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