Prof. DM Deshpande
The Parliamentary Committee on Health and Family Welfare submitted its 176th Report to Parliament recently. The title of the report, Affordability and Accessibility of Healthcare Facilities in Public and Private Sector, aptly highlights the twin problems faced by patients in India.
Private healthcare facilities are expensive, especially when per capita incomes are factored in. In addition, their availability is nil or restricted in several remote and interior rural parts of the country. Demand for public healthcare outstrips supply by several times. Hence, average citizens are driven to the private sector for basic, essential and critical care needs.
Not surprisingly, the report points out that the private sector accounts for about 60% of inpatient and 70% of outpatient medical needs in the country. However, healthcare costs in private hospitals are not only quite high but keep spiraling much faster than the general rate of inflation in the economy.
Annual medical inflation is estimated at between 10% and 13%. The report has rightly flagged uneven rates across geographies and urban centres in India. Citing the 80th round of the National Sample Survey on Social Consumption: Health, it points out that the average cost of hospitalisation in government hospitals was Rs 6,631, while the corresponding average cost in the private sector was Rs 50,508. This gap widens further in critical cases involving heart disease, kidney transplant and cancer.
The panel has come down heavily on widely varying treatment charges, diagnostic costs and differential billing practices, including room-linked pricing for clinical procedures. The practice of hospitals using the room category as a basis for charging or escalating other treatment costs such as operation theatre charges, doctor’s visits, anaesthesia and even surgeon’s charges in cases requiring surgical intervention is fairly widespread.
The Panel has rightly questioned how the room in which a patient recuperates should determine or change his or her total medical bill. It has therefore recommended abolition of room-linked medical pricing. Specifically and radically, it has said that the room rent in a large metropolitan hospital should not exceed the average tariff of nearby three-star hotels.
Doctor’s fees, nursing charges, cost of procedures, consumables and other expenses should be shown separately and transparently. The intention is clearly to prevent a relatively expensive room from becoming the basis for inflating the entire hospital bill.
The House Panel has also suggested establishment of a national statutory body to regulate and implement caps on essential diagnostics and procedures. It has recommended standardised, evidence-based treatment protocols to reduce variations in treatment costs. Every hospital should mandatorily display a schedule of charges, following the Tata Memorial Centre model.
The Panel has also flagged high mark-ups on medicines and medical devices. The experience of coronary stents is revealing. When the government imposed a price ceiling, the price fell dramatically from around Rs 1.9 lakh to Rs 25,000- Rs 30,000.
The Committee has further recommended setting aside 20% of beds for free treatment as a condition for private hospitals seeking certain subsidies and tax benefits. This principle has been upheld by the courts too, but implementation has remained weak.
The Committee’s approach is clear: private healthcare cannot be allowed to function entirely on commercial considerations when it receives public concessions and operates in a sector involving an essential human need.
The Panel has strongly recommended acceleration of standardised, low-cost health insurance products for the middle-income class. Calling them the ‘missing middle’, it points out that they are often left out of publicly funded schemes. Hence, they become extremely vulnerable to financial distress, especially during medical emergencies. The Panel has taken due note of instances of this class being forced to sell assets to meet catastrophic medical bills.
Most insurance schemes largely ignore outpatient costs. Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) has reduced the financial burden for many, but its principal focus is hospitalisation. The Committee has therefore recommended expanding government health insurance to cover outpatient consultations, diagnostics and post-hospitalisation care.
AB-PMJAY itself has done remarkably well within a relatively short period. The government says the scheme now provides annual health cover to more than 12 crore vulnerable families, while its network includes a large number of public and private hospitals. However, complaints about treatment rates and payment delays remain.
The Panel has questioned how the rates for various treatments are fixed. If actual costs are higher than the rates fixed under the scheme, major hospitals may find it difficult to remain within the network. It has therefore recommended fresh, localised cost studies and revision of rates to reflect current treatment costs.
At the heart of the problem, however, is low public spending on healthcare. The National Health Policy had set a target of raising public health expenditure to 2.5% of GDP. India has remained well below that level. Recent parliamentary analysis also highlights continuing shortages in public infrastructure and human resources.
Low public spending inevitably drives patients towards private care providers. When public hospitals lack beds, specialists or adequate equipment, patients have little choice but to turn to private hospitals, where the cost of treatment can be several times higher.
India has increasingly adopted an insurance-led approach to providing financial protection for healthcare, though it remains a hybrid system combining public hospitals, government-funded insurance and a large private sector. This is different from the predominantly private insurance-based system of the US. Countries such as Germany and France rely much more heavily on compulsory social health insurance, while the UK is predominantly a tax-funded, publicly provided system.
India’s hybrid method may be more suitable to its circumstances. But the Parliamentary Panel has rightly emphasised that insurance alone cannot solve the affordability problem. Merely buying insurance policies on behalf of citizens could result in public money financing increasingly expensive private healthcare.
If the underlying cost of healthcare continues to grow unchecked, insurance premiums, claims and ultimately the burden on taxpayers will also rise. The answer, therefore, lies in a combination of higher public spending, stronger public healthcare infrastructure, regulation and transparency in private healthcare, and affordable insurance. Universal healthcare cannot mean merely universal insurance coverage. It must mean affordable and accessible healthcare for all.
The author has four decades of experience in higher education teaching and research. He is the former first vice-chancellor of ISBM University, Chhattisgarh
