India on the world-map — healthcare
Over the first three months of the year 2020, we have seen the graph of numbers affected by the COVID-19, change its shape from linear to exponential. Once an infected is reported in an area, the number of daily new cases have been multiplying in no time. While relatively big economies like the US, China, Spain and Italy have shown little control over the contagion, some countries like South Korea have shown signs of hope in flattening the curve.
The obvious question that comes up — Is there ‘one’ correct way of dealing with this problem? The answer is obviously ‘No’. Individuals vary on their level of preparedness and inherent strengths. On a larger map, the same logic can be extrapolated for a country. Learning from the present situation, we can attempt to strengthen our healthcare system by an in-depth analysis of the strengths and shortcomings of India with respect to its peers, and framing a path to achieve the desired objective of universal health coverage.
Objective of the study: Propose solutions to achieve universal health coverage (UHC) for India using ‘The peer pressure approach’.
We will follow the below road-map to arrive at our conclusion:
Section I: Effectiveness of ‘The peer pressure approach’
The prominence of public healthcare in Indian national expenditure relative to other countries can be gauged from the following figure:
The present expenditure on public health as on 2019 has increased to 1.28% of GDP. Our Government has aimed to achieve 2.5% of the country’s GDP by 2025. To come up with a unique road-map for India to achieve UHC, one may follow two approaches:
- The budget approach — Develop a framework for our national budget, where-in allocations would be in accordance to importance of national concerns.
- The peer pressure approach — Set a country as a benchmark and observe and learn from comparable experiences.
The first approach may lead to contradictions as one might disagree on the relative importance of sectors. The second approach is effective in setting a clear target and avoids conflict of opinion on factors not directly related to the issue at hand.
Section II: Selection of the benchmark or ‘peer’
This approach entails identifying countries with similar characteristics like epidemiological profile, demography or income level as the first step. Next step is to set a benchmark and learn from the growth story and adapt measures wherever feasible.
India, China, Vietnam, and Japan are some of the countries who were on the same platform at the start of this millennium. With time, each has charted its own course of development to achieve new heights. A comparative study on specific parameters will help us in identifying the right peer India can look up to. The data for the following analysis has been taken from CIA factbook (https://www.cia.gov/library/publications/the-world-factbook/)
Population
There are two aspects which we may study — current population and population growth rate.
China and Vietnam are more close to India with respect to population and population growth rate respectively. India has been consistently one of the most populated countries in the world. However, whether one can use it as a leverage, depends on the age structure as we will observe next.
Age structure
China —
- 29% of the population is below the age of 25 years.
- 47% of the population is in the age bracket of 25–54 years.
- 24% is above the age of 54 years.
India —
- 44% of the population is below 25 years of age.
- 42% of the population is between 25–54 years.
- 14% of the population is above 54 years.
Vietnam —
- 38% of the population is below 25 years of age.
- 46% of the population is in the bracket of 25–54 years of age.
- 16% of the population is above 54 years.
Japan —
- 22% of the population is below 25 years.
- 37% of the population is between 25–54 years.
- 41% is above 54 years of age.
From the above statistics, we can surmise that Vietnam has a similar distribution of population across age followed by China. If population has to be leveraged for the benefit of a country a demography profile skewed towards a younger age group will help develop a stronger workforce and hence push the development of a country.
Birth rate and maternal mortality rate
In the following illustration, birth rate has been expressed in ‘births per 1,000 people’ and maternal mortality rate in ‘deaths/1,00,000 live births’.
Birth rate and maternal mortality rate can be directly associated with the prevalent healthcare strength of a country relative to the growing population. India tops the list in both the categories followed by Vietnam followed by China.
Unemployment, GDP (real growth rate) and population below the poverty line
Unemployment rate is an indicator of economic stability of a country. From the graph above, we can conclude that India has the highest rate of unemployment followed by Vietnam and China. With a relatively younger population and a high unemployment rate, India and Vietnam stand on the same page of under-utilization of available resources. On the other hand, China, with a relatively aged demography and the largest population in the world, has considerable lowered its rate of unemployment.
GDP based on real growth rate negates the effect of inflation and hence serves as a metric for the economic growth of a country. Currently the Indian GDP has been nose-diving and speculations are rife that demonetization and introduction of Goods and Services Tax (GST) are prominent among the factors responsible. Hence estimates of FY 2016–17 have been considered for comparison. The GDP growth during this period has been the same for India, China and Vietnam.
A factor that may be considered at this juncture is the difference in currencies across the world. Using the purchasing power parity (PPP) theory helps to adjust for this difference through a ‘basket of goods’ approach. We consider the different currencies to be at equilibrium when, taking into account the exchange rate, a basket of goods are priced equal. The nominal GDP, adjusted by PPP makes the value comparable between different currencies:
After the adjustment, it can be observed that Japan and China are leading the group. While, Japan’s GDP is more than four times that of India, China’s is about double. Vietnam is about the same as India. However, there is one drawback of this adjustment. Often, currencies are manipulated for economical leverage. The latter jeopardizes the motive of bringing the countries on the same platform for comparison. In addition, Government taxes on imports and market conditions in a country may further influence prices. Hence, we will consider the real GDP for our analysis.
Population below the poverty line is one of the most important factor to be considered as it reflects the portion of population to be supported by the Government. India is way above than any country in the number of people below the poverty line only followed by Japan.
Physicians’ density and hospital bed density
In the following illustration, physicians’ density has been expressed in ‘number of physicians/1000 people’ and hospital bed density in ‘beds/1000 people’.
Both are important parameters in analyzing the current state of healthcare in a country. India can be observed to be in the worst state among the four while Japan and China lead in this category.
From the comparison, we can conclude that China and Vietnam have more similarity with India than Japan. Hence, for our study we can map the progress of Vietnam and China over years in healthcare to set a suitable benchmark. The data for the following analysis has been taken from Global Health Expenditure of the World Health Organization (WHO).
In Millions, healthcare expenditure in India has seen an increase of 1.25 folds in 17 years. To compare, we will also look into the trends of China and Vietnam in the same time period.
China in the period under consideration has seen an increase of 8.14 folds, though it started on a lower platform than India in 2000.
Vietnam has shown a decrease in healthcare expenditure over the period under study.
With a rate of increase 6.5 times that of India in healthcare expenditure, China suits to be the ‘benchmark’ in the peer pressure approach of analysis. It is more perceptible from the following graph:
In the year 2000, the healthcare expenditure in China stood at 0.07 Millions US$ for a population of 1262.6 Millions whereas that in India was 0.12 Millions US$ for a population of 1053.1 Millions. Clearly, India was much ahead of China.
Section III: Track the progress of the healthcare system of China over the period 2000–2017
After Mao Zedong’s healthcare speech in 1965, the Communist Party of China institutionalized the concept of ‘barefoot doctors’ to bring healthcare services in rural parts of China where the urban-trained doctors would not go. These barefoot doctors were farmers, rural healthcare providers, and middle or secondary school graduates who were trained on basic healthcare services to serve the rural populace. The barefoot doctors practiced and promoted basic hygiene and preventive healthcare apart from treating common illnesses. They popularized preventive healthcare techniques that was prevalent in 21st century China. With time, China made considerable progress in economic prosperity but the gap between rural and urban areas widened — quality healthcare facilities was accessible only to the urban population. It was the appearance of SARS in 2002 that provided the necessary wake up call. The community took note of the growing disparities in healthcare access. In 2003, 79% of the rural population and 45% of the urban population was not covered by any health insurance. Migrants were not covered by any health insurance policies. There was an urgent need of a more sustainable development with uniformity in coverage.
Since the 1980’s, the out-of-pocket (OOP) expenses for healthcare increased from 20% to 60% in 2000, whereas social insurance and government subsidies decreased:
Due to the high share of OOP expenses, China ranked 188th out of 191 for fairness of financial contribution even though it came out 61st overall (WHO 2000).
To improve the healthcare insurance coverage three medical insurance schemes were introduced by the Social Insurance law:
In addition to the introduction of the insurance schemes, the Government also aimed at reducing costs through lowering the prices of essential drugs. In the year 2000, regulations were instituted to fix prices at every stage of production and distribution process. The latter was followed by fixing the retail prices for essential drugs. From the graph in Figure 15, it can be observed that the OOP decreased whereas the Government and social insurance share increased considerably by the year 2009.
In a 2009 policy document, ‘Opinions on Deepening Pharmaceutical and Healthcare System Reform’, the government asserted that access to health care is a basic right of citizens and that the responsibility for its provision rests ultimately with the state. The government committed $125 billion over 3 years to the sector, with the following allocations:
- 46% for medical insurance initiatives
- 47% for healthcare provision
- 7% for promoting public health
To combat the global financial crisis, the government increased its health care allocation from RMB 127 billion in 2009 to RMB 149 billion in 2010 and to RMB 173 billion in 2011.
In the middle of 2009 the Central Committee of Chinese Communist Party and State Council put forth a set of guidelines on medical and pharmaceutical system reform with a plan for implementation. The proposal entailed thorough implementation of the following steps:
Establishing and strengthening the basic health insurance system
This phase saw the strengthening of the basic medical insurance systems along with introduction of supplementary systems which covered the costs of catastrophic illnesses which the public insurance system could not cover. In addition a safety net was devised for individuals who could not afford individual premiums for publicly financed health insurance or who could not cover out-of-pocket spending.
Establishment of the National Essential Medicine Policy (NEMP)
Introduced in 2009, the policy aimed at establishing a cost-efficient non-profit distribution system of medicines to health care facilities. NEMP had positive effects in reducing both outpatient and inpatient expenses at grassroots level. The effects of the policy grew in prominence with time.
Improvement of primary healthcare services
With an aging population, chronic and non-communicable diseases were on the rise. China devised a robust primary healthcare system through the National Basic Public Health Service Program with an aim to narrow down the difference between urban and rural healthcare facilities. The health inequality index rated by urban and rural residents dropped by 32.5% from 2006 to 2016.
Steady improvement of access to fundamental public health services
China ensured through the years that basic public health service package was accessible to all people through government subsidies. Same was tracked and improved upon through yearly financial budget.
Expansion of public hospital services
Several reforms were undertaken to expand the number of public hospital services. Notable ones are replacing fee for service by an alternative payment system, improving pricing policies and removing mark-up of drugs as a source of finance for all public hospitals, encouraging the creation of consortia or alliances of healthcare providers, establishing a tiered service delivery system and encouraging the use of clinical pathways and guidelines.
In 2016, the healthcare sector witnessed a year-on-year growth of 12%. Over the last decade, the healthcare expenditure increased 4 folds and the per capita spending was around 6% of GDP (US$697.7 billion). This compared to 17% in the US and 10% in Japan and Europe and 9% in OECD countries. Reforms were planned to further push the figure upto 7% of GDP (US$1 trillion) by 2020. Plan of Health China 2030 released by the State Council in October 2016 set a target of reaching US$2 trillion by 2030.
The healthcare market of China has been consistently favoured by foreign investors due to its sheer size and growth potential. Investments, both local and foreign, helped the the medical device market grow by 20% year-on-year and the pharmaceutical market by 10.4%. Measures were chalked out to optimize the present market and fast-tracking approvals for new innovations.
The two invoice system
The two invoice system stipulated that only two invoices can be generated in the process of goods reaching from the manufacturer to the hospitals. One invoice will be generated by the manufacturer while another one by the hospital. The process essentially eliminated the existence of multiple distributors in the supply chain. It reduced corruption and reduced the cost to end-customer.
Fast-tracked registration of medical devices and drugs
The Opinions on Encouraging the Innovation of Drugs and Medical Devices by Deepening the Reform of Review and Approval System (“the Opinion”), released on 8th October 2017, laid down a well-defined framework for fast-tracking the approval process for new drugs and medical devices and encouraged innovation. One notable feature is the setting up of a catalogue of rare diseases. The new innovations for treating these diseases were eligible for fast-tracked trials. The reforms involved additional costs of implementation in the short-run but were beneficial in the long-run for the development of domestic innovation, which with time became competitive internationally.
Increased private-sector involvement
‘The Opinion’ also facilitated increased involvement of the private sector in healthcare. Eligible private sectors were given incentives equal to the Government sector in the form of referrals, performance assessments and fees. Foreign investors with good international records were encouraged to set up medical facilities through joint ventures. This facilitated the inflow of best-in-business technology and enabled knowledge sharing. Preferential policies were set-up in domains relatively important to the Chinese market.
With an aging population and rapid economic growth, people are relatively more affluent. This has and will fuel further investment in healthcare and framing of policies oriented towards strengthening the sector.
Section IV: Identification of issues plaguing the Indian healthcare system.
In India, states are responsible for organizing the respective health sector and delivering health services. The central Government is responsible for international health treaties, medical education, prevention of food adulteration, quality control in drug manufacturing, national disease control, and family planning programs. It also sets national health policy including the regulatory framework and supports the states.
The national health policy 2017 aims at improving the efficiency and quality of the overall healthcare system, increase the share of State on health to more than 8% of their budget by 2020. It stresses on increased utilization of public health facilities by 50% from current levels by 2025. To realize these objectives it is imperative to first identify the avenues for improvement.
Lack of health awareness and lax implementation of existing schemes.
Health awareness in India dates back to 3000 B.C. References to the Indus Valley civilization has cited evidences of well-developed environmental sanitation programmes such as underground drains, public baths in the cities etc. ‘Arogya’ or ‘health’, has always been in prominence in the daily lives of people. The present healthcare structure however, paints a grim picture. There has been a growing rift between the income-level of urban and rural population. Where an increase in disposable income has made the city dwellers opt for private healthcare, a shrinking income level has made the rural Indians weary of thinking beyond meeting their daily needs. The situation is further aggravated by disparity in literacy levels and accent on education within the healthcare system.
The different public health insurance schemes are as follows:
Though the Government health insurance schemes are aimed at covering the entire population and are available to all tax-paying citizens, evidence indicates that by 2014, less than 20% of the population was covered by any form of health coverage. Below is the coverage of RSBY in different states till 2017:
A study conducted by Tata Institute of Social Sciences concludes, of all eligible households 35% were not aware of the scheme and no more than 14 million beneficiaries have been to a hospital among the 150 million registered (9.94%).
Lack of access to healthcare facilities
Using the definition “the ability to enter a healthcare facility within 5 km from the place of residence or work” for access to healthcare, a study conducted by the IMS Institute for Healthcare Informatics found that in rural areas, only 37% of people were able to access in-patient facilities within a 5 km distance, and 68% were able to access out-patient facilities. The study found a positive correlation between distance of residence from a town and premature death.
Non-uniformity of quality and density of healthcare facilities
Of all health workers, 59.2% were in urban areas, where 27.8% of the population resides, and 40.8% were in rural areas, where 72.2% of the population resides. The situation is understandable from the fact that healthcare workers tend to migrate to cities where the standard of living is high and career prospects are better. The education level of our healthcare workforce can be observed from the graph below:
The above data collated by WHO, demonstrates a considerable portion of the workforce has a secondary schooling or less. This varies from 25% in case of ayurvedic practitioners to 67% in case of nurses and midwives.
Inadequate number of healthcare workers
India has roughly 20 health workers per 10,000 population. Healthcare professionals belong to the following categories:
As per Health Management Information system of the Ministry of Health and Family Welfare, Government of India (GOI), 10.4% of the sanctioned posts of auxiliary nurse midwives are vacant, which rises to 40.7% of the posts of male health workers. 27% of doctor posts at public healthcare facilities were vacant, which is more than a quarter of the sanctioned posts.
High cost of healthcare
The healthcare services offered by the public sector is cheap but is generally perceived as unreliable and low quality. Hence, the tendency to avail the services from the private offerings. The latter comes at a high cost and not accessible to the poorer sections. A survey published by The Economic Times reveals that people are concerned about the rising health costs and want the government to step up regulation of private healthcare providers. The results of the survey can be found in the illustration below:
Low Government expenditure on healthcare
30% of the total health expenditure is borne by the public sector, while 70% are borne by the consumers. The latter can again be split into OOP (95%) and insurance (5%). Again, 52% of the OOP is towards medicines. Private investments are mostly concentrated in urban areas and can be accessed by people with a level of affluence.
Section V: Solutions to reinforce the Indian healthcare system based on the analysis
China and India have followed their own growth paths and have their own unique roadblocks. China, through years, has effectively slowed the population growth through policies like ‘one-child policy’ and has substantially improved the affluence and literacy level of its population. India still has over 20% of the population below poverty level and a 74% literacy rate. Taking into consideration the limitations and strengths of India, the following steps can be taken:
Integrate healthcare awareness in school curriculum and increase access to state-run schools
India has a relatively younger population. Making healthcare awareness a part of the school curriculum will help in developing a generation knowledgeable of the importance and metrics of good health and consequently set a higher priority to the health of self and family.
To increase access to quality education, the following steps should be followed:
- Increase the number of well-equipped state-run schools so that no child has to travel more than 5 km to access education.
- The process of recruitment of teachers in state-run schools should be made corruption free.
- The village ‘panchayats’ should actively participate in proper implementation of the existing mid-day meal scheme, which is currently marred by corruption, to attract more people to send their children to school as well as cater to the correct nutritional requirement of children.
- Educate the poor on the benefits of the national healthcare scheme of RSBY.
Ensure equity in healthcare access
The National Basic Public Health Service Program of China has successfully narrowed the gap in healthcare services between the rural and urban areas. In 2016, China had invested to build 1,390 county-level hospitals to ensure that every county and urban district has at least one county-level hospital.
The ‘Ayushman Bharat’ scheme launched by the GOI in September, 2018, is a fully state sponsored health assurance scheme aimed at achieving the vision of UHC. The scheme intends to provide free holistic healthcare to the bottom 40% of the population through two complementary schemes — Health and Wellness Centres and National Health Protection Scheme. For fruition of the objective, following measures needs to be taken:
- Equip the existing wellness centres with latest provisions and infrastructure based on the epidemiological profile of the area. For example, snake bites cases are rampant mostly in tribal villages.
- Reduce the gap between rural and urban areas in healthcare access by ensuring at least one state-run primary healthcare centre in every village and one well-equipped hospital in every district.
- Regular survey by states to measure progress towards UHC and transparency in reporting of status on an online Government portal.
The first two points cover the demerits in the existing system. The last point will keep us aware of what has been achieved till date and how much needs to be done to achieve the goal.
Increase the number of healthcare workers and achieve uniform density across regions
China expanded its healthcare workforce to ensure steady improvement of access to fundamental public health services. India’s healthcare workforce of 20 /10,000 population is way below WHO standard of 1/1,000. 15,700 primary health centres are operating with just one doctor (Data source -https://www.who.int/hrh/resources/16058health_workforce_India.pdf). Way forward to address this crisis would be as follows:
- Increase the number of medical colleges.
- Increase the number of seats in existing medical colleges.
- Make study of medical sciences more affordable by increasing Government investment.
- Make serving in rural parts more attractive by ensuring access to facilities (for example, setting up Government quarters) and setting a higher remuneration package.
- Encouraging more private investment in sub-urban and rural areas.
Reduce OOP by increasing Government investment in healthcare
China has consistently increased Government spending on healthcare over a decade to strengthen the system in a phased manner. The graph above compares spending shares in different countries. India is way below the world average in Government spending (58%).
Four factors that require consideration before we arrive at a solution are:
- The poor sections of the society prefer out-patient services which include doctor’s consultation fees, medicines and medical appliance costs.
- The out-patient services cost is a major portion of the OOP expenditures which constitute more than 65% of the total heath expenditure of the country.
- The RSBY provides coverage for only hospitalization expenses upto Rs. 30,000/- for a family of five.
- The cost of hospitalization has been increasing with time by an average of 10% per year, but the RSBY insurance amount has remained the same.
Since the healthcare is the responsibility of the state Government, the following steps may be taken to reduce the OOP based on epidemiology profile of a state:
- Identify the areas in healthcare which attract maximum OOP.
- Evaluate whether the existing strategies are adequate to address the problem.
- If existing strategies are adequate then ensure effective implementation, otherwise introduce subsidies in areas that attract maximum OOP.
- Increase enrollment in the national health insurance schemes.
- Increase coverage limit of RSBY scheme in line with increasing healthcare costs.
- Include out-patient expenses in RSBY coverage.
- Introduce a system like the ‘Two invoice system’ of China to reduce the number of distributors or ‘middlemen’. This will benefit both the manufacturer and the hospitals by reducing corruption.
Encourage private investment and innovation
This is a field where we can emulate China’s strategies. ‘Make in India’ initiative has provided a push to innovate in-house and drive down the cost of medical equipment. But these innovations are limited to low cost products like bandages, syringes, patient monitors, test kits and stainless steel instruments, while 75% of medical devices are imported. Following steps can be taken to increase private sector involvement and encourage in-house manufacturing:
- Encourage global investors with good record to invest in home-grown companies.
- Incentivize renowned firms specializing in medical devices to enter into JV’s with Indian companies.
- Encourage global manufacturers to set up manufacturing facilities in India by developing a supportive ecosystem and reducing the complexity of regulatory frameworks.
- Active involvement of experienced medical professionals in product development process.
- Encourage more public-private partnership to effectively increase the medical access of rural India.
- Increase integration of AI and machine learning in medical research. For example, uses of machine learning in understanding of how our immune system responds to cancerous developments.
Conclusion
The pandemic is leaving us all scarred — each scar symbolizes a story of struggle. People are the strength of a nation and ensuring each and every citizen has access to affordable and quality healthcare is a collective responsibility. India has long depended on imports to meet its medical needs which is driving up costs of access. Overdependence on a few countries for supply of speciality equipment and drugs will weigh down on our exchequer and limit affordability. India needs to develop as a manufacturing hub of essential drugs and medical equipment as well as scale up the number of hospitals to have a wider reach and an exhaustive coverage. Peer pressure approach provides a frame of reference and a proven historical data for developing policy decisions in a country. India has taken initiatives in the right direction with policies like national health insurance schemes and commitment towards achieving UHC. Effective implementation of existing schemes and introduction of policies aimed at encouraging investment and innovation can be leveraged to make India a self-sustainable country.
