TWENTY five years ago, a child born in India had significantly better chances of survival than in neighbouring Nepal and Bangladesh. Twenty five years later, after neo-liberal reforms were implemented in India since 1991, both Nepal and Bangladesh have lower child mortality rates than India, ie, a child born in these countries are more likely to survive than in India. The above encapsulates the story of neo-liberal reforms in India and its impact on people's health. India is projected as the poster-boy of neo-liberal reforms and economic growth data is claimed to indicate that India is the fastest growing economy in the world. Yet for the people of India it has meant little and today in key human development indicators we lag behind many Least Developed Countries (LDCs) such as our immediate neighbours, Nepal and Bangladesh.

REFORMS INFORMED BY

WORLD BANK'S PRESCRIPTIONS

India's reforms in the health sector have been informed by measures prescribed by agencies such as the World Bank. The reforms prescribed for the health sector included imposing ceilings on public health expenditure, promoting cost-recovery (user fees) in public institutions, the segmentation of the health care system (into ‘basic’ care for the poor and private care for the rich) and out-sourcing functions to the private sector. Health sector reforms in India initiated after 1991, as we shall see later,  conscientiously followed these prescriptions.

It is to be noted that neglect of the health sector did not start in 1991. The public health system in India has historically suffered from sustained underfunding and overall neglect since the 1950s. Except for a brief period in the mid 1980s when public spending showed a consistently upward trend (albeit of low amplitude), it has remained consistently below or around 1 percent of GDP. Such a public health system, already grossly underfunded, faced a further squeeze in the immediate aftermath of the initiation of neo-liberal economic reforms in 1991. The union budget for 1992-93, for example, slashed allocation to the health sector by around 40 percent. Further, the mantra of ‘fiscal discipline’ was forced on state budgets as well. As a result, by the late 1990s, governments in various states of the country were forced to introduce austerity measures. This further worsened the impact of cuts in the union budget as upward of 70 percent of expenditure on health care is made by state governments.

An already ailing public health system was brought to its knees, paving the way for greater penetration by private care providers. The very low level of public spending on health in India places a huge financial burden on households. By 2004-05, per capita public spending on health was Rs 242, while private spending was almost four times at Rs 959  (figures based on disaggregated data available from the National Health Accounts). As a consequence, the number of people pushed below the poverty line (as defined by the government) because of catastrophic Out of Pocket (OoP) expenses incurred on health care has risen from about 26 million in 1993-94 to 39 million in 2004-05, and to an estimated 70-90 million in 2012-13.  Rural households spend a larger proportion of household income on health care than their urban counterparts because of poorer access to public health facilities. Evidence also indicates that lack of access to health facilities and lack of finances are major reasons for the sick not seeking treatment. In 2004-05 over 12 percent in rural areas reported that they did not seek treatment because of lack of access to health facilities and 25 percent cited financial reasons for not seeking treatment (up from 15 percent in 1986-87). Currently only about 20 percent of out-patients and less than 40 percent of in-patients are treated through public facilities. The rest are at the mercy of often unscrupulous and expensive private providers. A heavily diluted Clinical Establishments Act, designed to regulate all health care facilities, was passed by parliament during the UPA government's tenure, but even its limited provisions have not even been notified in most states.

Currently, India’s health system is one of the most privatised in the world and public expenditure is one of the lowest. Of the total expenditure on healthcare in India only 32 percent is public expenditure – the 16th lowest (among 190 countries in the World Bank Database) in the august company of countries such as Sierra Leone, Afghanistan, Haiti and Guinea. India performs even worse for public spending on healthcare as percent of GDP. At 1.3 percent of GDP spent on healthcare India stands 12th from the bottom in the company of Myanmar, Haiti, South Sudan, Timor-Leste and Pakistan.

MEDICINES FOR ALL OR

MEDICINES FOR PROFITS?

Ironically, while India is the third largest manufacturer of medicines in the world and exports over half of its production of medicines, expenditure on medicines constitutes the single largest item in OoP expenses incurred by households. India is also home to the largest number of people (estimated between 50-70 percent of the country's population) in the world who cannot access all essential medicines when they need them. Yet public procurement and distribution of medicines constitute a very small fraction of drug consumption (around 10 percent of total). The UPA government during the first part of its tenure had initiated discussions to support, from central funds, pooled purchasing mechanisms in states. Only Tamil Nadu has had a functioning public procurement system, based on pooled purchasing since the 1990s. The experience of Tamil Nadu in curtailing medicine costs in the public sector and in eliminating incidence of stock outs of essential medicines (Tamil Nadu supplies almost 400 medicines and devices through this system). However the initiative to scale up the experience of Tamil Nadu through central support was still born. Instead the UPA government left it to the states to take on similar schemes. The NDA government has continued with a similar hands-off policy, but many states are beginning to adopt schemes under the rubric of the "Free Medicines Scheme" where a specified list of essential medicines are made available free of cost in all public facilities. Rajasthan during the Congress government's tenure started implementation of the most comprehensive and most effective of all state "free medicine" schemes. Interestingly when the BJP was voted to power there were attempts to abort the scheme. However popular support has kept the free medicines scheme in Rajasthan going.

The major limitation of the "free medicines" scheme, even if it were to be implemented adequately in all states (which is nowhere near the current situation) is that an overwhelming proportion of medicines is purchased directly by patients. Patients are deprived of medicines because they are priced too high and not because they are not available. That is why Control of Drug prices has been a major issue in India. While the first comprehensive Drug price order (DPCO) was issued in 1978 and ceiling prices of 343 drugs were fixed, successive DPCOs in 1987 and 1994 diluted its provisions. The 1994 DPCO reduced the number of price controlled medicines to only 74. A public interest litigation challenged the continuous dilution of the DPCOs provisions and responding to this the Supreme Court directed the then UPA government to fix ceiling prices of all essential medicines (numbering around 350). The UPA government made a complete mockery of the Court's directive by completely changing the way ceiling prices were to be fixed. Instead of the earlier method of fixing prices based on actual manufacturing costs, the UPA government introduced a new DPCO in 2012 which covered all essential medicines but where ceiling prices were fixed in accordance with the then existing market prices. Since the existing market prices had already been rigged by drug companies, the impact of the DPCO of 2012 was a less than 10 percent overall reduction in drug prices. If the method of fixing prices based on manufacturing costs had been maintained, reductions would have been to the tune of 30-40 percent or even more. Curiously the current NDA government is now taking credit for the implementation of the new DPCO, glossing over the fact that the 2012 DPCO was a fraud foisted on the country by the UPA government in order to protect drug companies.

Having become a signatory to the WTO agreement in 1995 India was required to forgo the protection of the long-standing 1970 Patent Act in 2005. As a result, unlike earlier, generic pharmaceutical companies are unable to produce cheaper versions of new drugs, and many new drugs are now sold by multinational corporations at prices well beyond the reach of most Indian patients. Successive governments have refused to make these new drugs more affordable by invoking a section of the country's Patent Act (called compulsory licensing) which allows the government to license local companies to manufacture and sell patented drugs. The application of compulsory licenses are known – through global experience – to bring down the cost of patented medicines by 90-95 percent.

UNDERFUNDING PUBLIC SERVICES TO

PAVE WAY FOR INSURANCE SCHEMES

Since the mid 2000s we have seen two major initiatives related to healthcare delivery. The first was the setting up of the National Rural Health Mission (NRHM) in 2005. This was a partial response to the almost complete breakdown of public services in the aftermath of the neo-liberal reforms. The ambition of the NRHM, to strengthen and scale up public serves was laudable. The NRHM (or the NHM as it is now claimed) has led to some improvements in public services. But its broad ambitions have rarely been met as the scheme has consistently been underfunded. The underfunding of the NHM should be read in the light of the National Health Policy’s comment that “The budget received (for the National Rural Health Mission) and the expenditure thereunder was only about 40 percent of what was envisaged for a full re-vitalisation in the NRHM Framework”.

The other development has been the introduction of public funded health insurance schemes since 2007, both at state levels (eg, the first such scheme was in AP, called the Arogyasri scheme) and at the central level -- called the Rashtriya Swasthya Bima Yojana and now the Rashtriya Swasthya Suraksha Yojana. These schemes explicitly separate financing and provision of health care. They allow beneficiaries to access care in accredited facilities – which may be in the private or the public sector. In practice, an overwhelming majority of the accredited facilities are in the private sector. These insurance schemes (hallmark of neo-liberal reforms in the health sector the world over) serve to further strengthen the private sector by utilising public finances. Furthermore, these schemes only cover for hospital care while a bulk of private expenses are incurred by non-hospitalised patients. The problem lies not only with inadequate coverage but also with the way the system is milked by unscrupulous private providers for financial gains. These schemes, largely implemented through partnerships with private providers, have been indicted in several states for defrauding the system of hundreds of crores by performing unnecessary surgeries (for example a huge rise in unnecessary uterus removal operations) and for not contributing to better health outcomes.

ACCELERATED NEO-LIBERAL REFORMS

TO ACCOMMODATE THE BJP'S VISION

Within months of assuming office, in end 2014, the current BJP government signaled its intentions clearly by slashing 20 percent of committed central funds to the health sector. The 2016-17 budget indicates that the government intends to progressively starve public services of resources while outsourcing healthcare to the profit driven private sector. Overall, allocation to the ministry of health and family welfare saw a marginal increase from 32,819 crores in the Revised Estimates (RE) for 2015-16 to Rs 37,061 crores. After adjusting for inflation this represents a mere 5 percent per capita increase. Even the grossly understated ambition of the recently released National Health Policy is to increase healthcare expenditure to 2.5 percent of GDP. This would require a doubling of current expenditure and even simple mathematics would indicate that this would entail a 25-30 percent per capita increase in allocation every year, if the target of 2.5 percent of GDP spending on healthcare is to be achieved in the next five years. What is particularly worrying is that the trend of starving the National Health Mission (NHM) of funds continues. Allocation for the NHM saw an insignificant rise – from Rs19,135.37 crore in 2015-16 year to Rs 19,437 for 2016-17. Given the impact of inflation and population increase this actually represents a 6-7 percent decrease, per capita, in allocation for the NHM.

In contrast to the clear and deliberate intent to choke financial resources available to public health services through the NHM, is the headline declaration in the budget speech of finance minister that the public funded health insurance scheme would be expanded. The BJP government’s obsession with the promotion of insurance based care needs to be examined in the context of mounting evidence that existing national and state health insurance schemes have failed to rein in catastrophic health expenditure incurred by the poor. The latest NSSO data indicates that the penetration of such insurance schemes is just 13 percent in rural areas and 12 percent in urban areas. The government is also aggressively pushing for private health insurance and the 2015-16 budget explicitly encourages this by announcing tax relief to those who purchase private health insurance. At the same time states such as Rajasthan and Madhya Pradesh are engaged in drawing up plans for leasing out existing rural public facilities to the private sector.

The impact of these policies is clearly being felt. The NHM’s activities have faltered in many states and in some states they have stuttered to a standstill. Within six months of the new government’s installation, absorption of funds had started faltering and  just 42 percent of funds allocated to the NHM were spent in the first six months of the 2014-15 fiscal year. The government’s own data (in the yearly Rural Health Statistics) points to extremely disturbing trends. The number of Auxillary Nurse Midwives (ANMs) serving in the public system actually saw a reduction between 2014 and 2015, as did the number of specialists working in public facilities. In March 2015 only 18.8 percent of sanctioned posts for specialists in rural public facilities had been filled. Infrastructure creation through the NHM is also slowing down and only 288 new Primary Health Centres (PHCs) and 33 new Community Health Centres (CHCs) were set up in 2014-15 against 572 and 176 respectively in the corresponding period in 2013-14. Serious shortages of consumables and human resources have surfaced, with widely reported periodic stock-outs of medicines for the HIV and TB programmes.

The BJP’s vision of healthcare has little role for public health services. Insurance mechanisms and not public provisioning is the pivot of its so-called ‘health assurance’ model. In the coming days we are likely to witness a more explicit roll out of this vision, characterised by basic and not comprehensive public services available only at the primary levels of care. The BJP’s ideologues would of course be happy that this would thus pave the way for an ever larger penetration of private medical care, especially corporate run chains of private hospitals.