Editorial: Shoring up public healthcare

Published in The Hindu on January 1, 2011

The world’s growing riches seem to make little difference to over 100 million people globally as they slide into poverty every year because of healthcare costs. One of the unsolved conundrums in many countries is the inability to provide for universal healthcare coverage, despite economic growth and development. While the financial consequences of illness are severe for many in poorer countries that do not have appropriate systems in place, those in richer nations are by no means immune from this malady. Researchers at Harvard have made the point that illness or medical bills were behind 62 per cent of personal bankruptcies in the United States in 2007. In India, high spending on health is a major reason for people sliding into poverty. Inadequate state delivery systems mean India’s private expenditure on health accounts for 72 per cent of the total health expenditure. Moreover, with poor re-financing options, a staggering 89.5 per cent of this private health expenditure is met out of pocket, from the immediately available funds of individuals. Coming up with viable financing methods, therefore, is an urgent requirement for many countries, including India. The World Health Organisation makes a timely intervention by calling for reforms in the way nations finance healthcare in its World Health Report — Health systems financing: the path to universal coverage.

Any policy that aims at reducing personal financial burden related to healthcare should focus on bringing down the direct payments by the individual. This means a change in who pays for healthcare, now borne overwhelmingly by individuals in countries that have weak government-paid healthcare systems. The question of ‘who-else-should-pay’ gives itself two choices globally: integration of provision and payment, which calls for a lead role by governments; and an institutionally separate agency, say, an insurer or a government body that pays for healthcare on behalf of individuals. In India, there has been an increase in the share of private insurance to meet private health expenditure, up from 1.1 per cent in 1995 to 2.2 per cent in 2008. But this is no substitute for the state’s role in providing basic, affordable healthcare. The report’s suggested domestic options for innovative financing — for instance, diaspora bonds, and a minimal tax on foreign exchange transactions in currency markets (0.005 per cent in the case of India) — are timely as they could help governments fund better state-provided healthcare. Revenues raised from such measures should be used for putting in place strong and affordable delivery systems, particularly in the two important areas of primary and preventive healthcare.