Public Health System in Shambles Due to Lack of Financing

By Ravi Duggal
Third World Network Features
April 2, 2003

While the Indian government has provided various incentives for the development of private healthcare services in the country, the public health sector has suffered from a lack of funding. The structural adjustment and economic reforms programme that began in 1992 caused a further shrinking of resource allocations for public health services, and the introduction of user fees struck the final blow for the poor, who represent the majority of users of public health facilities.

Historically, India has always had a very large private health sector, especially for mobile services which cover providers of modern medicine as well as traditional practitioners. Until the mid-1970s, hospital services operated predominantly in the public domain. Medical education was almost a public monopoly until the late 1980s, after which the private sector grew rapidly. However, even today 75% of medical graduates are from public medical schools.

Since the mid-1970s, however, the State has provided various incentives like concessional land and tax breaks for setting up private hospitals and tax exemptions for imports. The private pharmaceutical industry has also received substantial State patronage through patent laws, subsidised bulk drug purchases from public sector companies and protection from multinational corporations.

While the Indian State has been committed constitutionally to providing healthcare to its citizens via the Principles of State Policy directive, healthcare provision was not a fundamental right. Over the years, various healthcare entitlements were created like one primary health centre (PHC) per 30,000 population, one referral hospital per five PHCs and one civil hospital per district. But resources for healthcare have been very limited and hence public healthcare has remained largely underdeveloped.

In the 1990s, the public health sector was woefully neglected with new public investments virtually stopping. In addition, user charges and the contracting out of services were introduced. During the same period the private health sector, including the hospital sector, expanded rapidly.

In addition to the lack of funding of public health services, the structural adjustment and economic reforms programme that began in 1992 caused a further shrinking of resource allocations for public health services. The recovery has been marginal but the introduction of user fees struck the final blow for the poor, who still represent the vast majority of users of public health facilities.

Other evidence of the collapse of public health facilities is from the national survey of public health infrastructure, which reveals that in 1999-2000, critical public health facilities were grossly inadequate. The 2002 National Health Policy acknowledges this severe indictment and recommends that public health investment and expenditures need to be more than doubled in the next five years in order to provide a reasonable level of primary healthcare.

The above trend is a global phenomenon that is well documented in the 2003 Social Watch Report. This report focuses on the privatisation of basic social services and documents the shift from social contracts to private contracts for services like health, education and water.

The background papers of the 2004 World Development Report by the World Bank further debunk the government provision model for basic services in favour of private contracts, thereby encouraging this shift. The Social Watch Report declares access to basic services as a human right and advocates maintaining the social contract for these basic services since these promote equity and universality and ensure a minimum level of access for all.

For a country like India, which still has to contend with mass poverty, this situation is not good and needs to be radically changed. We need to maintain the social contract paradigm and prevent healthcare from becoming an economic commodity. CEHAT (the Centre for Enquiry into Health and Allied Themes) recommends three main action points:

  1. The healthcare system needs to be organised into a single, regulated system. Under the prevailing circumstances, this will have to be a public-private mix. The financing of such a system will have to be through a single player mechanism that would be an autonomous collective entity that pools all the resources: from those who pay insurance premiums and those (about 60% of the population) who will have their premiums paid by the State.
  2. The medical profession will have to reorganise under the proposed system and introduce self-regulation so that the norms laid down are adhered to.
  3. Healthcare should be proclaimed a fundamental human right through an Act of Parliament.

Ravi Duggal is Coordinator of the Centre for Enquiry into Health and Allied Themes (CEHAT), Mumbai, India (www. cehat. org).

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