India Health Report 2010

India Health Report 2010

Editors
Ajay Mahal
Bibek Debroy
Laveesh Bhandari

AN IMPRINT OF BUSINESS STANDARD LIMITED

Copyright © 2010 Indicus Analytics. All rights reserved.

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First published in 2010 by T N Ninan for

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ISBN: 978-93-80740-00-3
 CONTENTS

Executive Summary vii

Chapter 1 1
The Case for Improving Health in India
Ajay Mahal and Victoria Fan

Chapter 2 21
Access to Healthcare
Laveesh Bhandari and Aali Sinha

Chapter 3 35
Emerging Issues in Health
Sumita Kale

Chapter 4 51
Inputs for Health
Laveesh Bhandari and Ankur Gupta

Chapter 5 73
Ethics and Side Payments
Sumita Kale and Laveesh Bhandari

Chapter 6 83
Access to Medicines in India: Issues, Challenges and Policy Options
Sakthivel Selvaraj and Veena Nabar

Chapter 7 97
The Evolving Role of the Government: Regulations and Programmes
Devendra B Gupta and Laveesh Bhandari

Chapter 8 109
Health Financing in India
Ajay Mahal

Chapter 9 127
Health Reform: A Historical Perspective and the Future
Bibek Debroy and Ajay Mahal

About the Authors 137

Executive Summary
This report provides a broad direction for India’s health
sector in the coming years. In doing so, it describes India’s
achievements with regard to the three key goals of health
policy—improved health status, financial risk protection,
and equity. It does so by identifying some of the factors—
and the state of policy instruments—that have facilitated
these achievements in the areas of access, quality and
efficiency. Hence, it looks at public health interventions,
regulation, financing, and the organisation of healthcare.
The role of both public and private institutions in the pro-
vision of such services is studied in this overall context.
The focus, therefore, is to analyse the status of health
in India, and this is done by bringing together data and
analyses from government documents, health economics
and policy literature and a host of other sources.
Organised in nine chapters, the report begins by making
a case for investing in health as a sound economic decision.
Ajay Mahal and Victoria Fan (Chapter 1) emphasise
that investing in health should be a priority, even when
resources are otherwise limited, owing to the high returns
from such investment. As such, they highlight the need
to enhance protection against the financial risk inherent
in an unhealthy population. They argue their case at four
levels: (a) health is a major factor in influencing aggregate
economic outcomes; (b) instances of ill health can expose
entire households to financial risk and, in many cases,
impoverishment; (c) health status itself is an indicator of
human well-being; and (d) in a society undergoing great
economic and social transition, such as India, improvements
in health carry an added importance (and, correspondingly,
constitute a greater challenge).
As the mere provision of health infrastructure does
not necessarily ensure universal accessibility, in Chapter 2,
Laveesh Bhandari and Aali Sinha examine the multiple
facets governing the access to, and utilisation of, health-
care services: awareness levels; locational or financial con-
straints; efficiency of public and private healthcare
providers; issues of quality and reliability of service and
treatment; analysis of hospitalisation and out-of-pocket
expenditure, etc. They conclude that despite heavy public
intervention, the health burden carried by Indians con-
tinues to be significant. They underline the importance
of addressing the constraining issues through effective
systemic changes.
In Chapter 3, Sumita Kale studies the new issues in
disease management in India today, many of which are
linked to growing prosperity in the country. One set of
issues she examines is the rising incidence of diseases like
ischemic heart, diabetes, cancer, HIV/AIDs, where health
education and regular screening can play a significant pre-
ventive role. She also highlights the need to match society’s
rising affluence with an environment where mental and
physical disorders and disabilities are included in the main-
stream discussion on health management.
In Chapter 4, Laveesh Bhandari and Ankur Gupta
discuss the status of the four major inputs fundamental to
a good health profile in India: well-trained, adequate and
well-motivated healthcare providers; a well spread and
accessible healthcare infrastructure; a good water supply
and sanitation system which also facilitates hygienic prac-
tises; and a population that is well supplied nutritionally
and practises a hygienic lifestyle. Bhandari and Gupta
highlight a single key problem underlying all these inputs:
the lack of a public health focus. Seeing the multiplicity of
government units involved in the various aspects of health
administration, they recommend a centralised authority
that is able to synchronise and coordinate various policy
measures in line with the received evidence on improving
health outcomes.
Medical ethics encompasses a vast range of issues and,
in Chapter 5, Sumita Kale and Laveesh Bhandari focus
on one: the growing distrust of the medical profession in
India. This, they argue, has come about in response to
the unethical commercial links between healthcare pro-
viders and drug/device manufacturing companies and
suppliers. They explain the market failure resulting from
information asymmetry when healthcare providers, driven
by commercial considerations, provide biased information
to patients. Given that the vast majority of the patients are
uneducated and uninformed, thus unable to understand the
implications of the treatment or to seek redressal, the issue
of conflict of interest becomes even greater in India. Kale
and Bhandari call for stricter action from the government
and regulatory agencies to safeguard patient interest and
viii Executive Summary
restore the moral character of what is expected to be a noble
profession.
In Chapter 6, Sakthivel Selvaraj and Veena Nabar take
up issues involving the pharmaceutical industry. They
document the inequitable access to medicines across regions
and income classes, and highlight the need for efficient
procurement systems for public healthcare facilities. They
examine all aspects of the industry, ranging from market
structure, pricing policies, and the role played by patents
in stifling competition, and go on to link the impact of
regulation on these crucial issues. They recommend a good
quality and sturdy regulatory mechanism that can take and
implement decisions aimed at ensuring low cost availability
of medicines in a sustainable manner.
In Chapter 7, Devendra B Gupta and Laveesh Bhandari
study the government’s two-pronged approach to ensuring
better health outcomes for all: regulation and government
programmes aimed at delivering better healthcare to all.
They review the evolution of the government’s role over
time, focusing on central government policies. They also
examine the status of regulations and regulatory mechan-
isms in India today and call for a central entity that can
provide the necessary leadership to create mechanisms that
can adequately address issues of market failure in the health
sector.
In Chapter 8, Ajay Mahal documents the inequity and
inefficiency prevalent in healthcare financing. The chapter
reviews the recent initiatives in health financing systems—
various government schemes for financing public health
expenditures and health insurance programmes in the
private and public domain. More crucially, he provides an
alternative methodology of conceptualising health finan-
cing policy, one that corrects the current lacunae and flawed
focus and works towards greater coverage rather than (cost)
efficient access. This is critical to achieving a sustainable,
equitable and efficient healthcare system in India.
In the concluding chapter, Bibek Debroy and Ajay
Mahal tie up all the threads and examine the evolution of
healthcare reform in the country, through policy changes,
programmes and legislation. They point to the need for a
Acknowledgement: We would like to thank Ankur Gupta, Swati Gupta and Anirudh Swami of the research team at Indicus Analytics who
provided us with key inputs and data support.
change in approach at the institutional level, that health-
care must become a priority, and that the mindset in
health policy must move on from targets of infrastructure
provision to improvements in health per se.
At the most basic level, the Indian health sector is
characterised by the lack of access to good quality health-
care services for all, a result of a host of specific issues
that are identified in the body of this report. These
specific constraints can all be traced to problems of poor
planning, low resource allocation, missing institutions, and
inadequate implementation. In an attempt to address these
specific constraints, India Health Report 2010 identifies
some of the changes required at the central, state and
local government levels—in policy and regulation, in imple-
mentation and planning, and in education and advocacy.
More importantly, it identifies the one factor that lies
behind each of these bottlenecks: the lack of focus on
health. Lack of focus shows up in many different ways—
inadequate resource allocation, institutional and regulatory
gaps, laxity in implementation of government programmes,
etc. The one and the most important change that India
needs is focused attention on the health sector.
Greater focus is not only about greater resource allo-
cation, though that is important; nor is it about devising
large-scale government programmes for healthcare delivery,
though they form an important component of India’s large
portfolio of welfare programmes. Focus requires adequately
empowering the institutions that govern India’s healthcare
sector and making them answerable for health outcomes. For
instance, the Ministry of Health and Family Welfare needs
to be strengthened in terms of both scale and scope; it also
needs to be made more answerable for India’s poor health
outcomes, and a strong public health focus needs to be put
in place either within the ministry or with a new entity so
empowered.
The innumerable problems that impact health out-
comes in India need to be seen foremost in the context of
missing and/or weak institutional structures. It, therefore,
becomes important to empower institutions that oversee
India’s health sector and make them answerable.
About the Authors
Laveesh Bhandari is the Founder Director of Indicus
Analytics. He has led policy-oriented studies for nationally
and internationally reputed organisations such as the
Finance Commission, World Bank, United Nations
Children’s Fund, Asian Development Bank and Food and
Agriculture Organization. He has published extensively
and is a columnist for newspapers and newsmagazines.
His work on inequality, education and regional growth is
frequently referred to in policy debates in India. He has
received a number of awards, including the EXIM Bank
Award for his work on international joint ventures and the
Hite Fellowship for his work on international finance.
Bibek Debroy is Professor at the Centre for Policy
Research, New Delhi and Contributing Editor with the
Indian Express. He has worked in academic institutes, for
the government and an industry chamber. He is the author
of several books, papers and popular articles. His special
interests are education, health, law, governance and trade.
Victoria Fan is a doctoral candidate in Health Systems
at the Department of Global Health and Population,
Harvard School of Public Health. Ms Fan received
a bachelor’s degree in mechanical engineering with a
minor in cultural anthropology from the Massachusetts
Institute of Technology. Her research focuses on impact
evaluations on health in India. She has worked with the
World Health Organization, World Bank, United States
Agency for International Development, Bangladesh Rural
Advancement Committee, Self Employed Women’s
Association, Harvard Global Equity Initiative and Harvard
Initiative for Global Health.
Ankur Gupta received his BTech and MTech degrees in
Biotechnology from the Indian Institute of Technology,
Delhi. He is a Research Consultant at Indicus Analytics
focusing on providing financial and technology leader-
ship in education, healthcare and energy sector studies.
In addition, he has conducted many studies on India’s
economic geography.
Devendra B Gupta is Senior Consultant at the National
Council of Applied Economic Research, New Delhi and
Visiting Professor, Institute for Human Development,
New Delhi. He received his Ph D from the University
of Birmingham and has been a development economist
for more than 40 years. He has taught at a number of
universities and institutions in India and abroad and has
worked extensively with the World Bank, United Nations
Children’s Fund, World Health Organization, Institute of
Economic Growth, National Institute of Public Finance
and Policy, etc.
Sumita Kale is Chief Economist with Indicus Analytics.
She received her Ph D from the University of Pune and
M Phil in the Economics of Developing Countries
from the University of Cambridge. She has a number of
publications to her credit and has been visiting faculty at
the Department of Economics, University of Pune and at
the National Insurance Academy, Pune.
Ajay Mahal is Associate Professor of International Health
Economics at the Department of Global Health and
Population, Harvard School of Public Health. His research
uses economic analyses to influence public health policy
in developing countries. He is especially interested in
policy issues related to the HIV/AIDS epidemic, resource
allocation in the health sector, ageing, human resources
and decentralisation and empowerment.
Veena Nabar studied economics at the Universities of
Bombay and Cambridge. After a short teaching stint at
Cambridge, she worked on various agriculture-related
projects at the Agricultural Economics Research Centre of
the University of Delhi, before moving on to working with
cooperatives under the Ministry of Agriculture. She has
worked with community-based organisations, undertaken
several research assignments on economic and social issues
for the government and international organisations, and
has many publications to her credit.
138 About the Authors
Sakthivel Selvaraj is a Health Economist and faculty
member at the Public Health Foundation of India. He is
currently engaged in teaching and research in the area of
healthcare financing, pharmaceutical economics and the
economics of tobacco. He was a Takemi Fellow (Post-
Doctoral Fellow at the Harvard School of Public Health,
Boston) and a Fulbright Scholar during 2006–07. He was
formerly engaged as a Health Economist in the National
Commission on Macroeconomics and Health, Ministry of
Health and Family Welfare, Government of India.
Aali Sinha was awarded the M S A Rao Scholarship by
the Delhi School of Economics, where she completed her
post-graduation in sociology. She has worked extensively
on reproductive child health, education of poor children,
spending patterns in healthcare, and access to healthcare.
Ms Sinha co-authored Social and Economic Profile of India,
a book that is a ‘first resort’ reference on Indian socio-
economic conditions.