is clearly very different from the one towards which India is moving. Yet, the shift to private provision and public liability is not yet inevitable. The health ministry had in 2015 prepared a National Health Policy, which it released for discussion. The health advisor to the NITI Aayog wrote in reply a widely circulated letter that gives a sense of where the government thinking on this subject is:

‘The National Health Policy aspires to create a health-guaranteeing Assured Comprehensive Care, Free Drugs, Diagnostic, Emergency and Patient Transport Services to all in public health facilities. This does not seem to be a reasonable supposition, given the budgetary and manpower constraints faced by the government system. Predicating our strategy on such an assumption – when government is consistently struggling to provide even 1% GDP to this structure in view of so many demands on the tax revenue – is an astounding leap of faith...’

 

This decision is one that India is likely to make in the next few years. It is vital that it gets it right. When Thailand was at a similar level of income to what India is now, in the early 2000s, it chose to roll-out genuine, publicly provided, universal healthcare. This roll-out was not without its glitches, but by and large these were sorted out within a few years. Thailand now spends 4.4% of its GDP on healthcare, having successfully controlled costs. (India spends 4.1% of its GDP on healthcare when private spending is included.) It also has best-in-class health outcomes. India might want to choose to live with its current chaotic healthcare system. But, just as Delhi cannot in the end live with bad air, India too will have to reform its healthcare – or die.