Wednesday, August 8, 2012

The HLEG report examined

Livemint reports that the Planning Commission, drawing on the recommendations of the Prime Minister's High Level Experts Group (HLEG), is contemplating a radical overhaul of India health care system in its Twelfth Plan (2012-17). The Commission divides health interventions into two categories - public health issues such as immunizations, births and HIV testing to be financed and delivered by the government, and the delivery of clinical services through the managed network system of public and private providers. It quotes the Chairman of the Commission, Mr Montek Ahluwalia,
Universal healthcare is perhaps best delivered if we move away from the present system, in which public healthcare providers are funded by the budget, to operating a network of primary, secondary and tertiary providers, where the network is paid on a per-capita basis depending on the number of people registered with it. The network could consist of pure public sector providers, or it could include some private providers on suitable terms. This certainly incentivizes the network to minimize costs and to emphasize preventive care since the total payment is fixed... Whoever manages the network will have to divide the total receipts between levels. Remuneration to doctors may have to be linked to patients actually seen. People will not be able to go straight to higher levels of the network, but will have to go through on a referral basis.  
The report also quotes the HLEG chairman, Dr Srinath Reddy's summary of its recommendations,
The HLEG had suggested a package of essential health services, which includes preventive, promotive, curative and rehabilitative services. The provision of these services has to be free of cost, and public sector facilities should be the main provider... Where necessary, private providers may be contracted-in on clearly defined terms. This should be done directly by the public sector without recourse to an insurance intermediary. For universal healthcare to succeed, with respect to public health and clinical services, it is essential that the public healthcare delivery system is strengthened all the way from the sub-centre to the district hospital.
Taken together, these statements do not bode well for health care reforms. Interestingly, both stand at the two extremes of how health care should be delivered. Both have all the hallmarks of classically misguided policy suggestions masquerading as informed prescriptions.

1. I am not aware of the HLEG's mandate, but its two prescriptions - what constitutes universal health care and the details of its standards, and how it should be delivered - are two entirely different issues, requiring very different competencies. While the HLEG's constitution does make it eminently well placed to address the first issue, I am not sure about its competency to address the second.

2. The HLEG's elimination of the use of an insurance intermediary, even to deliver tertiary care services, is surprising. The report too does not contain any valid justification for such a sweeping advocacy, especially when insurers are an important actor in any universal health care system where the presence of private operators is significant.

3. Managing the proposed public-private healthcare providers network in a country like India, where private providers increasingly dominate the market in secondary and tertiary care, even in rural areas, is no mean task. In fact, very large and experienced insurers, even in developed markets, have not been able to successfully manage the incentive distortions that are inevitable in health care markets. All the talk of contracting private providers on "suitable terms" or "clearly defined terms" betrays an understanding of the complexity of managing such contracts.

For example, the just released Annual Health Survey reports of grossly excessive C-section deliveries in private hospitals. Compounding problems is the near complete absence of health care service delivery standards for private sector. In view of all this, to imagine that the government will be able to effectively manage the regulation of contracted service delivery in a vast and diverse country like India, even if segmented regionally, appears to be a stretch. In fact, it is an invitation to crony capitalism in health care.

In simple terms, Mr Ahluwalia equates health care delivery to any other market where services can be bought and sold efficiently if incentives are aligned. Dr Reddy effectively advocates throwing more money on public institutions in the hope that more beds, specialists, and equipments will deliver universal healthcare. Both misdiagnose the issue and their prescriptions are bound to fail. As I blogged earlier, the immediate need is to have somebody in India's health care policy making establishment to "kill off bad ideas".

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