India Health Report 2010

India Health Report 2010

Editors

Ajay MahalBibek Debroy

Laveesh Bhandari

AN IMPRINT OF BUSINESS STANDARD LIMITED

Copyright © 2010 Indicus Analytics. All rights reserved.

The views and opinions expressed in this volume are those of the authors and do not necessarily reflect the views and opinions held by the publisher or Business Standard Limited.

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First published in 2010 by T N Ninan forBusiness Standard Books, the book publishing imprint ofBusiness Standard Limited.

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ISBN: 978-93-80740-00-3

CONTENTS

Executive Summary vii

Chapter 1 1The Case for Improving Health in IndiaAjay Mahal and Victoria Fan

Chapter 2 21Access to HealthcareLaveesh Bhandari and Aali Sinha

Chapter 3 35Emerging Issues in HealthSumita Kale

Chapter 4 51Inputs for HealthLaveesh Bhandari and Ankur Gupta

Chapter 5 73Ethics and Side PaymentsSumita Kale and Laveesh Bhandari

Chapter 6 83Access to Medicines in India: Issues, Challenges and Policy OptionsSakthivel Selvaraj and Veena Nabar

Chapter 7 97The Evolving Role of the Government: Regulations and ProgrammesDevendra B Gupta and Laveesh Bhandari

Chapter 8 109Health Financing in IndiaAjay Mahal

Chapter 9 127Health Reform: A Historical Perspective and the FutureBibek Debroy and Ajay Mahal

About the Authors 137

Executive Summary

of addressing the constraining issues through effective systemic changes.

In Chapter 3, Sumita Kale studies the new issues in disease management in India today, many of which are linked to growing prosperity in the country. One set of issues she examines is the rising incidence of diseases like ischemic heart, diabetes, cancer, HIV/AIDs, where health education and regular screening can play a significant pre-ventive role. She also highlights the need to match society’s rising affluence with an environment where mental and physical disorders and disabilities are included in the main-stream discussion on health management.

In Chapter 4, Laveesh Bhandari and Ankur Gupta discuss the status of the four major inputs fundamental to a good health profile in India: well-trained, adequate and well-motivated healthcare providers; a well spread and acces sible healthcare infrastructure; a good water supply and sanitation system which also facilitates hygienic prac-tises; and a population that is well supplied nutritionally and practises a hygienic lifestyle. Bhandari and Gupta highlight a single key problem underlying all these inputs: the lack of a public health focus. Seeing the multiplicity of government units involved in the various aspects of health administration, they recommend a centralised authority that is able to synchronise and coordinate various policy measures in line with the received evidence on improving health outcomes.

Medical ethics encompasses a vast range of issues and, in Chapter 5, Sumita Kale and Laveesh Bhandari focus on one: the growing distrust of the medical profession in India. This, they argue, has come about in response to the unethical commercial links between healthcare pro-viders and drug/device manufacturing companies and suppliers. They explain the market failure resulting from information asymmetry when healthcare providers, driven by commercial considerations, provide biased information to patients. Given that the vast majority of the patients are uneducated and uninformed, thus unable to understand the implications of the treatment or to seek redressal, the issue of conflict of interest becomes even greater in India. Kale and Bhandari call for stricter action from the government and regulatory agencies to safeguard patient interest and

This report provides a broad direction for India’s health sector in the coming years. In doing so, it describes India’s achievements with regard to the three key goals of health policy—improved health status, financial risk protection, and equity. It does so by identifying some of the factors—and the state of policy instruments—that have facilitated these achievements in the areas of access, quality and efficiency. Hence, it looks at public health interventions, regulation, financing, and the organisation of healthcare. The role of both public and private institutions in the pro-vision of such services is studied in this overall context. The focus, therefore, is to analyse the status of health in India, and this is done by bringing together data and analyses from government documents, health economics and policy literature and a host of other sources.

Organised in nine chapters, the report begins by making a case for investing in health as a sound economic decision. Ajay Mahal and Victoria Fan (Chapter 1) emphasise that investing in health should be a priority, even when resources are otherwise limited, owing to the high returns from such investment. As such, they highlight the need to enhance protection against the financial risk inherent in an unhealthy population. They argue their case at four levels: (a) health is a major factor in influencing aggregate economic outcomes; (b) instances of ill health can expose entire households to financial risk and, in many cases, im poverishment; (c) health status itself is an indicator of human well-being; and (d) in a society undergoing great economic and social transition, such as India, improvements in health carry an added importance (and, correspondingly, constitute a greater challenge).

As the mere provision of health infrastructure does not necessarily ensure universal accessibility, in Chapter 2, Laveesh Bhandari and Aali Sinha examine the multiple facets governing the access to, and utilisation of, health-care services: awareness levels; locational or financial con-straints; efficiency of public and private healthcare providers; issues of quality and reliability of service and treatment; analysis of hospitalisation and out-of-pocket expenditure, etc. They conclude that despite heavy public intervention, the health burden carried by Indians con-tinues to be significant. They underline the importance

viii Executive Summary

change in approach at the institutional level, that health-care must become a priority, and that the mindset in health policy must move on from targets of infrastructure provision to improvements in health per se.

At the most basic level, the Indian health sector is char acterised by the lack of access to good quality health-care services for all, a result of a host of specific issues that are identified in the body of this report. These specific constraints can all be traced to problems of poor planning, low resource allocation, missing institutions, and inadequate implementation. In an attempt to address these specific constraints, India Health Report 2010 identifies some of the changes required at the central, state and local government levels—in policy and regulation, in imple-mentation and planning, and in education and advocacy. More importantly, it identifies the one factor that lies behind each of these bottlenecks: the lack of focus on health. Lack of focus shows up in many different ways—inadequate resource allocation, institutional and regulatory gaps, laxity in implementation of government programmes, etc. The one and the most important change that India needs is focused attention on the health sector.

Greater focus is not only about greater resource allo-cation, though that is important; nor is it about devising large-scale government programmes for healthcare delivery, though they form an important component of India’s large portfolio of welfare programmes. Focus requires adequately empowering the institutions that govern India’s healthcare sector and making them answerable for health outcomes. For instance, the Ministry of Health and Family Welfare needs to be strengthened in terms of both scale and scope; it also needs to be made more answerable for India’s poor health outcomes, and a strong public health focus needs to be put in place either within the ministry or with a new entity so empowered.

The innumerable problems that impact health out-comes in India need to be seen foremost in the context of mi ssing and/or weak institutional structures. It, therefore, becomes important to empower institutions that oversee India’s health sector and make them answerable.

restore the moral character of what is expected to be a noble profession.

In Chapter 6, Sakthivel Selvaraj and Veena Nabar take up issues involving the pharmaceutical industry. They document the inequitable access to medicines across regions and income classes, and highlight the need for efficient procurement systems for public healthcare facilities. They examine all aspects of the industry, ranging from market structure, pricing policies, and the role played by patents in stifling competition, and go on to link the impact of regu lation on these crucial issues. They recommend a good quality and sturdy regulatory mechanism that can take and implement decisions aimed at ensuring low cost availability of medicines in a sustainable manner.

In Chapter 7, Devendra B Gupta and Laveesh Bhandari study the government’s two-pronged approach to ensuring better health outcomes for all: regulation and government programmes aimed at delivering better healthcare to all. They review the evolution of the government’s role over time, focusing on central government policies. They also examine the status of regulations and regulatory mechan-isms in India today and call for a central entity that can provide the necessary leadership to create mechanisms that can adequately address issues of market failure in the health sector.

In Chapter 8, Ajay Mahal documents the inequity and inefficiency prevalent in healthcare financing. The chapter reviews the recent initiatives in health financing systems—various government schemes for financing public health expenditures and health insurance programmes in the private and public domain. More crucially, he provides an alternative methodology of conceptualising health finan-cing policy, one that corrects the current lacunae and flawed focus and works towards greater coverage rather than (cost) efficient access. This is critical to achieving a sustainable, equitable and efficient healthcare system in India.

In the concluding chapter, Bibek Debroy and Ajay Mahal tie up all the threads and examine the evolution of health care reform in the country, through policy changes, programmes and legislation. They point to the need for a

Acknowledgement: We would like to thank Ankur Gupta, Swati Gupta and Anirudh Swami of the research team at Indicus Analytics who provided us with key inputs and data support.

About the Authors

Devendra B Gupta is Senior Consultant at the National Council of Applied Economic Research, New Delhi and Visiting Professor, Institute for Human Development, New Delhi. He received his Ph D from the University of Birmingham and has been a development economist for more than 40 years. He has taught at a number of universities and institutions in India and abroad and has worked extensively with the World Bank, United Nations Children’s Fund, World Health Organization, Institute of Economic Growth, National Institute of Public Finance and Policy, etc.

Sumita Kale is Chief Economist with Indicus Analytics. She received her Ph D from the University of Pune and M Phil in the Economics of Developing Countries from the University of Cambridge. She has a number of publications to her credit and has been visiting faculty at the Department of Economics, University of Pune and at the National Insurance Academy, Pune.

Ajay Mahal is Associate Professor of International Health Economics at the Department of Global Health and Population, Harvard School of Public Health. His research uses economic analyses to influence public health policy in developing countries. He is especially interested in policy issues related to the HIV/AIDS epidemic, resource allocation in the health sector, ageing, human resources and decentralisation and empowerment.

Veena Nabar studied economics at the Universities of Bombay and Cambridge. After a short teaching stint at Cambridge, she worked on various agriculture-related projects at the Agricultural Economics Research Centre of the University of Delhi, before moving on to working with cooperatives under the Ministry of Agriculture. She has worked with community-based organisations, undertaken several research assignments on economic and social issues for the government and international organisations, and has many publications to her credit.

Laveesh Bhandari is the Founder Director of Indicus Analytics. He has led policy-oriented studies for nationally and internationally reputed organisations such as the Finance Commission, World Bank, United Nations Children’s Fund, Asian Development Bank and Food and Agriculture Organization. He has published extensively and is a columnist for newspapers and newsmagazines. His work on inequality, education and regional growth is frequently referred to in policy debates in India. He has received a number of awards, including the EXIM Bank Award for his work on international joint ventures and the Hite Fellowship for his work on international finance.

Bibek Debroy is Professor at the Centre for Policy Research, New Delhi and Contributing Editor with the Indian Express. He has worked in academic institutes, for the government and an industry chamber. He is the author of several books, papers and popular articles. His special interests are education, health, law, governance and trade.

Victoria Fan is a doctoral candidate in Health Systems at the Department of Global Health and Population, Harvard School of Public Health. Ms Fan received a bachelor’s degree in mechanical engineering with a minor in cultural anthropology from the Massachusetts Institute of Technology. Her research focuses on impact evaluations on health in India. She has worked with the World Health Organization, World Bank, United States Agency for International Development, Bangladesh Rural Advancement Committee, Self Employed Women’s Association, Harvard Global Equity Initiative and Harvard Initiative for Global Health.

Ankur Gupta received his BTech and MTech degrees in Biotechnology from the Indian Institute of Technology, Delhi. He is a Research Consultant at Indicus Analytics focusing on providing financial and technology leader-ship in education, healthcare and energy sector studies. In addition, he has conducted many studies on India’s economic geography.

138 About the Authors

Aali Sinha was awarded the M S A Rao Scholarship by the Delhi School of Economics, where she completed her post-graduation in sociology. She has worked extensively on reproductive child health, education of poor children, spending patterns in healthcare, and access to healthcare. Ms Sinha co-authored Social and Economic Profile of India, a book that is a ‘first resort’ reference on Indian socio-economic conditions.

Sakthivel Selvaraj is a Health Economist and faculty member at the Public Health Foundation of India. He is currently engaged in teaching and research in the area of healthcare financing, pharmaceutical economics and the economics of tobacco. He was a Takemi Fellow (Post-Doctoral Fellow at the Harvard School of Public Health, Boston) and a Fulbright Scholar during 2006–07. He was formerly engaged as a Health Economist in the National Commission on Macroeconomics and Health, Ministry of Health and Family Welfare, Government of India.