Guest post by KAVERI GILL
The world of development is as prone to fashions as any other. In recent times, ‘evidence-based policy’ has become the new gold standard, following hot on the heels of participation and ownership of policy processes and outcomes by academics, activists and civil society groups. This applies within nation states, especially of the global South. India today epitomises such objective and bottom-up democratic largesse in favour of the ‘aam admi’- for largesse it is, make no mistake – with a near constant refrain of the avowed aim of ‘inclusive growth’. And yet, does it really?
Or is politically correct discourse and seemingly open decision-making processes in the social sector sphere merely dangerous fig leaves for seismic and opaque shifts in policy, which have very little to do with evidence and even less to do with broad-based consensus? Rather, they are an outcome of fixed ex-ante views – which may be termed as a distinct partiality to the Chicago School of Economics – about the path to a fictitious endpoint of a mainstream development paradigm, which itself is faith-based. It is not justified by theory or a heterodox reading of the empirical experiences of presently developed countries, let alone latecomer developing nations which are, for various exogenous and endogenous reasons, likely to have different trajectories altogether. I refer here to the hackneyed line about faster growth being pursued as a necessary, if not sufficient, condition for eventual trickle down, no matter that the ‘dur khaima’ of an equitable society is never arrived at!
In his address to the nation last Friday, the Hon. Prime Minister mentioned ‘the common man’ twice in the opening lines, as a straw man in whose name and interests all ‘difficult’ second-stage reforms are being undertaken. On p.1 of the Planning Commission of India’s Approach Paper to the XIIth Plan , it is argued that high growth during the XIth Plan was seen as instrumental to achieving two ends: to create income and employment opportunities for better living standards for the majority, and to generate resources in order to finance social sector programmes, aimed at “enabling inclusiveness”. It goes on to define the latter: “…inclusiveness is a multidimensional concept. Inclusive growth should result in lower incidence of poverty, broad-based and significant improvement in health outcomes…” (ibid., p.2). A wish list of the Left liberal’s ideal social contract follows, in the Rawlsian sense of justice, and quite far from Nozick’s Libertarian minimal nightwatchmen role of the state. The discourse could not be better.
But let us unpack the ‘inclusive growth’ jargon – with particular reference to public health care – as an illustrative exercise of evidence, and its selective and biased use to derive unwarranted policy prescriptions in the social sector sphere in recent times. Quickly, to recap a refresher undergraduate course in economics, health care is not a routine commodity, rather more of a public good , exhibiting externalities and marked information asymmetries of moral hazard and adverse selection. In layman’s terms, because of these and other characteristics, the state remains heavily involved in this sector even in advanced countries, through public financing, and provision or regulation or both, for the market is bound to fail. When returns to large investments accrue over the time horizon of many generations – and admittedly many governments – then it is only a progressive state that has the gumption to invest in such sectors.
Judging by its expansive discourse and promises, one could be forgiven for thinking this is precisely what the present government in India means to do. For structurally, the ‘demographic dividend’ advantage of a relatively young population, that it also constantly waxes eloquent about, can only be realised if we have achieved decent health (and education) outcomes for the majority. It is the briefest window of time which, given the present dire state of malnutrition amongst children, and the fact that India is far from attaining any of the numerous health-related goals of the MDGs , lead many to suggest it is closed off already. Even discounting this view as needlessly grim, the Approach Paper to the XIIth plan itself concedes that health outcome indicators, such as infant mortality rates and maternal mortality rates, are weaker than they should be at this level of development (cf. Footnote 1). So what does it propose to actually do, in its Health Chapter of the Approach Paper to the XIIth Plan ?
India has averaged 8% p.a. GDP growth rates over the XIth Plan period. And yet, its public spending on (core) health – combined Centre and State, plan and non-plan– has hovered around an abysmal 1-1.2% of GDP , one of the lowest in the world . Where the XIth Plan still ostensibly aimed to increase this (core) amount to 2-3% by the end of plan period, the Approach Paper to the XIIth Plan settles for an avowed increase to only 1.58% by the end of the plan period. Why should this be the case, given that higher growth rates for the country are justified time and again as being necessary for fiscal room to spend more on social sector programmes?
And how is this possible, given the government has recently vocalised a desire to move towards universal health care for all, in which connection the Planning Commission of India constituted a High Level Expert Group (HLEG) of respected academics and practitioners, to deliberate and come up with the best way forward . The logistical ‘how’ is threefold in the Health Chapter (August draft).
First, the Centre expects individual States to contribute increasingly to the funding of public health, which over the XIth Plan was roughly in the ratio of 1:2. The previous sharing formula for Centrally Sponsored Schemes, such as the National Rural Health Mission (NRHM), was largely in the form of a self-regulated MOU, which States progressively lived up to over the course of a plan period, depending on their fiscal capacities and levels of development. Such contributions would now be mandatory, in that a large part of the Central funding is conditional on higher investments by States.
The proposed new formula to determine the quantum of the flexible ‘incentive fund’ to each State still takes into account its health lag versus that of the national average. In so doing, it gives some weight to its developmental and poverty levels. But linking this amount to its own contribution, and to “agreed parameters of performance and reform in previous year’s sector wide MOU with the MoHFW” (p. 32, Health Chapter (August draft)) – whatever the latter refers to – penalises the worse off States, which are most likely to be cash-strapped and have less room for manoeuvre for additional fiscal spend. In a federal system, States are in any case reluctant to own Centrally Sponsored Schemes, such as NRHM, because they are conceived of elsewhere and the political credit for them accrues to the government in power at the Centre.
In recognition of externality and equity issues in the provision of basic health care services at the national level, HLEG recommends “a substantial proportion of financing of these services can and should come from the Central government, even though such services have to be provided at sub-national levels” (p.11, HLEG 2011). Yes, States should not use Central contributions as a substitute for their own spending, as many have done so in the recent past, rather to complement it. But this peculiar form of forced ‘incentivisation’ coming out of a misplaced desire to straighten negotiation between Centres and States on the distribution of funding is likely to result in a poverty trap for poorer and less well governed States, and their hapless populations.
More confounding, given the evidence, is the proposal to follow the ‘managed-care’ model of health care provision, the beacon for it being the USA model. The latter is universally derided for being highly inequitable in provision, extremely expensive, and leading to relatively poor health outcomes, compared to other advanced countries. This despite the fact that the private sector is regulated to a far higher degree in that country and patients have recourse to expensive law suits in case of transgressions in delivery by them. What this model would mean in India is that large corporate networks would compete with public health institutions for public funds, to deliver packages of services (most outpatient care and hospital services) at cost to patients. If they cannot compete, as hitherto poorly funded and supported public sector health institutions are unlikely to be able to do so, they do not survive the Darwinian game. The public sector’s role in delivery of health care will be restricted to a minimal essential package, made up of basic child and reproductive care, as well as prevention and promotion roles. In short, the spectre of the private sector is to be unleashed on the public health delivery system.
Strong critiques of the proposed structural ‘privatisation by stealth’, including indisputable international evidence to show how such managed care models work over time to reduce choice in the range of (free) services on offer, and quality of care, have emerged from committed researchers and practitioners working in the public health sphere, so I will not repeat what they have said far better . Indeed, the Health Chapter (August draft) itself admits the following: “…the system creates strong incentives for whoever is managing the network to minimise total cost… there is limited patient choice, and as such the quality of medical care provided has to be carefully regulated” (p.29, ibid.). I would like to focus instead, in conjecturing what could be the objective intellectual motivations for such a shift in policy, and in so doing, make some observations about public sector performance, quality, regulation and finally, rights and justice, in the Indian social sector context, and health care sphere in particular.
Is the shift driven by an argument about poor public sector performance in delivery in health care? If a researcher is objective and without ideological bias, they cannot deny that it has been lacking, which reflects in the dismal health outcomes in the country (noted previously), as well as the flight of those who can and who cannot afford it from the public delivery systems in health (and education). At 67%, the proportion or private out-of-pocket spending on health is sky high, and research has established that health expenses is one of the primary reasons for pushing households below the poverty line. But how can we best read this voting with one’s feet – or in this case – wallet?
Cross-country data on health expenditures show that a higher level of government spending on health is frequently associated with lower levels of reliance of a country’s health system on private out-of-pocket expenditures . So if the quest is eliciting better performance, isn’t the answer to strengthen the public health care system after decades of below-minimal (forget-optimal) spending by the government on this sector? To completely emasculate and demolish it, on the logic that the private sector will force it to perform better or die out, reeks of rather strong ideological proclivities (of the Chicago School of Economics variety).
Is the idea that frontline providers in the public health care system, be they doctors or paramedical staff, are completely unaccountable and therefore, need the stick of private sector discipline to get in line? Again, any open-minded researcher and practitioner would be foolish to dispute widespread doctor absenteeism in public health care centres, especially in rural India, the system’s de facto privatisation through corrupt medical functionaries diverting patients to their ‘private clinics’ in the same compound, charging a fee for consultation and medicines etc. Indeed, I myself found that to be the case in 2008-09, when working on an evaluation of NRHM, as an independent researcher for the Planning Commission of India )!
But in the public health system’s defense, what do we expect from a huge cadre of contract and not regular employees, such as are currently employed in NRHM. I refer here to doctors and paramedics, not even the accredited social health activists (ASHAs), itself a large cadre of underpaid and overworked ‘voluntary’ women workers, on whom the system exploitatively and cheaply depends . The next question to ask is whether private sector employees would be more accountable? Specialist and super-specialist services in public health centres in rural Bihar are already contracted out to the private sector, and their employees behave as badly, if not worse, than their public sector counterparts. We come to the vexed question of asymmetrical geographical power and monetary incentives in a fully corporatised medical sector, because of course highly well-paid doctors in urban centres have to perform, in terms of showing up and working long hours, to the tune of profit-maximising payroll masters (and broke patients!)
If the idea behind this shift in policy really is to guarantee good performance and high quality in public delivery, a far better idea is to tie powerful people to the public health system in the country, and ensure they have a stake in its doing well, as we have all read and absorbed Hirschman’s classic 1970 treatise on ‘Exit, Voice and Loyalty’. A good beginning would be to somehow link CGHS benefits for all public sector employees – from the most junior to the most senior, as they are all relatively powerful in their own tiers and domains – to the public health care system alone. It will be remarkable how quickly we see an improvement in performance and quality of provision, were such a move undertaken. Additionally, legislation ought to be passed that the private costs of health care, as well as foreign costs of health care, for government and political functionaries, is not underwritten by the Government of India. This will countervail, to a significant extent, the argument that there is no fiscal room for additional social sector spending in these recessionary times, since the amount saved will add to the ability to do so (cross-subsidisation of sorts, always a decent redistribution tool).
Further, is the government willing and able to rein in and regulate the private sector in general? For as the Health Chapter (August draft) itself acknowledges, any kind of privatisation in the provision of health care, such as the managed-care model, has to be carefully and heavily regulated by the government. So far, it is unable to stem empanelled doctors and hospitals from gaming the system and performing unnecessary hysterectomies, in rural and small-town India, the costs of which are reclaimed through the Rashtriya Swasthya Bima Yojana insurance scheme (which we will come to shortly). In subaltern India, it will also find it hard to enforce necessary emergency caesareans be performed, in a managed-care model whose financial imperative act to cut free services over time, especially those of a more expensive nature. Moral hazard and adverse selection are going to be rife in this system, as is the complexity of information and understanding needed sidestep them. Such information asymmetry problems are known to be much worse for poorer and illiterate women, and other subordinate groups, so it will be the government’s duty to safeguard their rights if it is the one foisting this market on them.
What about the argument that the public delivery of health care is irrevocably interwoven with large-scale corruption, such as recently publicised about NRHM in Uttar Pradesh, and therefore, what is the harm in trying the private sector alternative? First, this is not universally true across states of India, as anyone with a passing knowledge of Tamil Nadu and other well performing states’ social sector programmes will counteract. Second, a sophisticated understanding of corruption as also including unilateral power to behave with impunity, especially in today’s India, suggest the private sector will be allowed to get away with ‘corruption’ on an equally, if not larger, scale than the public sector. In Delhi itself, the post-Imperial capital, the government is unwilling or unable to ensure that powerful private hospitals, who have obtained government land on the condition that they admit a certain percentage of patients from economically weaker sections (EWS), actually do so. It is also turning a blind eye to the hidden but increasing private medical trials industry that is mushrooming in the country.
Privatisation of an entire system is not something that can be easily – or at all – rolled back, in our Age of Capitalism. How hard it is to stuff the genie back in the bottle, in the face of greedy corporates and powerful lobby groups, is something the NHS is set to find out soon in the United Kingdom, just as numerous Presidents of the USA did when trying to reform its deeply flawed system, and ironically, as Obama has fought hard to do in recent times. So before this massive step is taken, let us think very carefully as a nation, especially as our levels of development and health achievements are far worse than that of these countries.
Finally, if privatisation and PPPs are something the government needs for faster growth, as signals to attract FDI and keep the stock market bullish, why not fully privatise numerous other sectors, such as large-scale infrastructure, construction, airlines operations etc.? Let these be riven with ‘efficient corruption’, in the Shleifer and Vishny sense, or not, in which case they can keep rooking on cost, quality and timing, with need for repeat delivery at short intervals etc. (it will keep the aggregate demand high, in any event!) Let the opportunity to earn supra-normal profits, via monopolies and even natural monopolies, be with the private sector alone (not even PPPs). For they matter – relatively – little to the social contract of the state, with its citizens, other than cutting the government’s revenues in earnings. If something has to be ceded from the public sector portfolio in the India of 2012, to keep it on the conveyor belt of growth, let it be these areas. In lieu, ring fence public spending and the public provision of basic needs, such as health care (and education), for not only are these instrumentally important to achieve ‘inclusive growth’, if we really mean to, but they are constitutively important, to ensure the majority of citizens in a democracy have capabilities to lead a flourishing life.
The less said about the third ‘how’ of financing universal health care, via insurance, in the Health Chapter (August Draft), the better. International evidence is overwhelmingly of the view that this is not possible, and numerous early academic and evaluation studies of the Rashtriya Swasthya Bima Yojana (RSBY) insurance scheme show its many flaws. These are acknowledged by the Planning Commission: “They [HLEG] have also noted the problems with reliance on a market oriented, “fee for service model”, based on insurance in which the premium is paid by the government. This creates incentives for unnecessary curative care and a consequent spiraling of costs (p. 29, Health Chapter (August draft)). And still, it proposes to expand it across the entire BPL population of the country, to numerous other unorganised sector worker groups and so on.
If all these suggestions and the associated policy push are not coming from theory or empirical evidence, then where are they coming from? Unless one were party to inner policy formulation deliberations, it is hard to say. The Health Chapter (August draft) places the full onus on the origin of the managed-care model recommendations with the HLEG. The HLEG 2011 does suggest a networked system at the district level, leaving itself wittingly or unwittingly open to such misinterpretation, as activists feared. If news reportage is correct, there is an on-going debate and disagreement between the Ministry of Health and Family Welfare, and the Planning Commission of India, on the proposed changes. As an outsider, it is again hard to keep track of the exact nature of the differences, and how they are being negotiated, day by day. Therefore, the broader political economy ‘how’, of the eventual form of the Health Chapter (August Draft) in the final approved Approach Paper to the XIIth Plan, is still an open-ended one.
As Buchanan and Tullock (1962) famously noted, government and the bureaucracy is not a monolithic, uniform black-box of an actor, and is rather made up of individuals, their idiosyncracies, their failures, their incentives, their propensities to act in certain ways. So we are yet to see where the chips eventually fall on the policy front, as regards proposed changes to the public health care system. But I will appeal to the higher selves of those determining the final version of the Health Chapter, in the Approach Paper to the XIIth Plan, whomsoever they be, to rather act to strengthen its many good ideas, some drawn from bright people working within the government and others from HLEG 2011, on the expansion of regional AIIMS-like institutions across the country, medical education in the public sector, the provision of free essential generic medicines, the regulation of private sector quacks through accreditation and so on. This is your and our moment, this country’s moment, if it really aspires to being just, fair and ‘inclusive’.
To remind public sector naysayers, within and outside the government, health care is not a normal commodity in many respects (neither is education). Both are linked to fundamental needs and aspirations of the people, what it means to be human, in essence, and as a social animal, a community. A catastrophic illness in the poorest family will compel them to spend all their money, even money they do not have, on the slim chance of survival for one of its members. The desperation of the poor to better their situation and become upwardly mobile – though that is semantically a misleading gradient, too opulent at that standard of living – is what compels families to enroll their children in schools, as they are doing in droves at present in India, against every socio-economic odd and every geographical constraint of vast distances between remote hamlets and providers. Such aspiration is only going to grow in our country today, because of what the media and every single sensory source in our Age of Information Overload is consciously projecting as our country’s shining future.
If the judiciary is increasingly recognising and legislating on rights in the social sector sphere, surely the government ignores them at its own peril in a democracy? And if it is going to do so, let us forget all this humbug about faster growth being pursued to better the lot of ‘the common man’. Let us openly acknowledge that evidence-base and ownership by academics, activist and civil society groups matters not a whit to eventual policy formulation. Let us not attempt to co-opt all dissenting voices, by soliciting their views in endless committees and platforms, while proceeding exactly or even worse than before (such as a supposed desire to move towards universal health care, disguising all sorts of sins of omission and commission), for it is more cynical an act than never having consulted them at all. And let us be prepared politically for the consequences of systematically and knowingly ruling out the possibility of the majority ever being able to participate in a democracy’s so-called ‘success story’, of growth alone. Pursued for its own sake, it is to be a private celebration for an exclusive few.
(Kaveri Gill is an independent academic and researcher based in Delhi. The views expressed in this piece are the author’s own and are independent of any professional institutional affiliation she holds, past or present).
 http://planningcommission.nic.in/plans/planrel/12appdrft/appraoch_12plan.pdf (last accessed 24 September 2012).
 So is education, especially elementary education.
 On the primary education side, too, there has been an increase in enrollment and fall in drop-out rates in recent years, but grave questions remain about the actual learning levels and quality of education.
 I allude in this piece to an August draft of the proposed Health Chapter of the Approach Paper to the XIIth Plan, which is at present being finalised by the Planning Commission of India. It shall forthwith be referred to as the Health Chapter (August draft). Since there are many drafts and it is a work in progress, figures may differ slightly in citations of different versions by various authors.
 These figures vary by source, but the range remains as stated. Public spending increases marginally, if spending on co-determinants of health, such as water, sanitation etcetera, is included.
 At 19%, public spending on health as a percentage of total health expenditure is also lower in India (WHO 2007 & 2008) than all South Asian countries, except Pakistan (Sri Lanka: 46.2%; Bangladesh: 29.1%; Nepal: 28.1%; Pakistan: 17.5%), let alone China (38.8%) and Brazil (44.1%). Interestingly, Europe (Germany: 76.9%; France: 79.9%; UK: 87.1%) – with its tradition of welfare states – far outshines the USA (45.1%) in this respect.
 It produced, “High Level Expert Group Report on Universal Health Coverage for India” (November 2011), forthwith referred to as HLEG 2011.
 Inter alia, “Dangerous Drift in Health Policy – Jan Swasthya Abhiyan Action Alert” (August-September 2012) maybe be accessed at: http://www.scribd.com/doc/103888531/Jan-Swasthya-Abhiyan-Action-Alert; “Setting up Universal Health Care Pvt. Ltd.”, Rakhal Gaitonde and Abhay Shukla, op-ed in The Hindu, 13 September 2012).
 Much also “depends upon the specific way the additional public spending is pooled and spent. Prepayment from compulsory sources (i.e. some form of taxation) and the pooling of these revenues for the purpose of purchasing healthcare services on behalf of the entire population is the cornerstone of the proposed universal healthcare…[it] is essential for ensuring that the system is able to redistribute resources and thus services to those in greatest need…both theory and evidence [shows] that no country that can be said to have attained universal coverage relies predominantly on voluntary funding sources (p. 9, HLEG 2011).
 “A Primary Evaluation of Service Delivery under the National Rural Health Mission (NRHM): Findings from a Study in Andhra Pradesh, Uttar Pradesh, Bihar and Rajasthan”, Gill 2009, Working Paper 1/2009 – PEO, Planning Commission of India.
 This trend for contractual employment to do the same job, in the public and private sector in India (the distribution of regular to contractual workers in Maruti Suzuki’s factory in Manesar is a good example of the latter), can also be traced to the many labour market perils of unfettered globalisation and capitalism.