Healthcare in India vs. developed markets

As India takes a step in the direction of better public healthcare, we assess the differences in the healthcare situation in developed markets and in India.

Oct 08, 2018 10:10 IST India Infoline News Service

Union Budget 2018 launched India’s first universal healthcare scheme, Pradhan Mantri Jan Arogya Yojana (PMJAY), also known as the Ayushman Bharat scheme. The plan is ambitious to begin with. With a Rs5 lakh health cover for 10cr poor and deprived families, it encompasses coverage for a total of ~50cr individuals. This is nearly 40% of India’s population.
 
Current state of India’s healthcare
Some statistics about the state of India’s healthcare are quite shocking. For example, more than 80% of the people in rural and urban areas do not have any proper access to healthcare. More than 70% of the population still lives in villages and semi-rural areas with virtually no healthcare services of reasonable quality. Nearly a quarter of Indians are forced to borrow money at usurious rates to meet their healthcare needs.
 
Over the years, India has dabbled with various public healthcare schemes, however, state-run healthcare still remains crippled. The recently launched PMJAY is likely to address these issues to an extent, which means that there will be forward and backward linkages including hospitals, testing centres, laboratories, and pharmacies.
 
As India takes a step in the direction of better public healthcare, we assess the differences in the healthcare situation in developed markets and in India.
 
How does the healthcare ecosystem in India differ from that in developed nations?
  • The first difference lies in the state of healthcare in India compared to other developed nations. For example, a majority of the children under the age of 5 are grossly underweight compared to their western counterparts. In the US, child deaths below the age of 5 is as low as 0.8%, whereas in India it is ~7%, with many deaths still going unreported.
  • One of the ways you can gauge state-run healthcare in a country is its share of healthcare spend as a percentage of the GDP. The US spends about 18% of its GDP on healthcare, whereas in the case of India, it is just about 4.2%. Even out of this small budget, only 30% of the healthcare budget is spent and the balance just lies idle due to lack of infrastructure required to implement planned policies.
  • Healthcare does not operate in isolation and requires a complete supporting ecosystem which includes hospitals, diagnostic labs, pharmacies, delivery infrastructure, testing centres, and mini hospitals. This is another area where India falls short. This results in long queues and crowding in government-run hospitals and negligence of health problems by those dependent on these facilities owing to long wait times.
  • The growth of proper healthcare in any country is dependent on the quality of health insurance facilities and infrastructure. In terms of healthcare performance, most of the developed markets rank in the top 20, while India ranks 112, behind most Asian, Latin American, and East European nations. Lack of proper health insurance is another big challenge. In the US, only 10-12% of the people availing healthcare facilities are required to shell out cash for healthcare services. In India, the percentage of people meeting healthcare expenses out of their pockets is ~70%.
  • There is a vast difference in the scope of coverage of medical insurance between India and the developed world.  For example, in India, insurance companies usually only cover hospitalization exceeding 24 hours. Out-patient consultation, medicines, and tests are not included if one has not been hospitalized. In Western countries, medical insurance usually covers all these items, which makes it a lot more useful for the customer.
  • Finally, an important difference between healthcare in developed markets such as the US and that in India is that health insurance is not mandatory in India. In the US, employers are statutorily required to provide healthcare to employees. Similarly, every person has to mandatorily take medical cover. In India, medical cover is still voluntary which is why, despite relatively low premiums, the penetration levels are quite small.
 
It is in the above context that PMJAY needs to work. An economy that is growing at 7.5% per annum needs a much more robust healthcare infrastructure to benefit its people. PMJAY is just one step in that direction. Putting this entire ecosystem in place will, no doubt, be a humungous task.

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