New Delhi:
Even as the recent COVID-19 pandemic has emphasised the importance of healthcare sector and its inter-linkages with other key sectors of the economy, a sectoral regulator to undertake regulation and supervision of the healthcare sector must be considered given the market failures stemming from information asymmetry, said the Economic Survey 2020-21, presented by finance minister Nirmala Sitharaman on Friday..
The mitigation of information asymmetry, that will be ensured by the proposed healthcare regulator,would also help lower insurance premiums, enable the offering of better products and help increase the insurance penetration in the country,said the pre-Budget document tabled in Parliament on Friday.
.A sectoral regulator to undertake regulation and supervision of the healthcare sector must be considered given the market failures stemming from information asymmetry and the World Health Organisation(WHO)also highlights the growing importance of the same. Information utilities that help mitigate the information asymmetry in healthcare sector can be very useful in enhancing overall welfare, explained the Survey..
The ongoing pandemic has showcased how a healthcare crisis can get transformed into an economic and social crisis Healthcare policy must not become beholden to “saliency bias”, where policy overweights a recent phenomenon.
Five -point agenda for the healthcare sector
To enable India to effectively respond to future pandemics, the health infrastructure must be agile.
Second, given its potential to provide healthcare access in remote areas, telemedicine needs to be harnessed to the fullest by especially investing in internet connectivity and health infrastructure.
Third, the National Health mission (NHM) has played a critical role in mitigating inequity as the access of the poorest to pre-natal and post-natal care as well as institutional deliveries has increased significantly. Therefore, in conjunction with Ayushman Bharat, the emphasis on NHM should continue.
Fourth, an increase in public spend from 1 per cent to 2.5-3 per cent of GDP – as envisaged in the National Health Policy 2017 – can decrease the Out-Of-Pocket Expenditures(OOPE) from 65
per cent to 30 per cent of overall healthcare spend.
Fifth, as a bulk of the healthcare in India is provided by the private sector, it is critical for policymakers to design policies that mitigate information asymmetry in healthcare, which creates market failures and thereby renders unregulated private healthcare sub-optimal.
The Survey has pointed out that despite improvements in healthcare access and quality (healthcare access and quality scored at 41.2 in 2016, up from 24.7 in 1990), India continues to underperform in comparison to other Low and Lower Middle Income (LMIC) countries. On quality and access of healthcare India was ranked 145th out of 180 countries (Global Burden of Disease Study 2016). Only few
sub-Saharan countries, some pacific islands, Nepal and Pakistan were ranked below India.
The states that have higher per capita spending have lower out-of-pocket expenditure, which also holds true at global level. Hence, there is need for higher public spending on healthcare to
reduce OOP.
An increase in public spending to 2.5-3 per cent can substantially reduce OOP from the current level of 60 per cent to 30 per cent.Therefore, the richer states should especially target increasing the healthcare spending as a per cent of GDP to 2.5-3 per cent
While the share of public institutions has increased both in hospital and outpatient cares, the private sector dominates in total healthcare provision in India. Around 74 per cent of outpatient care and 65 per cent of hospitalisation care is provided through the private sector in urban India
Therefore, information utilities that help mitigate the information asymmetry can be very useful in enhancing overall welfare. The Quality and Outcomes Framework (QOF) introduced by the National Health Service (NHS) in the United Kingdom 2004 as well as other quality assessment practices in various countries provide good examples in this context. An increase in public spend from 1 per cent to 2.5-3 per cent of GDP – as envisaged in the National Health Policy 2017 – can decrease the OOPE from 65 per cent to 30 per cent of overall healthcare spend.
Telemedicine needs to be harnessed to the fullest by investing in internet connectivity and health infrastructure, suggested the Survey..