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Life expectancy in India has more than doubled since independence, to 65
years, from just 32 in 1950. The infant mortality rate has been cut by two-
thirds since 1971. Smallpox and guinea worm have been eradicated, the
spread of HIV/AIDS has been contained, and the World Health Organization
has declared India polio-free.
Yet for all of that, Indias healthcare system in many respects is on life
support. The country trails behind sub-Saharan Africa, Bangladesh and
Nepal on numerous health fronts, despite higher per-capita income and two
decades of spectacular economic growth. Inequities in the availability and
outcome of care abound, determined in large part by gender, socioeconomic
status and geographical location. And most Indians seeking care are
confronted by two unpalatable choicesa public health system that is
almost entirely free but of poor quality if it is accessible, and a largely
unregulated private-sector system that provides world-class service to some
but too often charges ruinous prices, dispenses inappropriate or
unnecessary care, and is riddled with practitioners with little or no formal
The costs of these failings fall disproportionately on the poor, especially
women and children, but are borne by all. High rates of infectious diseases
compete with a large and growing burden of chronic illness. Cardiovascular
disease has become a major cause of morbidity and mortality, more than a
Fixing Indias healthcare system
Strong political commitment is needed to build a system of universal health coverage and better
A. K. Shiva Kumar
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million deaths a year are attributed to smoking, and nearly 65 million Indians
are known to have diabetes. Mental illness and occupational health and
safety suffer from neglect.
With India at a crossroads, with a new government expected soon, the time
is ripe to put healthcare reform at centrestage, with the goal of pressing the
next central government to achieve meaningful universal health coverage.
Four key steps are necessary to reach that goal.
First, the government must embrace the idea of tax-funded universal
coverage, as opposed to contributory or subsidized private insurance
schemes. Second, it must incentivize preventive care by setting up more
robust primary-care facilities, especially in underserved rural areas. Third, it
must pursue substantive public-private partnerships with trustworthy private
actors; this step should be supported by a stronger regulatory framework
from the central government. Fourth, it must encourage state governments to
function as laboratories to produce better outcomes.
To take these steps, India will have to double its funding for public health
programmes to at least 2.5% of gross domestic product (GDP). Financed by
general taxation, the additional resources should be used to strengthen the
delivery of primary healthcare, improve the quality of services, and promote
more equitable access, especially for poor and marginalized communities.
Ailing status quo
At the heart of Indias health care shortcomings is money. The Constitution
makes the states responsible for the provision and delivery of health
services, with the cost shared by the states and the central government (the
central government contributes 36%). But with few exceptions, neither level
of government has assigned a high priority to spending in this area.
In per capita terms adjusted for purchasing power, Indias public expenditure
on health is $43 a year, compared with $85 in Sri Lanka, $240 in China, and
$265 in Thailand. In terms of GDP, India spends only 1.2%, a rate that hasnt
budged in more than a decade and is one of the lowest in the world. The
comparable rates are 1.5% in Sri Lanka, 2.7% in China, and 3% in Thailand.
Indias low spending has put the financial burden on individuals. Out-of-
pocket spending69% of total health expenditureis among the highest in
the world and much more than in Thailand (25%), China (44%), and Sri
Lanka (55%). Millions are driven into poverty every year by large medical
Almost every country that has achieved universal health coverage or is
working towards it has done so through the public assurance of
comprehensive quality primary care for all. But though treatment in public
facilities in India is nearly free (except for a small user fee), it is often not
available or is of poor quality. Only 22% of the population in rural areas and
19% in urban areas use government facilities for out-patient care. Even for
in-patient care, only around 42% in the villages and 38% in the cities utilize
government facilities.
The facilities tend to be understaffed, underfunded and terribly managed.
The better ones tend to be overcrowded. A severe shortage of doctors,
nurses and midwives is made that much worse by big geographical gaps in
availability. Rural areas are especially poorly served. Complaints are
common about distant locations, inconvenient hours, high staff absenteeism
and the insensitivity of many health workers.
The governments failure to deliver quality care has led to a rapid expansion
of the private sector, which today accounts for 93% of all hospitals (up from
8/13/2014 Fixing Indias healthcare system - Livemint 3/5
8% in 1947), 64% of all beds, and 80% to 85% of all doctors.
But that sector has major systemic shortcomings as well. For starters, it is
unevenly distributed, highly fragmented, and mostly unregulated. It also
fluctuates wildly in quality. At one end are quacks, practitioners with little
medical knowledge or formal training. At the other end are world-class
hospitals that cater to both Indians and foreigners who can afford to pay for
often expensive care. In between are small private clinics and other
hospitals, which can be for-profit or not-for-profit.
Informational asymmetry (allowing the profit-oriented doctor to cheat the
patient by prescribing unnecessary medicines or unwanted treatment)
renders private markets in healthcare grossly inefficient. While some private
providers offer good quality services at affordable prices, costs in general
tend to be unreasonably high. A majority of Indians, especially in rural areas,
are at the mercy of self-declared doctors who have not completed their
schooling and have picked up their skills by working as assistants to
pharmacists or real doctors.
Even within the formal private sector, overdiagnosis and overtreatment are
common, as is faulty treatment. Many private practitioners sell substandard
and counterfeit medicines, prescribe unnecessary drugs and tests, receive
commissions for referrals, order unnecessary hospital admissions and
manipulate the length of stays.
Towards universal coverage
The central government, and some state governments, have taken a number
of steps over the past decade to improve the situation, but much more needs
to be done.
First, the central government and the states, as well as the influential middle
class, should fully embrace the concept of universal health coverage. The
principal approach of the government so far has been to provideas far as
possible, however limited it may beuniversal access to free primary care;
to rely on insurance mechanisms to offer cashless secondary and tertiary
care to the poor and to a small set of privileged government employees; and
to leave the rest of the population to buy healthcare in the private market.
This approach has perpetuated a fragmented, inefficient, iniquitous and
expensive system of care.
Policymakers have to recognize that neither private healthcare, even if
properly subsidized, nor commercial health insurance subsidized by the
state can meet the challenge of universal coverage. The interests of
providers, consumers, and insurance companies are simply not aligned to
maximize returns to consumers. Serious incentive-incompatibility problems
arise when insurance companies deny use, medical practitioners induce
demand or encourage overuse, and patients themselves misuse services
(commonly referred to as the moral hazard problem).
Available evidence from across the world points out that insurance schemes
incentivize tertiary care and neglect primary and preventive care, especially
when they cover only hospitalization costs. As a result, it is also not clear
whether improved health can be counted as one of the real benefits of
commercial insurance. High administrative costs tend to reduce considerably
the amount that can be devoted to health care per se out of the premiums
paid. There is also overwhelming evidence to suggest that commercial
insurance suffers from a lack of oversight to check medical malpractice.
For all of those reasons, a true system of universal coverage is needed and
it ought to be primarily funded through taxes. Much more public discussion
on specifics is required to build a national consensus to push this through.
8/13/2014 Fixing Indias healthcare system - Livemint 4/5
The second step that must now be taken is for both the central and state
governments to give top priority to ensuring the basics of government-
provided primary care. These services, such as universal immunization, can
greatly reduce morbidity, lower the costs of curative care, and reduce the
need for tertiary care.
Third, recognizing the fiscal constraints that governments face, the central
government and the states need to find new ways to engage the private
sector, especially with regard to tertiary care. At the same time, the central
government must put in place a regulatory and development framework for
improving the quality, performance, equity, efficiency and accountability of
healthcare delivery across the country.
Finally, the central and state governments must spend more on health, with
a significant portion earmarked for primary care. Flexible new mechanisms
for transferring funding from the central government to the states are
needed. With the additional money, the states should customize strategies to
meet the health needs of different groups and communities. They should
also draw up blueprints for universal coverage and begin experimenting with
pilot programmes. Learning by doing is the only way forward.
In the ultimate analysis, strong political commitment and effective
stewardship are desperately needed to help India rise from its sick bed.
A. K. Shiva Kumar is a member of Indias National Advisory Council.
This is adapted from a chapter in the upcoming book Getting India Back on
Track edited by Bibek Debroy, Ashley J. Tellis and Reece Trevor. It will be
published in June by the Carnegie Endowment for International Peace and
Random House India.
Comments are welcome at
Follow Mint Opinion on Twitter at


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First Published: Tue, May 13 2014. 06 51 PM IST
4 Comments Livemint Login
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Kirti Saluja a day ago
Hmmm agreed on what you have mentioned in your article fixing health care system

Aveek Jayant 3 months ago
I work for the public health system and this is topical as a new government takes charge.
Much of what the author says has empirical evidence from across the globe backing it-
how universal quality healthcare is the way to go.Yes, this needs money but even as the
government makes provision for this (if at all, given the widespread perception that fiscal
expansion on the social front is likely not going to happen)what is also needed is
accountability from the medical bureaucracy that manages this system- large institutions
which are better funded than others, especially can be made to embark on a course which
demands of them clear patient care standards which, like any public system must be
audited on a large, transparent and ruthless scale. That will have small but measurable
impact at the tertiary level. The buck in these institutions must be made to stop
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Raghuram Rajan and Indias cursed
2 comments 4 hours ago
Madan Raghuram Rajan was not the RBI
governor when rupee depreciated sharply
last year or when inflation
Narendra Modi slams Pakistan for proxy
war against India
2 comments a day ago
hh He is saying the same thing all
previous governments have said. Where is
Modi's election bravado where he
A hunt for PPF that leads to toxic sales
7 comments 20 hours ago
Ankit Bank 1 was ICICI bank, without a
Low attendance at Lalu-Nitish rally due to
poor management: JD (U)
8 comments 20 hours ago
Anuj Gupta "Poor management". If they
can't even manage a rally, wonder how they
plan to manage a state. Jokers united.
somewhere-medical staff are lazy, nursing staff are on a paid holiday and administrative
staff have no urgency that a hospital system demands. We need to badly get stop the
Alice in Wonderland reverie that they are perpetually in!

Bharati 3 months ago
"In the ultimate analysis, strong political commitment and effective stewardship are
desperately needed to help India rise from its sick bed."
As provided over the years by the NAC, of which the author is a member?

NARENDRA M APTE 3 months ago
is a very good article. The poor want good centres of primary healthcare.
However, affordable and efficiently managed healthcare system for the poor has
become a rarity in both urban as also rural areas. Why is this so? It is not just
a fund crunch. I believe that one major reason for our poor public healthcare
system is a huge leakage of funds meant for primary health care centres. There
is wastage of fund and poor revenue mobilization. To top it all there is no
political and administrative will to improve the system.

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