UPA’s all flagship programs are under stress. During their previous tenure the UPA formulated their strategy and had 3 to 4 years for the various flagships to build their foundation. But we see that success has eluded them, especially in the social sector arena of health, education and welfare. The National Rural Health Mission attempted to do what the Minimum Needs Program did way back in the eighties. The MNP succeeded in creating the rural health infrastructure – the PHCs and subcentres - as per the 1981 National Health Policy to support the goal of Health For All by 2000 AD. This even pushed the public health spending upto 1.6% of GDP, the highest ever for the country. While the physical infrastructure was in place, the human resources, medicines, equipment etc were far from adequate and failed the strategy. And then we were subjected to SAP and the macroeconomics that followed spelled disaster for the social sectors, halving the public health spending from the MNP peak to a mere 0.8% of GDP. To stem this collapse of the public health system the NRHM was launched with a target of pushing public health spending to 2 to 3 percent of the GDP by making architectural corrections.
At the end of their first tenure the UPA managed to take public health spending barely to 1 percent of GDP, no where close to their target. The rural public health system continued to suffer from the same malaise as earlier – not enough doctors and nurses, inadequate medicine supplies, poor maintenance etc. What was worse is that the reasonably robust urban public health system also began to collapse with rapid private sector growth and expansion, including the support of private health insurance. Thus the inadequate public investment in health during the previous UPA regime actually led to the boom of private healthcare which had now jumped to 5.5% of GDP. Since private insurance covers barely 2% of the population, most of this expenditure is out-of-pocket indicating a huge burden on households who often had to sell assets or take loans for their hospitalization needs. Thus the UPA government failed to make any significant impact in the public health domain.
The failure is both political and bureaucratic because there is a complete lack of political will to push radical reforms or the architectural changes the NRHM strategy document talked about as well as the inadequate capacity of the bureaucracy to facilitate the structural changes. During the period of the UPA regime we saw in Thailand a major transformation where social insurance and increased public financing catapulted Thailand to the status of a universal access country assuring equitable access to basic healthcare for all. If Thailand could do it given a very similar historical trajectory to that of India then why can’t UPA facilitate the same for India? The answer lies in viewing the entire health system, both public and private, as a single system and creating a regulatory mechanism and a financing strategy of a single-payer instrument and to accommodate that under a single umbrella. Well the first 100 days of the second UPA regime does not show any inclination towards that end. Hence civil society has a long struggle to get the UPA on track to achieve the goals of universal access to basic healthcare.
Saturday, September 12, 2009
Saturday, August 29, 2009
Perspective Paper for Health Financing session for MFC 2010 Annual Meet
The health financing strategy of any country is critical for the character and nature of the health system that evolves in that country. If we look at countries where citizens have universal access to healthcare then it is clearly evident that public finance is the predominant mode for provision of healthcare services. Thus in such countries between 45 to 80 percent of health expenditure is accounted for by publicly generated sources like taxes and social insurance. Examples of such countries include all OECD countries with the exception of USA. These include Canada, UK, Sweden, Germany, Japan, Australia, Italy etc.. A number of developing countries too have moved towards universal or near universal access to healthcare for their populations. These include Sri Lanka, Thailand, Malaysia, Brazil, Costa Rica, Cuba, Chile, Mexico etc..
When countries move closer towards universal access through predominantly public financing a very clear shift in out-of-pocket payments take place – from being predominant they become insignificant. Mexico and Thailand are the most recent examples of this trajectory. Similarly when countries reduce public financing for healthcare then OOPs increasingly account for a larger share and inequities start surfacing. Sri Lanka, because of a budgetary crunch is facing this kind of crises and its predominantly tax financed system is under threat, especially so because World Bank is now coming with its classical prescriptions of the government limiting its role to primary care or selective care and allowing the private sector to take charge of the rest and that too in a scenario in Sri Lanka where the private sector has been very weak and unregulated and most of it is anyway government doctors doing legally permitted private practice.
In contrast most developing countries of Africa and Asia have levels of public financing which is under 40% of total health expenditure and this constrains public financing in provision of healthcare and puts a larger burden on households to pay directly for accessing healthcare most of the time. WHO has estimated that 5.6 billion people, mostly the poor, across the world spend out-of-pocket to seek healthcare for over half their healthcare needs and this is often financed through debt or sale of assets. And this is also often one of the primary causes for poverty in such countries. Table 1 provides very clear evidence at the global level of the linkages between income, public financing of healthcare, level of health expenditure and health outcomes.
Table 1: Linkages between income, level of health expenditure, source of Health Financing and health outcomes
While public financing is critical to healthcare access and equity, what Table 1 also tells us is that in order to have a reasonable level of public finance commitment to healthcare we also need adequate revenues accruing to the public exchequer. Thus tax:gdp ratios also become a critical element for public financing of healthcare. Again most countries which have universal or near universal healthcare access have tax:gdp ratios which are above 30%, that is of the total income of that country the government is able to net in over 30% of it as tax revenues. The latter is critical for social sector expenditures because in most countries around 10% of GDP goes towards what we call non-development expenditures like public administration, law and order, defense, governance structures etc.. And most developing countries usually have a tax:gdp ratio of between 10-15%. Thus if 10% goes to non-development spending then what is left for social sectors is grossly inadequate. Thus if we have to meet the globally accepted norm of 5% GDP for health and 7% GDP for education then a tax:gdp ratio closer to 30% becomes critical.
However tax:gdp ratios are closely linked to the structural dynamics of the larger economy, and often political will with a strong social-democratic leaning is the underlying determinant for realizing reasonable levels of revenues for governance. Thus a sense of public good must prevail strongly within governance structures. Thus countries which have high tax:gdp ratios also have a social democratic character and therefore commit larger resources to the social sector or public goods and are able to achieve reasonable levels of equity in access to basic social and economic needs. The schematic in Figure 1 demonstrates the above political economy and its criticality for health financing, universal access and equity.
Figure 1: The Importance of Healthcare as a Public Good with Public Financing
Thus what we conclude from the above is that a healthcare system which has universal access as its goal will emerge only when healthcare is recognized primarily as a public good and consequently receives the necessary resources from public sources.
The other problematic that confronts us in the understanding of health systems and financing is the provision of healthcare. This is an arena of conflict and debate with people taking strong sides in favour of the public or private sectors. The crux of the debate and conflict is that the supporters of private sector criticize the public system for its inefficiency, red-tape, callousness, and mindset and attitude problems. The supporters of public sector blame the private sector as being exploitative and profit-oriented, unethical, and inducing unnecessary demand. Both are correct as well as wrong. Correct because the descriptors mentioned above are indeed quite common and wrong because if the public sector is inefficient then the contrary that the private sector is efficient may not be always true or if the private sector is exploitative that does not mean the public sector is unexploitative and so on. Most countries providing universal access have overcome these problems through organization of systems and regulation. That is the healthcare system is modeled around the financing strategy and the latter is used as the fulcrum to organize, regulate and control. Thus it does not matter whether the provider of services is from the public sector or from the private sector. The financing mechanism which is under public domain defines in detail the structure and nature of services needed and develops a payment or buying mechanism of those services which are regulated and audited. There is no fixed formula across countries. While we see that financing mechanisms tend to be very similar across countries – mostly a combination of two or three modalities, provision of services is much more varied with different kinds of a public private mix, mostly a consequence of their historical position. Thus for example when UK adopted the NHS, the hospital system was largely public owned and hence hospitals under NHS are overwhelmingly in public sector. In contrast ambulatory care was mostly in the private sector and hence the ambulatory care system under NHS devised a mechanism to contract in private providers through a capitation payment system. Similarly when Canada adopted its Health Canada Act hospitals were equally owned by public and private sector and hence under Health Canada there are hospital providers both in public and private sector. The key here is that the healthcare system is organized, regulated and controlled through a financing mechanism which is managed publicly irrespective of whether services are provided privately or publicly.
If India has to move towards a universal access healthcare system it will have to adopt the above principles though its structures and mechanisms may be different. That is India will have to organize, restructure, regulate and control the healthcare system through a publicly mandated financing mechanism which would be some mix of a social insurance and tax based system, similar perhaps to Thailand’s financing strategy. But given India’s historical position the larger challenge would be the provision of healthcare, especially the reining in of the huge private sector in both ambulatory and hospital services. I say that this is a larger challenge because no country in the world which has achieved universal access to healthcare was in a historical position like India, that is having a completely dominating private health sector which is also completely unregulated and lacks ethics in practice.
So what are the options for India? Not an easy question to answer. India spends around Rs. 3000 per capita on healthcare which is around 6% of its GDP. Huge indeed but of this only Rs.450 comes from the public exchequer or a mere 15%. Of the rest 96% is out-of pocket and only about 4% is insurance. The 15% of the expenditure which goes to the public sector accounts for 15% ambulatory care and 55% hospital care and the 85% of private expenditure takes care of 85% ambulatory care and 45% of hospital care. The public sector is plagued with a severe human resources problem especially doctors and nurses as well as supplies and maintenance which has led to a virtual collapse of the public health system over the last decade and a half, though in the last 5 years the NRHM has put in substantial efforts to try and revive atleast the rural public health system. Their efforts have not been very successful as the above said problems continue to plague the public health system and somewhere the health financing strategy in the public sector is to blame because the demands at the unit level where care is delivered are not used as the basis of developing the financing framework but some age old top-down mechanism which is not only ad hoc but bureaucratically suffocating.
In the urban areas while more resources are committed, especially for the hospital sector, the problems of human resources, supplies and maintenance are probably more severe because the numbers using the urban public health system are huge unlike the rural public health system which has very low levels of utilization. This shows that urban health systems, especially from the perspective of the poor have a large demand but it remains unfulfilled again because of a poor and inadequate financing strategy. Overcrowding in hospitals because of a lack of a robust primary care system in urban areas and consequently a lack of a referral system creates havoc with the urban healthcare system rendering it ineffective and inefficient as well as financially unsound. Hospital systems are best served with a global budgeting strategy which implies that funds are allocated on the basis of effective costing of services which are translated into per bed cost for effective delivery of care and budget levels thus determined. This does not happen in India and hence the urban health care system in India fails to deliver despite its high level of utilization atleast in numbers.
Where the private health sector is concerned it functions completely on supply-induced demand which fuels unnecessary procedures, prescriptions, surgeries, referrals etc.. leading to its characterization as an unethical and mal-practice oriented provisioning of healthcare. This has huge financial implications on households, inflating costs of healthcare, spiraling indebtedness and pauperization and being responsible for the largest OOPs anywhere in the world.
So the challenge is huge demanding huge restructuring of the healthcare system in the country through strong regulatory mechanisms both for the public and private sectors, education of professionals in ethics of practice, pushing the politicians for creating a strong political will to make healthcare a public good as well as generate and commit adequate resources to realize universal access. The restructuring of the healthcare system and its financing strategy, given the price advantage of India and economies of scale it offers, will actually reduce nearly by half the healthcare spending in the country and reduce substantially the household burden to access healthcare. Calculations I have done show that for universal access to healthcare across India we need less than 3% of GDP provided we show the political will to shift healthcare from the domain of the market to the category of a public good. This will indeed do a lot of public good!
rduggal57@gmail.com
When countries move closer towards universal access through predominantly public financing a very clear shift in out-of-pocket payments take place – from being predominant they become insignificant. Mexico and Thailand are the most recent examples of this trajectory. Similarly when countries reduce public financing for healthcare then OOPs increasingly account for a larger share and inequities start surfacing. Sri Lanka, because of a budgetary crunch is facing this kind of crises and its predominantly tax financed system is under threat, especially so because World Bank is now coming with its classical prescriptions of the government limiting its role to primary care or selective care and allowing the private sector to take charge of the rest and that too in a scenario in Sri Lanka where the private sector has been very weak and unregulated and most of it is anyway government doctors doing legally permitted private practice.
In contrast most developing countries of Africa and Asia have levels of public financing which is under 40% of total health expenditure and this constrains public financing in provision of healthcare and puts a larger burden on households to pay directly for accessing healthcare most of the time. WHO has estimated that 5.6 billion people, mostly the poor, across the world spend out-of-pocket to seek healthcare for over half their healthcare needs and this is often financed through debt or sale of assets. And this is also often one of the primary causes for poverty in such countries. Table 1 provides very clear evidence at the global level of the linkages between income, public financing of healthcare, level of health expenditure and health outcomes.
Table 1: Linkages between income, level of health expenditure, source of Health Financing and health outcomes
While public financing is critical to healthcare access and equity, what Table 1 also tells us is that in order to have a reasonable level of public finance commitment to healthcare we also need adequate revenues accruing to the public exchequer. Thus tax:gdp ratios also become a critical element for public financing of healthcare. Again most countries which have universal or near universal healthcare access have tax:gdp ratios which are above 30%, that is of the total income of that country the government is able to net in over 30% of it as tax revenues. The latter is critical for social sector expenditures because in most countries around 10% of GDP goes towards what we call non-development expenditures like public administration, law and order, defense, governance structures etc.. And most developing countries usually have a tax:gdp ratio of between 10-15%. Thus if 10% goes to non-development spending then what is left for social sectors is grossly inadequate. Thus if we have to meet the globally accepted norm of 5% GDP for health and 7% GDP for education then a tax:gdp ratio closer to 30% becomes critical.
However tax:gdp ratios are closely linked to the structural dynamics of the larger economy, and often political will with a strong social-democratic leaning is the underlying determinant for realizing reasonable levels of revenues for governance. Thus a sense of public good must prevail strongly within governance structures. Thus countries which have high tax:gdp ratios also have a social democratic character and therefore commit larger resources to the social sector or public goods and are able to achieve reasonable levels of equity in access to basic social and economic needs. The schematic in Figure 1 demonstrates the above political economy and its criticality for health financing, universal access and equity.
Figure 1: The Importance of Healthcare as a Public Good with Public Financing
Thus what we conclude from the above is that a healthcare system which has universal access as its goal will emerge only when healthcare is recognized primarily as a public good and consequently receives the necessary resources from public sources.
The other problematic that confronts us in the understanding of health systems and financing is the provision of healthcare. This is an arena of conflict and debate with people taking strong sides in favour of the public or private sectors. The crux of the debate and conflict is that the supporters of private sector criticize the public system for its inefficiency, red-tape, callousness, and mindset and attitude problems. The supporters of public sector blame the private sector as being exploitative and profit-oriented, unethical, and inducing unnecessary demand. Both are correct as well as wrong. Correct because the descriptors mentioned above are indeed quite common and wrong because if the public sector is inefficient then the contrary that the private sector is efficient may not be always true or if the private sector is exploitative that does not mean the public sector is unexploitative and so on. Most countries providing universal access have overcome these problems through organization of systems and regulation. That is the healthcare system is modeled around the financing strategy and the latter is used as the fulcrum to organize, regulate and control. Thus it does not matter whether the provider of services is from the public sector or from the private sector. The financing mechanism which is under public domain defines in detail the structure and nature of services needed and develops a payment or buying mechanism of those services which are regulated and audited. There is no fixed formula across countries. While we see that financing mechanisms tend to be very similar across countries – mostly a combination of two or three modalities, provision of services is much more varied with different kinds of a public private mix, mostly a consequence of their historical position. Thus for example when UK adopted the NHS, the hospital system was largely public owned and hence hospitals under NHS are overwhelmingly in public sector. In contrast ambulatory care was mostly in the private sector and hence the ambulatory care system under NHS devised a mechanism to contract in private providers through a capitation payment system. Similarly when Canada adopted its Health Canada Act hospitals were equally owned by public and private sector and hence under Health Canada there are hospital providers both in public and private sector. The key here is that the healthcare system is organized, regulated and controlled through a financing mechanism which is managed publicly irrespective of whether services are provided privately or publicly.
If India has to move towards a universal access healthcare system it will have to adopt the above principles though its structures and mechanisms may be different. That is India will have to organize, restructure, regulate and control the healthcare system through a publicly mandated financing mechanism which would be some mix of a social insurance and tax based system, similar perhaps to Thailand’s financing strategy. But given India’s historical position the larger challenge would be the provision of healthcare, especially the reining in of the huge private sector in both ambulatory and hospital services. I say that this is a larger challenge because no country in the world which has achieved universal access to healthcare was in a historical position like India, that is having a completely dominating private health sector which is also completely unregulated and lacks ethics in practice.
So what are the options for India? Not an easy question to answer. India spends around Rs. 3000 per capita on healthcare which is around 6% of its GDP. Huge indeed but of this only Rs.450 comes from the public exchequer or a mere 15%. Of the rest 96% is out-of pocket and only about 4% is insurance. The 15% of the expenditure which goes to the public sector accounts for 15% ambulatory care and 55% hospital care and the 85% of private expenditure takes care of 85% ambulatory care and 45% of hospital care. The public sector is plagued with a severe human resources problem especially doctors and nurses as well as supplies and maintenance which has led to a virtual collapse of the public health system over the last decade and a half, though in the last 5 years the NRHM has put in substantial efforts to try and revive atleast the rural public health system. Their efforts have not been very successful as the above said problems continue to plague the public health system and somewhere the health financing strategy in the public sector is to blame because the demands at the unit level where care is delivered are not used as the basis of developing the financing framework but some age old top-down mechanism which is not only ad hoc but bureaucratically suffocating.
In the urban areas while more resources are committed, especially for the hospital sector, the problems of human resources, supplies and maintenance are probably more severe because the numbers using the urban public health system are huge unlike the rural public health system which has very low levels of utilization. This shows that urban health systems, especially from the perspective of the poor have a large demand but it remains unfulfilled again because of a poor and inadequate financing strategy. Overcrowding in hospitals because of a lack of a robust primary care system in urban areas and consequently a lack of a referral system creates havoc with the urban healthcare system rendering it ineffective and inefficient as well as financially unsound. Hospital systems are best served with a global budgeting strategy which implies that funds are allocated on the basis of effective costing of services which are translated into per bed cost for effective delivery of care and budget levels thus determined. This does not happen in India and hence the urban health care system in India fails to deliver despite its high level of utilization atleast in numbers.
Where the private health sector is concerned it functions completely on supply-induced demand which fuels unnecessary procedures, prescriptions, surgeries, referrals etc.. leading to its characterization as an unethical and mal-practice oriented provisioning of healthcare. This has huge financial implications on households, inflating costs of healthcare, spiraling indebtedness and pauperization and being responsible for the largest OOPs anywhere in the world.
So the challenge is huge demanding huge restructuring of the healthcare system in the country through strong regulatory mechanisms both for the public and private sectors, education of professionals in ethics of practice, pushing the politicians for creating a strong political will to make healthcare a public good as well as generate and commit adequate resources to realize universal access. The restructuring of the healthcare system and its financing strategy, given the price advantage of India and economies of scale it offers, will actually reduce nearly by half the healthcare spending in the country and reduce substantially the household burden to access healthcare. Calculations I have done show that for universal access to healthcare across India we need less than 3% of GDP provided we show the political will to shift healthcare from the domain of the market to the category of a public good. This will indeed do a lot of public good!
rduggal57@gmail.com
Tuesday, August 25, 2009
Social Security and the SENSEX et.al.
In India those who can afford to buy healthcare from the market generally get free healthcare and those who do not have resources are left to the mercy of the market. This happens because the public health system in India is grossly inadequate to meet the healthcare demands of the population and hence those in poverty or living on subsistence (less than $2 per day, about 80% of the population) are forced to buy healthcare from the market and often this is done by selling assets or borrowing money. Most of those above subsistence are in the organized sector and have reasonable protection for healthcare through various social security provisions. For education, housing, pension and other welfare the same is true.
For example if you work or have worked in the armed forces, the social security package is indeed very liberal. Both during active service as well as a pensioner you get free comprehensive healthcare, quotas and fee waivers for children’s education, free rations, tax free commodities through canteen services, free housing while in service and subsidies for purchase of house at retirement, travel concessions etc.. Most other government employees also get a more or less similar range of benefits. Many in the organized private sector are also covered by various social security legislations and receive various benefits. But such social security in India covers only an estimated 15% of the population and another 2% – 3% use their own surplus resources to arrange for their social security. The remaining 82% of the population has to fend for itself because social security initiatives for the general population are very fragmented. From time to time the Central and State governments come up with social security schemes, especially for those below the poverty line or select vulnerable groups below the poverty line like widows, elderly or for scheduled castes and tribes etc.. But these schemes are only populist measures usually implemented during an election year and then forgotten, or even if some of them are sustained getting access to the benefits is a tardy and bureaucratic one.
The question here is whether universal social security is possible in India? Not an easy question to answer. With a tax:GDP ratio of less than 15% this is indeed difficult because countries which have universal or near universal social security have tax:GDP ratios of over 30%. Over the last two decades India has averaged a growth rate of around 8% with huge increases in its GDP but the governments have been unable to rake in the resources from this windfall because of massive reductions in tax rates. One has however seen some significant changes in the last decade. Realizing that the GDP growth comes largely from the service sector, including the financial sector, the introduction of service tax and the security transaction tax was an important maneuver which has largely contributed to the 2% - 3% of additional GDP being netted through public revenues over the last decade. But this is not adequate if the Indian State has to become a strong welfare state. We have to virtually double the tax:GDP ratio if any significant social security has to be provided to the entire population. This is the great challenge for the Indian State.
Let us illustrate this with an example for the health sector. The present government at the Centre had committed to spending upto 3% of GDP on healthcare in its Common Minimum Program Declaration but in their previous 5 years of governance the public health spending stagnated below 1% of GDP whereas private health expenditure zoomed from 4% of GDP to 5.5% of GDP. Now that they are back in power they have another opportunity to pursue this (as well as the other flagship programs of employment, education, rural infrastructure etc..) To achieve these alternative sources will have to be tapped in order to generate more resources. Employers and employees of the organised sector are an important source (ESIS, CGHS and other such health schemes should be merged with general health services) for payroll deductions towards social insurance payments. There should be no income ceilings for membership – any one who is employed in a registered establishment, whether private or public must be compulsorily a member and the employer and employee should contribute. There could also be a proviso to register self-employed persons who want to become members of such a social health insurance scheme. The agricultural sector is the largest sector in terms of employment and population and at least one-fourth to one-third of this population has the means to contribute to a health scheme. Some mechanism, either linked to land revenue or land ownership, will have to be evolved to facilitate receiving their contributions. Similarly self-employed persons like professionals, traders, shopkeepers, etc. who can afford to contribute can pay out in a similar manner to the payment of profession tax in some states. Further, resources could be generated through other innovative methods - health cess collected by local governments as part of the municipal/house taxes, proportion of sales turnover and/or excise duties of health degrading products like alcohol, cigarettes, paan-masalas, guthkas etc.. should be earmarked for the health sector, voluntary collection through collection boxes at hospitals or health centres or through community collections by panchayats, municipalities etc... Given the increasing domination of the service sector economy, especially financial services, Tobin tax or the STT kind of taxes must be used more extensively to generate revenues from all financial transactions in trade, stock markets, commodity markets, futures and options, foreign currency exchange, banking, credit card etc.
It is not very difficult to raise additional resources if the government has some commitment to the social sectors. For instance a health cess of 2% on sales turnover of health degrading products like alcohol, tobacco products like cigarettes, guthka, beedis, pan masalas etc. which together have a turnover estimated at Rs.2000 billion would itself generate Rs. 40 billion which would contribute a 10% addition to the existing health budgets of central and state governments combined. Similarly, the financial transaction tax (STT) introduced in the 2004-05 budget needs to be expanded and earmarked for social sector expenditures only (this should be an additional allocation and should not entail reductions from existing allocations out of present tax revenues). India is a rapidly growing financial sector economy and daily transactions in securities (Government and stock market, commodities, forex, including futures and options) alone are estimated at over Rs. 1000 billion per day and other cheque and financial instruments another Rs. 300 billion daily and as per the present STT rate of 0.15% this would generate over Rs. 500 billion annually and if the rate is doubled to 0.3% with the proviso that the increased rate would fund social sector budgets like health and education then we are looking at over Rs.1000 billion (3% of GDP) of additional taxes. And this would not hurt those transacting as it would be merely Re. 3 per Rs. 1000 transacted and there would be a return on this contribution in the form of improved health and education services. Apart from this there are other transactions like credit card transactions, commodities trading etc. which can contribute substantially. There are also other avenues for raising resources for the health sector, for example a health tax similar to profession tax, a health cess on land revenues and agricultural trade so that the rural economy can also contribute to revenues for public health, health cess on personal vehicles using fossil fuels, on luxury goods like air conditioners, on house rents and property taxes above a certain value or size etc. The bottom line is that these additional resources should be strictly earmarked for the health and other social sectors and should not find their way into the general pool – with this caveat and evidence of its use for strengthening social sectors like health and education people will not protest against such levies.
All these methods are used in different countries to enhance health and social sector finances. Many more methods appropriate to the local situation can be evolved for raising resources. The effort should be directed at assuring that at least 50% of the families are covered under some statutory contribution scheme. Since there will be no user-charges on services rendered people will be willing to contribute as per their capacity to social security funding pools and because they are making a dedicated contribution (similar to an insurance premium) they will also demand accountability in the use of those funds and the services provided. For the remaining 50% of the population which cannot contribute the government would provide the resources through the general tax pool.
The grapevine says that the Finance Ministry is likely to review or scrap the STT and look at alternate means for netting resources from the stock markets. This may not be such a good idea because if you remember the STT in the first place was a replacement for capital gains tax. Its implementation scrapped the long terms capital gains tax and reduced the short term capital gains to 10% from 33%. Infact the Finance Ministry needs to extend the application of the STT as a broader financial transaction tax covering all kinds of speculative financial transactions as well as other high end financial transactions. In the last 5 years the STT has averaged about Rs.6000 crores per year but has the potential even with the present rate if extended to all financial transactions to net in over Rs. 50,000 crores annually. Also as suggested above a doubling of the rate to 0.3% would help the government improve its tax:GDP ratio substantially. So the SENSEX, NIFTY et.al. has a great untapped potential in contributing to India’s social security. Given the fact that the market capitalization of just the BSE listed shares is equal to or more than the GDP of India the potential of the stock market transaction contributing to social security of the country is enormous. In a booming stock market such contributions would also boom, and when it is known that a booming SENSEX or NIFTY will contribute to peoples health and education there will be a vested interest to assure that the stock market is also healthy and robust.
Ravi Duggal
For example if you work or have worked in the armed forces, the social security package is indeed very liberal. Both during active service as well as a pensioner you get free comprehensive healthcare, quotas and fee waivers for children’s education, free rations, tax free commodities through canteen services, free housing while in service and subsidies for purchase of house at retirement, travel concessions etc.. Most other government employees also get a more or less similar range of benefits. Many in the organized private sector are also covered by various social security legislations and receive various benefits. But such social security in India covers only an estimated 15% of the population and another 2% – 3% use their own surplus resources to arrange for their social security. The remaining 82% of the population has to fend for itself because social security initiatives for the general population are very fragmented. From time to time the Central and State governments come up with social security schemes, especially for those below the poverty line or select vulnerable groups below the poverty line like widows, elderly or for scheduled castes and tribes etc.. But these schemes are only populist measures usually implemented during an election year and then forgotten, or even if some of them are sustained getting access to the benefits is a tardy and bureaucratic one.
The question here is whether universal social security is possible in India? Not an easy question to answer. With a tax:GDP ratio of less than 15% this is indeed difficult because countries which have universal or near universal social security have tax:GDP ratios of over 30%. Over the last two decades India has averaged a growth rate of around 8% with huge increases in its GDP but the governments have been unable to rake in the resources from this windfall because of massive reductions in tax rates. One has however seen some significant changes in the last decade. Realizing that the GDP growth comes largely from the service sector, including the financial sector, the introduction of service tax and the security transaction tax was an important maneuver which has largely contributed to the 2% - 3% of additional GDP being netted through public revenues over the last decade. But this is not adequate if the Indian State has to become a strong welfare state. We have to virtually double the tax:GDP ratio if any significant social security has to be provided to the entire population. This is the great challenge for the Indian State.
Let us illustrate this with an example for the health sector. The present government at the Centre had committed to spending upto 3% of GDP on healthcare in its Common Minimum Program Declaration but in their previous 5 years of governance the public health spending stagnated below 1% of GDP whereas private health expenditure zoomed from 4% of GDP to 5.5% of GDP. Now that they are back in power they have another opportunity to pursue this (as well as the other flagship programs of employment, education, rural infrastructure etc..) To achieve these alternative sources will have to be tapped in order to generate more resources. Employers and employees of the organised sector are an important source (ESIS, CGHS and other such health schemes should be merged with general health services) for payroll deductions towards social insurance payments. There should be no income ceilings for membership – any one who is employed in a registered establishment, whether private or public must be compulsorily a member and the employer and employee should contribute. There could also be a proviso to register self-employed persons who want to become members of such a social health insurance scheme. The agricultural sector is the largest sector in terms of employment and population and at least one-fourth to one-third of this population has the means to contribute to a health scheme. Some mechanism, either linked to land revenue or land ownership, will have to be evolved to facilitate receiving their contributions. Similarly self-employed persons like professionals, traders, shopkeepers, etc. who can afford to contribute can pay out in a similar manner to the payment of profession tax in some states. Further, resources could be generated through other innovative methods - health cess collected by local governments as part of the municipal/house taxes, proportion of sales turnover and/or excise duties of health degrading products like alcohol, cigarettes, paan-masalas, guthkas etc.. should be earmarked for the health sector, voluntary collection through collection boxes at hospitals or health centres or through community collections by panchayats, municipalities etc... Given the increasing domination of the service sector economy, especially financial services, Tobin tax or the STT kind of taxes must be used more extensively to generate revenues from all financial transactions in trade, stock markets, commodity markets, futures and options, foreign currency exchange, banking, credit card etc.
It is not very difficult to raise additional resources if the government has some commitment to the social sectors. For instance a health cess of 2% on sales turnover of health degrading products like alcohol, tobacco products like cigarettes, guthka, beedis, pan masalas etc. which together have a turnover estimated at Rs.2000 billion would itself generate Rs. 40 billion which would contribute a 10% addition to the existing health budgets of central and state governments combined. Similarly, the financial transaction tax (STT) introduced in the 2004-05 budget needs to be expanded and earmarked for social sector expenditures only (this should be an additional allocation and should not entail reductions from existing allocations out of present tax revenues). India is a rapidly growing financial sector economy and daily transactions in securities (Government and stock market, commodities, forex, including futures and options) alone are estimated at over Rs. 1000 billion per day and other cheque and financial instruments another Rs. 300 billion daily and as per the present STT rate of 0.15% this would generate over Rs. 500 billion annually and if the rate is doubled to 0.3% with the proviso that the increased rate would fund social sector budgets like health and education then we are looking at over Rs.1000 billion (3% of GDP) of additional taxes. And this would not hurt those transacting as it would be merely Re. 3 per Rs. 1000 transacted and there would be a return on this contribution in the form of improved health and education services. Apart from this there are other transactions like credit card transactions, commodities trading etc. which can contribute substantially. There are also other avenues for raising resources for the health sector, for example a health tax similar to profession tax, a health cess on land revenues and agricultural trade so that the rural economy can also contribute to revenues for public health, health cess on personal vehicles using fossil fuels, on luxury goods like air conditioners, on house rents and property taxes above a certain value or size etc. The bottom line is that these additional resources should be strictly earmarked for the health and other social sectors and should not find their way into the general pool – with this caveat and evidence of its use for strengthening social sectors like health and education people will not protest against such levies.
All these methods are used in different countries to enhance health and social sector finances. Many more methods appropriate to the local situation can be evolved for raising resources. The effort should be directed at assuring that at least 50% of the families are covered under some statutory contribution scheme. Since there will be no user-charges on services rendered people will be willing to contribute as per their capacity to social security funding pools and because they are making a dedicated contribution (similar to an insurance premium) they will also demand accountability in the use of those funds and the services provided. For the remaining 50% of the population which cannot contribute the government would provide the resources through the general tax pool.
The grapevine says that the Finance Ministry is likely to review or scrap the STT and look at alternate means for netting resources from the stock markets. This may not be such a good idea because if you remember the STT in the first place was a replacement for capital gains tax. Its implementation scrapped the long terms capital gains tax and reduced the short term capital gains to 10% from 33%. Infact the Finance Ministry needs to extend the application of the STT as a broader financial transaction tax covering all kinds of speculative financial transactions as well as other high end financial transactions. In the last 5 years the STT has averaged about Rs.6000 crores per year but has the potential even with the present rate if extended to all financial transactions to net in over Rs. 50,000 crores annually. Also as suggested above a doubling of the rate to 0.3% would help the government improve its tax:GDP ratio substantially. So the SENSEX, NIFTY et.al. has a great untapped potential in contributing to India’s social security. Given the fact that the market capitalization of just the BSE listed shares is equal to or more than the GDP of India the potential of the stock market transaction contributing to social security of the country is enormous. In a booming stock market such contributions would also boom, and when it is known that a booming SENSEX or NIFTY will contribute to peoples health and education there will be a vested interest to assure that the stock market is also healthy and robust.
Ravi Duggal
Doctors, Nurses and Public Health System
Getting Doctors and Nurses to Work for the Public Health System
One major concern with the functioning of the public health system is availability of key functionaries, especially doctors and nurses. The question is not one of lack of production because that happens adequately with about 25000 each of doctors (allopathic alone, in addition about 20000 AYUSH doctors) and nurses being produced annually. Infact we produce enough to cater to the world and Indian doctors and nurses are in great demand all over the world – over 5000 doctors and 7000 nurses go abroad each year. But the public health system, both in rural and urban areas, is unable to attract the requisite human resources needed for running the public health system. This despite the fact that over 80% of such production happens with public resources.
It is time that the legislators of this country give serious attention to this shortage of human resources for the public health system if the National Rural Health Mission has to achieve any significant success. Apart from doctors and nurses the public health system also needs managers under the architectural corrections mandated by the NRHM.
Over the years various mechanisms have been tried but they have failed because there was no legal backing for them. Whatever was done was done on good faith which is in fact the corner stone of the medical profession. But we all know that ethics in medical practice is getting even more distant with gross commercialization of healthcare and good faith is no longer a value cherished by this profession. This makes the role of the lawmakers of the country even more critical.
It is very clear that the only way of meeting the shortages of human resources for public healthcare and other public services is by instituting legislation that mandates compulsory national/state public service of 3 to 5 years. Thus all medical and nursing graduates as well as management, engineering, accounting, general stream etc.. graduates must put in compulsory public service as a social return for the investment in them by the public exchequer. This will not only provide the public system with human resources but it will also instill social responsibility and ethics in the professionals.
A number of countries have national public service, either military and/or non-military, and it is time India put in place such a mechanism. We need a legislation on national public service for anyone attaining age 21 with immediate effect otherwise the economic growth and development will have little meaning as we will increasingly lose skills and resources to the developed world one way or another.
We can learn from different countries, some have general compulsory public service and some target specific professionals like doctors and nurses. Since there is already a historical debate on the health professionals doing some compulsory service like in rural areas we can begin with this profession through a national ordinance making public health service compulsory with immediate effect and gradually bring in the broader legislation for a national public service.
We urge Parliamentarians to consider this with urgency and bring this into effect in the winter session of Parliament. Since 25000 each doctors and nurses graduate each year and over 10000 specialists also, we can immediately fulfill all shortages faced by the public health system with one stroke of the pen. Doctors and nurses will agitate and resist but the State must show strong political will to realize the critical objectives of our Constitution of social justice and equity. Similarly management graduates, especially from the IIMs should be targeted as for them it would be a great opportunity to prove their skills in efficiently managing public systems before they learn to manipulate markets. The NRHM needs these management graduates as much as they need doctors and nurses. Let the public health system become the experimental ground for a national public service because with healthcare needs addressed, a healthy population is the best guarantee for economic and social development.
(Published in IMPF Newsletter Vol. 2 No. 3, Winter Session, 2007)
One major concern with the functioning of the public health system is availability of key functionaries, especially doctors and nurses. The question is not one of lack of production because that happens adequately with about 25000 each of doctors (allopathic alone, in addition about 20000 AYUSH doctors) and nurses being produced annually. Infact we produce enough to cater to the world and Indian doctors and nurses are in great demand all over the world – over 5000 doctors and 7000 nurses go abroad each year. But the public health system, both in rural and urban areas, is unable to attract the requisite human resources needed for running the public health system. This despite the fact that over 80% of such production happens with public resources.
It is time that the legislators of this country give serious attention to this shortage of human resources for the public health system if the National Rural Health Mission has to achieve any significant success. Apart from doctors and nurses the public health system also needs managers under the architectural corrections mandated by the NRHM.
Over the years various mechanisms have been tried but they have failed because there was no legal backing for them. Whatever was done was done on good faith which is in fact the corner stone of the medical profession. But we all know that ethics in medical practice is getting even more distant with gross commercialization of healthcare and good faith is no longer a value cherished by this profession. This makes the role of the lawmakers of the country even more critical.
It is very clear that the only way of meeting the shortages of human resources for public healthcare and other public services is by instituting legislation that mandates compulsory national/state public service of 3 to 5 years. Thus all medical and nursing graduates as well as management, engineering, accounting, general stream etc.. graduates must put in compulsory public service as a social return for the investment in them by the public exchequer. This will not only provide the public system with human resources but it will also instill social responsibility and ethics in the professionals.
A number of countries have national public service, either military and/or non-military, and it is time India put in place such a mechanism. We need a legislation on national public service for anyone attaining age 21 with immediate effect otherwise the economic growth and development will have little meaning as we will increasingly lose skills and resources to the developed world one way or another.
We can learn from different countries, some have general compulsory public service and some target specific professionals like doctors and nurses. Since there is already a historical debate on the health professionals doing some compulsory service like in rural areas we can begin with this profession through a national ordinance making public health service compulsory with immediate effect and gradually bring in the broader legislation for a national public service.
We urge Parliamentarians to consider this with urgency and bring this into effect in the winter session of Parliament. Since 25000 each doctors and nurses graduate each year and over 10000 specialists also, we can immediately fulfill all shortages faced by the public health system with one stroke of the pen. Doctors and nurses will agitate and resist but the State must show strong political will to realize the critical objectives of our Constitution of social justice and equity. Similarly management graduates, especially from the IIMs should be targeted as for them it would be a great opportunity to prove their skills in efficiently managing public systems before they learn to manipulate markets. The NRHM needs these management graduates as much as they need doctors and nurses. Let the public health system become the experimental ground for a national public service because with healthcare needs addressed, a healthy population is the best guarantee for economic and social development.
(Published in IMPF Newsletter Vol. 2 No. 3, Winter Session, 2007)
National Health Bill and Right to Healthcare
Dear Friends of mfc and phm
I have been closely reading the debate and find that we are all saying the same thing but in different ways. Colin is using the legal lens, Abhay the universal access lens etc..
I find the Health Bill very complex and complicated and full of legalities. I would prefer a health rights bill which is simple like the Health Canada Act which spells out the basic principles and mandates the rights. The details are taken care of separately through various other mechanisms.
The public sector-private sector dichotomy is the key issue to sort out when we univresalise healthcare access. Thailand is the most recent example having done this successfully. Pooled public financing is the key tool to control the health sector. Three-fourths of the population will have to be completely supported directly by state agencies without any expectation of contributions. The rest will contribute through their employment or business and over time the proportion of contributors would increase with economic development. The national government needs to create a public agency by law which will have the authority to pool all resources for the health sector from government, employers, individuals in the contributory group, social insurance funds etc.. and then this agency will have to purchase health care from all providers whether public or private within the framework of rules and regulations governing the nature, character, quality and quantity of services to be provided. This is the only way in which any universal access healthcare suystem operates in the world. The only exceptions are countries where healthcare is a near state monopoly like Cuba, Sweden, etc.. Given the largest private health sector that India has the Cuban or Swedish models are not feasible for India. The Thai and Brazil models which are more recent and emerge from a political economy closer to India's are more realistic options for India to emulate. Structurally Brazil being a federation may have more learnings for India but Thailand has managed the private sector better. The private sector in India is much larger than any country in the world, unregulated, unethical and unwilling to be part of public domain and joins PPPs only when they can milk the state - that is the unfortunate character of the Indian bourgeosie whether a small time bania, a doctor or an Ambani.
Thus the task in India for universal access to healthcare is not going to be as simple or easy. The other problem is the middle class. The moment we have some money we debunk the public sector and shift to the private sector. Mumbai city is a classical example. Until mid eighties the public health facilities run by BMC and govt in Mumbai were very robust and many of us used them. As late as 1989 my daughter was born in a public hospital. The middle classes were the voice and the poor benefited from that voice. The schools of BMC met the same fate. In the eighties with grant-in-aid institutions being set up, the middle classes migrated to the private schools and the BMC schools lost their voice. Fortunately the public transport system has survived because all classes use them - this is thanks to there being not enough roads to accomodate private vehicles - the many flyovers being constructed are taking us into that direction! Let us look within and ask how many of us use the public health system when we fall ill or send our children to government schools?
This brings me to the point of existence of dual systems, one for the poor (read public) and one for the rich (read private). This way we will never get to universal access. Universal access means the existence of a single system that is managed and control by a multistakeholder public agency who conrols it through their power of being a single-payer of services. Provision of services can be by a public or private provider as may be organised under that system. All people whether rich or poor or any other vulnerable category have the right to access any facility mandated under the organised and regulated system, whether public or private and access services without making any direct payment. There are generally two types of organised mandates, one like the UK NHS where families are assigned to local GPs paid using capitation who provide primary care and are gatekeepers for referral and higher levels of care or the portable Canadian system which allows open access to ay provider who are paid on fee-for-services basis.
We already have a public network of primary care, secondary care and tertiuary care facilities and we need to build around them by infusing human resources from the private sector by using one of the above systems of payment through an organised mechanism. Getting doctors and nurses is a genuine problem for the public health facilities and therefore we need to think out of the box and find ways of getting providers to work with the public health system.
We need to intensify this debate and get govt also to respond to this. I recently wrote a critique of the NRHM budget in the EPW of August 15 2009 and it was called Sinking Flagships and Health Budget. Our friend in the ministry Amarjeet Sinha promptly responded saying that he was going to respond to my provocative article. Thats good news and we must thus take the present debate also to them.
Ravi
I have been closely reading the debate and find that we are all saying the same thing but in different ways. Colin is using the legal lens, Abhay the universal access lens etc..
I find the Health Bill very complex and complicated and full of legalities. I would prefer a health rights bill which is simple like the Health Canada Act which spells out the basic principles and mandates the rights. The details are taken care of separately through various other mechanisms.
The public sector-private sector dichotomy is the key issue to sort out when we univresalise healthcare access. Thailand is the most recent example having done this successfully. Pooled public financing is the key tool to control the health sector. Three-fourths of the population will have to be completely supported directly by state agencies without any expectation of contributions. The rest will contribute through their employment or business and over time the proportion of contributors would increase with economic development. The national government needs to create a public agency by law which will have the authority to pool all resources for the health sector from government, employers, individuals in the contributory group, social insurance funds etc.. and then this agency will have to purchase health care from all providers whether public or private within the framework of rules and regulations governing the nature, character, quality and quantity of services to be provided. This is the only way in which any universal access healthcare suystem operates in the world. The only exceptions are countries where healthcare is a near state monopoly like Cuba, Sweden, etc.. Given the largest private health sector that India has the Cuban or Swedish models are not feasible for India. The Thai and Brazil models which are more recent and emerge from a political economy closer to India's are more realistic options for India to emulate. Structurally Brazil being a federation may have more learnings for India but Thailand has managed the private sector better. The private sector in India is much larger than any country in the world, unregulated, unethical and unwilling to be part of public domain and joins PPPs only when they can milk the state - that is the unfortunate character of the Indian bourgeosie whether a small time bania, a doctor or an Ambani.
Thus the task in India for universal access to healthcare is not going to be as simple or easy. The other problem is the middle class. The moment we have some money we debunk the public sector and shift to the private sector. Mumbai city is a classical example. Until mid eighties the public health facilities run by BMC and govt in Mumbai were very robust and many of us used them. As late as 1989 my daughter was born in a public hospital. The middle classes were the voice and the poor benefited from that voice. The schools of BMC met the same fate. In the eighties with grant-in-aid institutions being set up, the middle classes migrated to the private schools and the BMC schools lost their voice. Fortunately the public transport system has survived because all classes use them - this is thanks to there being not enough roads to accomodate private vehicles - the many flyovers being constructed are taking us into that direction! Let us look within and ask how many of us use the public health system when we fall ill or send our children to government schools?
This brings me to the point of existence of dual systems, one for the poor (read public) and one for the rich (read private). This way we will never get to universal access. Universal access means the existence of a single system that is managed and control by a multistakeholder public agency who conrols it through their power of being a single-payer of services. Provision of services can be by a public or private provider as may be organised under that system. All people whether rich or poor or any other vulnerable category have the right to access any facility mandated under the organised and regulated system, whether public or private and access services without making any direct payment. There are generally two types of organised mandates, one like the UK NHS where families are assigned to local GPs paid using capitation who provide primary care and are gatekeepers for referral and higher levels of care or the portable Canadian system which allows open access to ay provider who are paid on fee-for-services basis.
We already have a public network of primary care, secondary care and tertiuary care facilities and we need to build around them by infusing human resources from the private sector by using one of the above systems of payment through an organised mechanism. Getting doctors and nurses is a genuine problem for the public health facilities and therefore we need to think out of the box and find ways of getting providers to work with the public health system.
We need to intensify this debate and get govt also to respond to this. I recently wrote a critique of the NRHM budget in the EPW of August 15 2009 and it was called Sinking Flagships and Health Budget. Our friend in the ministry Amarjeet Sinha promptly responded saying that he was going to respond to my provocative article. Thats good news and we must thus take the present debate also to them.
Ravi
Saturday, August 15, 2009
Money for Right to Healthcare
Calculation for Comprehensive Healthcare in India for Right to Healthcare
2. First level Referral Care
In rural areas for every 5 PHCs there would be one 50 bedded hospital and this would cost Rs. 400,000 per bed per annum or Rs. 20 million per such hospital. As per this ratio we would need 7500 rural hospitals and this would translate into Rs. 150 billion for the country as a whole.
In urban areas for each 10 PHCs one 200 bedded hospital would be needed and this would cost Rs. 500,000 per bed per year or Rs. 100 million per hospital. As per this ratio 700 such hospitals would be needed and this would translate into Rs. 70 billion for the country as a whole.
3. Secondary and Tertiary care / Teaching Hospitals
One such hospital per 2.5 million population, that is 440 hospitals of 500 bed each at a cost of Rs. 500,000 per bed per year translating into Rs. 250 million per hospital or Rs. 110 billion for the country as a whole.
Primary + First Referral + Secondary/Tertiary = Rs. 696.50 billion
4. Other costs
Capital @ 10% or Rs. 69.65 billion
Research and Data systems @ 4% or Rs. 27.86 billion
Admin costs @ 4% or Rs 27.86 billion
Audit costs @ 2% or Rs 13.93 billion
Grand Total would be Rs. 835.80 billion or Rs. 760 per capita and this works out to 1.9% of GDP. This calculation excludes medical education and medical research, which would be 15% and 10% of the total healthcare cost, respectively, amounting to an additional Rs.209 billion.
(2007 prices)
1. Primary healthcare (Family Medical Practitioner + Epidemiological Station-PHC) with following features:
• Staff composition for each PHC-FMP unit to include 4 doctors, 1 PHN, 2 nurse midwives, 8 ANMs (females), 4 MPWs (males), 1 pharmacist, 1 clerk/stat asst., 1 office assistant, 1 lab technician, 1 driver, 1 janitor – this adds up to salaries and benefits/capitation of Rs. 6 million (salary structures across states may be different and hence this could vary). Doctors and nurses may either be salaried or contracted in on a capitation basis as in the NHS of UK. The curative care component should work as a family medical practice with families (500 – 2000, depending on density) being assigned to each such provider.
• 10 beds per PHC
• Average rural unit to cover 20,000 population (range 10-30 thousand depending on density); average urban unit to cover 50,000 population (range 30-70 thousand population depending on density)
• Non-salary costs separately for rural (avg 20000 population per unit) and urban (avg 50000 population per unit) units per unit cost (Rupees) as per table below:
1. Primary healthcare (Family Medical Practitioner + Epidemiological Station-PHC) with following features:
• Staff composition for each PHC-FMP unit to include 4 doctors, 1 PHN, 2 nurse midwives, 8 ANMs (females), 4 MPWs (males), 1 pharmacist, 1 clerk/stat asst., 1 office assistant, 1 lab technician, 1 driver, 1 janitor – this adds up to salaries and benefits/capitation of Rs. 6 million (salary structures across states may be different and hence this could vary). Doctors and nurses may either be salaried or contracted in on a capitation basis as in the NHS of UK. The curative care component should work as a family medical practice with families (500 – 2000, depending on density) being assigned to each such provider.
• 10 beds per PHC
• Average rural unit to cover 20,000 population (range 10-30 thousand depending on density); average urban unit to cover 50,000 population (range 30-70 thousand population depending on density)
• Non-salary costs separately for rural (avg 20000 population per unit) and urban (avg 50000 population per unit) units per unit cost (Rupees) as per table below:
Rural Urban
1.Medicines/Consumables @Rs. 40 per capita/yr 800,000 2,000,000
2. Travel/POL etc. @ Rs 10000/5000 pm rural/urban 120,000 60,000
3. Office expenses/utilities @ Rs.10000/12000 pm R/U 120,000 200,000
1.Medicines/Consumables @Rs. 40 per capita/yr 800,000 2,000,000
2. Travel/POL etc. @ Rs 10000/5000 pm rural/urban 120,000 60,000
3. Office expenses/utilities @ Rs.10000/12000 pm R/U 120,000 200,000
4. Maintenance Building/equipment 150,000 250,000
5. Rent and/or amortization 200,000 300,000
6. CHW honorarium @ Rs.1000/1250 pm 480,000 495,000
(1 CHW per 500 popn rural and 1500 urban)
7. Other costs 130,000 195,000
Total Non-salary 2,000,000 3,500,000
Total Primary care Cost per unit 8,000,000 Rs.9,500,000
(Rs. 400 per capita) (Rs. 190 per capita)
Total Primary care cost for country Rural: 750 million population needing 37,500 PHCs; and urban 350 million population needing 7000 PHCs : Rs. 300 billion (rural) and Rs. 66.5 billion (urban)
(Rs. 400 per capita) (Rs. 190 per capita)
Total Primary care cost for country Rural: 750 million population needing 37,500 PHCs; and urban 350 million population needing 7000 PHCs : Rs. 300 billion (rural) and Rs. 66.5 billion (urban)
2. First level Referral Care
In rural areas for every 5 PHCs there would be one 50 bedded hospital and this would cost Rs. 400,000 per bed per annum or Rs. 20 million per such hospital. As per this ratio we would need 7500 rural hospitals and this would translate into Rs. 150 billion for the country as a whole.
In urban areas for each 10 PHCs one 200 bedded hospital would be needed and this would cost Rs. 500,000 per bed per year or Rs. 100 million per hospital. As per this ratio 700 such hospitals would be needed and this would translate into Rs. 70 billion for the country as a whole.
3. Secondary and Tertiary care / Teaching Hospitals
One such hospital per 2.5 million population, that is 440 hospitals of 500 bed each at a cost of Rs. 500,000 per bed per year translating into Rs. 250 million per hospital or Rs. 110 billion for the country as a whole.
Primary + First Referral + Secondary/Tertiary = Rs. 696.50 billion
4. Other costs
Capital @ 10% or Rs. 69.65 billion
Research and Data systems @ 4% or Rs. 27.86 billion
Admin costs @ 4% or Rs 27.86 billion
Audit costs @ 2% or Rs 13.93 billion
Grand Total would be Rs. 835.80 billion or Rs. 760 per capita and this works out to 1.9% of GDP. This calculation excludes medical education and medical research, which would be 15% and 10% of the total healthcare cost, respectively, amounting to an additional Rs.209 billion.
Summary Table
Type of Cost Amount in Rupees billion
1. Primary care 366.50
2.First Referral Rural 150.00
3. First Referral Urban 70.00
4. Secondary/Tertiary care 110.00
SUBTOTAL 696.50
5. Capital @ 10% 69.65
6. Research and data systems @ 4% 27.86
7. Admin @ 4% 27.86
8. Audit @ 2% 13.93
TOTAL Healthcare Cost 835.80 or 1.9% of GDP
Medical Education and Research 208.95
Grand Total (Rs. 950 per capita) 1044.75 or 2.4% of GDP
Type of Cost Amount in Rupees billion
1. Primary care 366.50
2.First Referral Rural 150.00
3. First Referral Urban 70.00
4. Secondary/Tertiary care 110.00
SUBTOTAL 696.50
5. Capital @ 10% 69.65
6. Research and data systems @ 4% 27.86
7. Admin @ 4% 27.86
8. Audit @ 2% 13.93
TOTAL Healthcare Cost 835.80 or 1.9% of GDP
Medical Education and Research 208.95
Grand Total (Rs. 950 per capita) 1044.75 or 2.4% of GDP
Making it Happen...
A large part of my career I have spent on working on this issue through research, trainings, campaigns, advocacy... This is a dream that I have nurtured since I go into the field of health way back in 1982 when I joined the Foundation for Research in Community Health. Under the then raging community health movement one was swayed by experimental alternatives and the NGO sector seemed to appear as a panacea to realizing this dream but a quick study of this sector made it very clear to us that some of the NGOs were in the business of charity and others were just in business, albeit with an alternate approach that atelast appeared to be progressive on the face of it. With further research into households and their expenditures on health care in 1987 it became crystal clear that healthcare was a business the way it was being run, whether run by the government, private sector or the NGOs. The need was to change this so that healthcare was reestablished as a public good, that is it was not left to the mercy o the markets. Thats the key essence of healthcare and only when we imbibe that will we be able to realize the dream of right to healtcare...
Actually I do not see it as a dream anymore. In fact that was the mistake.. How can right to healthcare be a dream? It has to be a reality!
Then some of us friends came together and set up Anusandhan Trust in 1992 and its first centre the Centre for Enquiry into Health and Allied Themes (CEHAT) with the objective of moving towards establishing right to healthcare. We pursued the same interests and tried to reach out to the larger world by expanding debate and dialogue on these issues, collaborating with many others who had joined this struggle. Through this emerged the Peoples Health Movement in 2000 and later its campaign on Right ot Healthcare. (see http://phmovement.org/ )
The PHM's campaign of Health For All Now and the right to healthcare while mobilzing communities and civil society has been collaborating with public agencies like the National Human Rights Commission and the National Rural Health Mission etc.. with an increasing hope of realizing the right to healthcare.
While this goal may still appear to be distant it is becoming increasingly desired by more and more people. The question is not whether this is possible but whether we want to make it possible... Resources are not really an issue. In one of my other posts Money for Right to Health I show that we do not have dearth of resources and that we can actually realize this with less than half of what we all spend on healthcare, mostly out of pocket and with very poor results. Thus if we make right to healthcare a reality then we will actually save resources that we spend wastefully on unregulated healthcare....
Actually I do not see it as a dream anymore. In fact that was the mistake.. How can right to healthcare be a dream? It has to be a reality!
Then some of us friends came together and set up Anusandhan Trust in 1992 and its first centre the Centre for Enquiry into Health and Allied Themes (CEHAT) with the objective of moving towards establishing right to healthcare. We pursued the same interests and tried to reach out to the larger world by expanding debate and dialogue on these issues, collaborating with many others who had joined this struggle. Through this emerged the Peoples Health Movement in 2000 and later its campaign on Right ot Healthcare. (see http://phmovement.org/ )
The PHM's campaign of Health For All Now and the right to healthcare while mobilzing communities and civil society has been collaborating with public agencies like the National Human Rights Commission and the National Rural Health Mission etc.. with an increasing hope of realizing the right to healthcare.
While this goal may still appear to be distant it is becoming increasingly desired by more and more people. The question is not whether this is possible but whether we want to make it possible... Resources are not really an issue. In one of my other posts Money for Right to Health I show that we do not have dearth of resources and that we can actually realize this with less than half of what we all spend on healthcare, mostly out of pocket and with very poor results. Thus if we make right to healthcare a reality then we will actually save resources that we spend wastefully on unregulated healthcare....
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