HEALTH CARE SECTOR IN INDIA

The constitution of world health organization (1948) defined health as more than freedom from disease to include complete physical, mental and social well-being. Disease and poor health status reduces human productive capacity (efficiency to earn) & (efficiency to work). Hence poor health status among people becomes a major cause of poverty and low standard of living. Diseases make a rich poor and a poor still poorer. In economic literature, the standard model for the demand for health and health care is the Grossman model (Grossman, 1972). In this model, health is considered as a capital stock which may be increased due to investment in health (buying health services or spending time on healthy activities); while it will be depreciated due to, e.g., age. There are two reasons why individuals demand health, according to the model. First, health is a consumption commodity in the way that it directly enters the individual preference or utility function. Good health implies higher utility than bad health for a certain consumption level. For instance, a depressed person will not gain as much utility from a good meal as he would if he was not depressed. The second reason to demand health is based on health as an investment commodity. Health determines the total amount of time available for market and non-market activities, e.g., the ability to earn money. Bad health gives more sick days than good health, days that cannot be used to the mentioned activities. Thus, better health increases the available time, which can be measured in a monetary value. This may be thought of as a return to investment in health. In addition to the two mentioned reasons to have a good health, the stock of health is also essential to determine the length of life. When the stock reduces to a certain level, the minimum health level, life terminates. (Verndokk-2000). Health is like a stock of capital which yields better quality of life, productivity to earn income and is a good source of a happy and contended life. Healthy workers have more strength and endurance on the job and a longer working life. In addition to being more productive, they take fewer days off due to illness, and the economic savings can be substantial. Improved health increases the returns to education. The links between schooling and income are well established. In Asia and the Pacific, primary education yields a private rate of return of 39 percent.(ADB-1999) Healthy children are better able to learn and take advantage of the investments made in their education. Improved health conditions increase the returns to other factors of production. Good health conditions allow populations to take full advantage of other factors of production such as natural resources Preventing disease frees up financial resources. For many illnesses, especially those that are expensive to treat, disease prevention offers a means of reducing the costs of curative care. (ADB-1999) Investments in health are fundamental to enhancing human well-being and advancing economic and social development.

Just as public investments in other sectors of the economy, government intervention in health sector must be encouraged. There are a number of good reasons for public intervention in the health sector, including (i) many health interventions, such as immunization or TB control, display substantial positive externalities or are public goods; (ii) due to the technical nature of the health sector, there are major problems associated with imperfect information; (iii) the existence of large uncertainties and catastrophic illnesses impels governments to ensure that there is risk pooling; (iv) there are serious insurance market failures associated with adverse selection by patients, “cream skimming” by insurers and the creation of moral hazards; (v) there are economies of scale, for example in the purchase of vaccines and essential drugs; and (vi) equity considerations Improvements in health provide substantial economic payoffs.(Vii) poverty reduction provides another strong rationale for investments in health. The economic gains to the poor from improved health are greater than for their wealthier compatriots, since they bear a disproportionate burden of disease. Moreover, the income of the poor typically depends on physical labor, and thus illness robs them of a greater portion of their income. Since the poor usually do not have much savings, they find it difficult to recover from ill health without depleting their human and physical capital. Investing in the health of the poor increases their productivity and educability; assets they need to lift themselves from poverty. (viii) Women have special health needs throughout their lives and improving their health can make a significant contribution to their well-being and that of their families. Strengthening health services targeted at women and children will help correct gender-based inequities, reduce the constraints on the time of women, and improve their overall status.(ix) Improvements in health allow children to reap greater benefits from schooling by increasing their attendance and ability to learn, and by increasing the Private participation of girls.(ADB-1999).

Private players in health sector have also emerging roles to play as public sector provisions in under developed and developing countries become inadequate in this sector. Public-Private partnerships in the health sector are also being increasingly encouraged. The need of it is supported by a clear understanding of the public sectors inability to provide public goods entirely on their own, in an efficient, effective and equitable manner because lack of resources and management issues.(Oxford University Press-1996). The collaboration with NGOs ensures promotion of people oriented policies of the Government .

During the past half century, India has made substantial improvements in health outcomes (Ramana, Sastry and Peters 2002).Yet health conditions for India’s billion people are still comparable to those in other low- income countries. India’s infant mortality rate, for instance, is 68 deaths per 1,000 live births, compared with 76 for the low income groups (World Bank 2002).The health sector in India is characterized by:

* a government sector that provides publicly financed and managed curative and preventive health services from primary to tertiary level, throughout the country and free of cost to the consumer (these account for about 18% of the overall health spending and 0.9% of the GDP), and

* a fee-levying private sector that plays a dominant role in the provision of individual curative care through ambulatory services and accounts for about 82% of the overall health expenditure and 4.2% of the GDP. Nationwide health care utilization rates show that private health services are directed mainly at providing primary health care and financed from private resources, which could place a disproportionate burden on the poor. (WHO-2004)

India has a vast health care system, costing an estimated Rs.108,732crore in 2002 (US $24 billion), representing 4.8% of India’s gross domestic product (GDP), translating to $23 per capita total health care expenditure.(Govt of India 2005) Broadly, health care in India is made up of services provided by two sectors: public and private. Additionally, an important feature of the Indian public and private health care system is that it has perhaps the world’s largest community-based tradition of indigenous systems of medicine, which include Ayurveda, yoga/naturopathy, Unani, Siddha and homeopathy (AYUSH). The public sector accounts for approximately 20-25% of the total health care expenditure, which represents only 1% of GDP and puts India’s public health care expenditure among the bottom 20% of countries.(World bank-2002,GOI-2005) public sector is financed through general tax and non-tax revenues from both internal and external agencies. The private sector, in comparison, accounts for 70-80% of health care expenditure, one of the highest proportions of private health care spending in the world. (World bank-2002, GOI-2005) This sector has grown astronomically in the past 15 years, making India one of the largest private health care sectors in the world. The burden of financing the private sector, however, comes almost exclusively from out-of-pocket household spending. The private health care sector in India is highly diverse, ranging from voluntary, not-for-profit, for-profit, corporate, trusts, stand-alone specialist services, diagnostic laboratories, pharmacy shops, and unqualified providers.(Mahal et al-2002) Data from the National Sample Survey, a nationally representative sample of 121,000 households in 1995-96, found that the public sector largely serves the poor with one exception: the outpatient services. Approximately 80% of all outpatient visits (hospital and non-hospital based) take place in the private sector. This finding is similar by income group, urban and rural populations, by gender, by caste and tribe affiliation, and above and below the poverty line. (Mahal et all-2002) Hospitalizations and institutional deliveries (births) are shared almost equally between the public and private sectors. Preventive services such as antenatal care and immunizations, however, are predominantly given in the public sector (60% of antenatal visits, 90% of immunizations). Therefore, the main thrust of the private health sector is the provision of curative services, particularly in the outpatient arena.

The World Bank’s assessment of the Indian public health care sector is that it is under-funded and not large enough to meet the current health needs of the country. (WB-2001) It is also criticized for being overly-centralized, bureaucratic, inflexible, and poorly managed. The private health care sector also has many shortcomings. It is largely unregulated with little control as to what kinds of services can be provided by whom, in what manner, and at what cost.(GOI-2005.Bal A.M-2005) Since the health care infrastructure in India is vast and complex, and no one sector is meeting all of the population’s health care needs, public-private partnerships are necessary. WHO has formally encouraged strategies that involve a public/private mix as a way of improving health, particularly in resource-limited settings. India has had several examples of public-private health care partnerships, some of which have been successful. For example, in the case of leprosy control, an organized strategy of information, education and communication (IEC) between public and private providers has greatly improved referrals of patients for leprosy treatment.(GOI-2005).

Some Ongoing PPP Initiatives in India:

Contractual appointment of health care personnel and hiring of Private practitioners for providing services in the CHCs/PHCs have been attempted to fill the gaps in underserved areas in most states.

Handing over the management of Public sector health facilities to the private sector, NGOs preferably to corporate sector. (Orissa, Gujarat etc)

Private Sector / Industry providing health care to the tribal population (by Tata Steel etc)

Contracting of services in the area of diet and catering, laundry security and IEC programmes is being implemented in many States (e.g. Maharatra, West Bengal, Orissa.)

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