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High Retail Inflation In Healthcare Pinching Pockets

Farmers are distressed, industrial producers have taken a hit, but the same cannot be said of health service providers. A detailed analysis of data related to rates of retail inflation reveals that cost of health care services is on the rise.

Though the overall rate of retail inflation for May was 3.05 per cent, for health services it was 8.01 per cent, which is second highest after meat & fish (8.12 per cent). More importantly it was more than 9 per cent in rural area, but little less than 6 per cent in urban area. Among the seven sub groups of health, rate of retail inflation related with hospital and nursing charges was in double digit. The only item, which gave some relief is spectacles, where the rate of retail inflation was 3.3 per cent.

Experts say that lack of regulation leads to unchecked increase in prices of health services. “Hospital charges across the board keep on increasing every few months. This applies to pathology and radiology tests too. Healthcare industry does this out of habit. It is a protocol to keep on increasing charges, irrespective of whether expenses are going up. Private health service is an unregulated sector. If people are willing to pay then why not increase the charges is what happens,” Sanjay Nagral, Editor, Indian Journal of Medical Ethics, said.

Biswajit Dhar, Professor, Economics at Jawaharlal Nehru University, New Delhi, agreed. He said private investment in health care is squeezing out public sector. Capacity creation in public sector is less, whereas there is more demand and people go to private facilities which are completely unregulated. “While the telecom sector has Telecom Regulatory Authority of India, insurance has the Insurance Regulatory and Development Authority and the banking sector has an Ombudsman, the health services sector does not have a regulator,” he argued.

Cause for concern

DK Pant, Director (Public Finance) with India Ratings & Research, said that retail inflation of health component of CPI has been in excess of 8 per cent since December 2018. It has been reported in the media that this is mainly due to change in data collection agency. However, consistently high inflation is a cause for concern. In fact health inflation was the highest by any commodity group in the CPI basket during December 2018 to April 2019.

On higher hospital and nursing charges, he said a part of this could be due to increased health insurance activities feeding into the system and translating in higher inflation of hospital and nursing home charges. “However, sharp inflation of medicine (non-institutional) at a time when wholesale inflation of manufacture of pharmaceuticals was in the range of 0.2-4.7 per cent during December 2018 and April 2019 is a conundrum,” he said.

Rate of retail inflation is indicated by the Consumer Price Index (CPI). This index is prepared on the basis of data collected from 1,114 markets in 310 selected towns by the Field Operations Division of NSSO and the specified State/UT Directorates of Economics and Statistics and from 1181 selected villages by the Department of Posts. The base year is 2012 and health has a weight of 5.89 (7.94 in rural area and 5.58 in urban areas) in overall CPI.-The Hindu Business Line