Inadequate Public Expenditure Means Indians Spend More Than They Earn On Healthcare

Unless India’s public healthcare infrastructure is improved considerably, development and investment in other sectors will mean little.

A paramedic distributes free medicine provided by the government to patients inside a ward at Rajiv Gandhi Government General Hospital (RGGGH) in Chennai July 12, 2012. Credit: Reuters/Files

A paramedic distributes free medicine provided by the government to patients inside a ward at Rajiv Gandhi Government General Hospital (RGGGH) in Chennai July 12, 2012. Credit: Reuters/Files

Last week, in a reply to  a question on the national health policy in the Lok Sabha, health minister J.P. Nadda mentioned that the issue of catastrophic healthcare expenditure is much more acute in rural areas than urban areas. The minister further admitted that improving the state of rural healthcare was a priority. A study released soon after by Brookings India highlighted that, compared to rural households, urban households spent five times more on diagnostics and twice as much on medicines and doctors’ fees, underlining the issue of high out of pocket (OOP) expenditure in the country. This state of affairs is the result of a larger systemic problem within healthcare – low incomes and consistently low public expenditure on the sector.

In an internal study released by AIIMS, New Delhi, in May 2015, doctors reported that because of extreme poverty, nearly half of the 2,500 patients with cases of severe head injuries admitted to the hospital had died within six months of being discharged from the trauma centre. The report further said that most of these patients belonged to the migrant population and were the sole breadwinners of their families, having left their villages in search of a livelihood. Their wives were unable to generate enough money to keep them alive, especially with an average of three or four kids to take care of.

Despite being able access treatment in government hospitals, patients were unable to afford the rehabilitative care required. Unfortunately, there are many who are unable to get this tertiary level treatment. For instance, as against a daily requirement of 10-15 beds, the AIIMS trauma centre only has six beds to treat patients. This means that many patients are turned down every day because of inadequate infrastructure.

Inadequate public expenditure

According to World Bank data available for 2013, per capita expenditure on healthcare in India – at about $61 – is much lower than in Brazil ($1085) and China ($367), two comparable countries on the development scale. Lower public expenditure on healthcare has resulted in a situation where hospital bed density in India has stagnated at a mere 0.9 beds per 1000 patients since 2005 (which has now recently increased to 1.2 beds per 1000 patients in urban regions), which is significantly short of prescribed WHO standards of at least 3.5 beds per 1000 patients. Moreover, there is a huge inequity in the utilisation of facilities at the village, district and state levels, with state-level facilities mostly inadequate and tertiary systems being put under a lot of strain. This inadequacy of public healthcare infrastructure has encourage the proliferation of a private, and expensive, healthcare industry.

Recent research on the quality of medical care in public and private hospitals in India by Jishnu Das and Alaka Holla of the World Bank showed that although private medical practitioners may often overcharge patients, on balance, they provide better quality care than public hospitals. A 10-month-old boy died in a government hospital this year in Bahraich district in UP, allegedly after not being given timely treatment by the staff because his parents could not pay the Rs 100 bribe demanded by them. Incidents like these do not instil confidence in public health facilities. Thus the sorry state of affairs in public healthcare is forcing an increasing number of patients to turn to private medical centres.

In a country where the average household income varies between Rs 5000-10,000 a month, it is impossible to imagine a poor person being able afford even the most basic medicines after being treated in a government hospital, let alone going to a private hospital to receive treatment. According to data released by the Insurance Regulatory and Development Authority last year, 76% of the population do not have any insurance cover, which results in high OOP expenditure.

The push towards private healthcare, and the low penetration and reach of subsidised healthcare schemes results in people spending out of their own pocket for medical treatment. The WHO India Profile 2014 report mentioned that high OOP expenditure has resulted in 3.2% Indians falling below the poverty line, with about 70% of Indians spending their entire income on healthcare and purchasing drugs.

Changing nature of diseases

The change in disease profile from communicable to non-communicable diseases (NCDs) further aggravates the problem. According to the WHO report, NCDs, which are more expensive to treat, account for half of the disease burden and 60% of the total deaths in the country. The report further stated that the probability of dying between the ages of 30 and 70 due to four major NCDs – cancer, cardiovascular diseases, chronic respiratory diseases and diabetes – is very high for both sexes.

This is shocking in light of the fact that these NCDs with high death rates are considered “rich country diseases”, contracted due to unhealthy lifestyle patterns. The same WHO report mentions that India is ten years ahead of its expected rate of contracting these diseases, when compared with the historical rate for developing countries. Moreover, if we compare this data against the demographic dividend of the population within the working age group, we can see that majority of this population is affected by life threatening diseases and young people are dying because of a lack of access to quality medical treatment.

A 2015 Lancet study mentioned that while 30% of the rural population did not go for any treatment due to financial constraints, about 47% and 31% of hospital admissions in rural and urban India respectively, were financed by loans and sale of assets.

Heart disease is the cause of maximum deaths in our country. As per a Times of India report, last year, a private hospital in Bengaluru did its first heart transplant. A 28-year-old man, who came from an economically weak background, was billed Rs 7 lakh for the procedure, which usually costs around Rs 20-25 lakh. Though the heart comes free for transplant, the cost of surgery is borne by the patients themselves. Recently, another patient in his early 20s passed away because he could not pay for a heart transplant. Although the organ was available, he could not afford the high cost for the surgical procedure.

A heart recipient has to spend Rs 30,000 to Rs 50,000 on post-operative care for six months and has life-long medication costs of Rs 10,000 to Rs 15,000 every month. As per NSSO data, for a 15 day period, the average treatment cost for cancer, which is the third largest cause of hospitalisation in the country, was around Rs 57,000.

In the Budget for 2015-16, finance minister Arun Jaitley planned a total expenditure of Rs 1,500 crore, which would have meant an increase of 152% in government insurance expenditure. However, this cover falls short of basic facilities. The beneficiaries under the Rashtriya Swasthya Bima Yojana (RSBY) only get cashless coverage of Rs 30,000, which means they are not covered after the procedure for the cost of medicines. Furthermore, only 282 mine workers, 454 rickshaw pullers and 710 sanitation workers were enrolled in the RSBY in 2015. It is thus important that we overhaul our insurance coverage to include post-hospital care of the patients. Including expenditure on rehabilitative care as part of the government insurance cover could be one of the social security benefits that the new Budget, which is to be released in the next two months, can work on.

Easing the burden

The lack of doctors and the dismal condition of primary healthcare centres have resulted in the overburdening of the tertiary sector. As of March 2015, almost 10% of India’s 25,300 primary health centres had no doctor. In a recent case, in May this year, a 53-year-old throat cancer patient from Chikkamagaluru, who had undergone an emergency tracheotomy in a city hospital was discharged after being taught some basic suction techniques. However, the man died after five days as the local healthcare unit didn’t have a doctor or medical staffer who could help him use the suction pipe. This could easily have been taught by a paramedical staffer but the lack of trained professionals at public healthcare centres results in the overburdening of the secondary and tertiary sectors.

Evidence suggests that recruiting and retaining doctors to serve in lower healthcare facilities in rural areas will be very difficult, given the poor conditions of the facilities. However, medical graduates and physicians are not required at every primary healthcare centre all the time because trained paramedical staff can easily treat a majority of diseases. Thus a push towards paramedic training can reform the level of treatment we require at a local level.

Using technology like telemedicine is another way forward. Villages, on the basis of their disease profile, could be grouped into clusters and one physician could be hired for that cluster. A specialist could then be assigned to a group of clusters. For feedback, questionnaires in respective languages could be devised to gauge the level of patient satisfaction and then this data could form a part of the appraisal of the hired paramedical staff.

These solutions are small in nature but they can considerably impact the healthcare system if implemented well. We are aiming to be a superpower but if people keep dying because they do not have enough money to treat themselves because the public healthcare infrastructure is inadequate, there would be no point in development. If we do not pay enough attention to our healthcare system and do not invest in it, it will keep pushing people into poverty, thereby negating the potential for overall development.

Rohit Kumar was a LAMP fellow from the 2015 batch and was formerly a research assistant to Varun Gandhi.