Given how private medical care, whether in hospitals or for outpatients, typically costs around double that of public medical care, the obvious solution is more public healthcare as the cure for India’s dismal record. While the draft 12th Five Year Plan reaffirms the universal healthcare commitment, India fails to live up to this promise by a huge margin—both life expectancy and infant mortality rates, at 65 years and 39 per ’000, are below the world average of 69 and 49 years, respectively. Even on infrastructure, we lag behind, with our bed density, at 1.30 per ’000, being severely behind the world average of 2.6 or the WHO-recommended 3.6. But given the public sector added hospital beds at a rate of just 3-4% per year between 2002 and 2010 versus the private sector’s 7-10%, this appears little more than a utopian solution.
A McKinsey study analyses the progress of countries like Brazil, Thailand and South Korea who had health parameters as bad as India’s a few decades ago but are dramatically better today. What worked there? By and large, these countries dispensed with the state’s role as a provider during the 1970s and, instead, incentivised the private sector to step up provision, while heavily assisting low-income groups through social insurance and other subsidies. A study by some World Bank economists for rural Madhya Pradesh and urban Delhi showed dramatically higher quality health coverage by the private sector.
While this may solve the problem of availability, the question of affordability is quite another. There is little doubt excessive reliance on insurance-based models jack up costs—we’ve seen several examples of this in the government’s RSBY programme—and more so if solutions to better health lie in better primary care, where the private sector hardly ventures. But even if the government was to go by the McKinsey solution as opposed to the Srinath Reddy one of greater government-funded primary healthcare, what’s required is a totally different type of government. Government-funded and privately-provided models are being tried in highways and also in schooling, so there’s no reason why they shouldn’t be tried in healthcare. But this needs tight contracting of the sort we’re just about beginning to see in India—in the past, hospitals have got free land in return for a promise to treat the poor free, but this has been honoured more in the breach. That’s a prescription for disaster.