India’s Healthcare Should Not Go Down The Dangerous US Model Path

The NITI Aayog’s recently published report titled ‘Health System for a New India: Building Blocks – Potential Pathways to Reform‘ is remarkable in a number of ways. It has dared to challenge the entrenched healthcare paradigm and move beyond the traditional, clichéd discourse on healthcare reform that has hitherto characterised our plan and policy documents.

A realistic framework for achieving universal healthcare has been envisaged, along with a number of laudable measures – including harmonisation of the myriad, fragmented health schemes, which has been a pressing demand of activists; a standard benefits package; abolition of informality in healthcare provision; and other reforms to step up quality and efficiency.

The report, however, does not lay out an all-encompassing reform agenda for Indian healthcare in its entirety, focusing rather specifically on health financing and service delivery reforms to bring about health system transformation. Essential areas like population health and primary healthcare receive only ritualistic treatment.

Further, rather than deliberating the merits and demerits of the various competing approaches (for instance, tax financing vs social insurance), it advances the insurance model to be India’s primary approach to universal healthcare in the future – mainly building and expanding upon the Modi government’s flagship health programme, the Pradhan Mantri Jan Aarogya Yojana (PMJAY).

One of the main recommendations is to achieve the consolidation of health service providers through integration and improvement of risk pooling and strategic purchasing. The report rightly identifies that undue heterogeneity and informality in the healthcare providers’ landscape is a threat to quality and efficiency of care and regulation, which can be addressed through integrated risk pooling and strategic purchasing of services from providers.

However, market consolidation in healthcare, which has been upheld as a desirable end, presents an area of keen discomfort – especially since the multiplicity of small healthcare providers in the country has been identified as an undesirable feature.

Conflating informality and sub-optimal standards of care with the existence of a large number of small healthcare providers in the country is absurd. Not only do these small providers and hospitals form the backbone of our healthcare, but many of them provide reasonably good quality and affordable care to the population. While weeding out of informal and poor-quality small establishments is desirable, capacity building of legitimate small providers will be of utmost importance to ensure competition in the healthcare market. A framework of consolidation where larger institutions contribute to capacity-building of smaller ones and productive linkages are established across various levels in an integrated fashion will indeed be highly desirable.

However, the report’s strong emphasis on incentives and disincentives to amalgamate small providers into larger institutions for the sake of care quality and simplicity of regulation, rather than incentives to strengthen small providers – can prove counterproductive to the objective of cost control and efficiency. While the US Health Maintenance Organisation (HMO) model has been enthusiastically cited in the report, it needs to be remembered that progressive consolidation of hospitals and physician groups under HMOs led to severe cost escalations in US healthcare around the early 2000s.

As such, while the report otherwise seeks to increase the government’s leverage with providers, too enthusiastic pursuit of this policy may very well undermine this leverage. The announcement of a number of competition-deterring measures in recent times, such as subsidies for opening private hospitals in the countryside and private cells in district hospitals, only aggravates the fears.

Multiple other areas are central to ensuring access, quality and efficiency in healthcare. There is a dire need for increasing public investment in health, whose share in total health spending stands at a meagre 30% – in contrast to 54% for China, 49% for Indonesia, 47% for Brazil and above 62% for most of the OECD nations. Evidence attests to the vital importance of strengthening the public sector for ensuring fair competition in the healthcare market, especially in a weakly regulated ecosystem like ours. These, along with strong regulation of the private sector cutting across levels of care, have been insufficiently underscored.

There is also a noticeable leaning towards the much-criticised US model of healthcare, and many of its features have been subtly advanced for emulation in the Indian context. This isn’t surprising considering that the international experts who have co-authored the report draw connections to the US – not to mention the generous backing of it by the Gates Foundation.

Being a 15-year vision-plan, the report could very well signify a de-facto long-term adoption of US healthcare ideals. US healthcare is widely known as one of the most inefficient health systems across the world, mainly owing to unrestrained business interests. Its unmindful emulation could have far worse implications for a country in a comparatively much weaker overall position such as India.

While collaboration with business is indispensable and may even be desirable, we need to remember that there exists a thin line between fair collaboration and exploitative collaboration, which grows thinner for countries with a weak regulatory architecture like India. While the former is attuned to actual national priorities and overall development, the latter can distort priorities and relegate health to a mere tool for maximising economic gains.-The Wire

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