Government regulations have unintended consequences. This is an axiom of policymaking. The Narendra Modi administration’s recent moves in healthcare demonstrate how failing to anticipate these consequences results in poor policies. Following the imposition of price controls on coronary stents in February, the inevitable happened. Companies like Abbott Healthcare Pvt. Ltd and Medtronic India Pvt. Ltd moved to withdraw some models of their stents from the Indian market. The government’s response—throwing the regulatory rulebook at the companies—was as ham-handed as the price controls had been. Now, with reports that the government is considering expanding the scope for price control in various ways—bringing medical devices directly under the Drug Price Control Order (DPCO), 2013, and provisions for reducing drug prices even when they are below the ceiling price—its broader approach to healthcare warrants scrutiny.

In 1943, the Bhore committee led by Joseph William Bhore was set up by the government of India to assess health conditions in India and suggest reform measures. It submitted its report in 1946. Its recommendations sound familiar today: universal healthcare provided by the government, primary health centres seeded across the country, a nationwide health network that ensures no one is denied medical care for lack of ability to pay. In 1952, the government of independent India accepted the committee’s proposals. They would form an integral part of the country’s healthcare system, such as it was.

Today, that system and its outcomes are close to shambolic. India faces the dual challenges of communicable and non-communicable diseases. Centre and state government healthcare spending has been hovering around the 1.15% of GDP (gross domestic product) mark. As a consequence, India ranks sixth out of 50 low-middle-income countries when it comes to out-of-pocket health expenditure, according to an IndiaSpend analysis; about 63 million people are impoverished annually by healthcare expenses.

The National Health Policy, 2017, released earlier this year—the third after the 1983 and 2002 iterations—did get some things right in attempting to address the shortfalls when it came to infrastructure. It targeted government healthcare expenditure of 2.5% of GDP—lower by far than the global average of 5.4%, but a beginning at least. It promised to reform medical education and improve hospital bed availability, clean up regulation of the sector—it currently falls somewhere on the spectrum between moribund and corrupt—and improve the quality of, and access to, public primary healthcare. The last is particularly important; good primary care reduces the pressure on secondary and tertiary healthcare.

Given the public health system’s poor presence in the latter categories, the policy also set out the objective of “strategic purchase" of services not only from public facilities and not-for-profit private facilities, but also from for-profit private facilities. The criticism that followed notwithstanding—the measure was seen as giving too much play to the private sector in a critical area—this was inevitable. Unfortunately, the steps taken by the government since—price controls on stents aside, making the prescription of generics mandatory without taking steps to address known quality issues with Indian generics or ensure that generics are bioequivalent to the original product—have shown a continuation of the policy-by-fiat thinking that has led to missteps in recent years. Heavy-handed drug price controls under the DPCO in previous years, for instance, have both denuded the domestic sector, leading to a dangerous dependence on imports from China for the active pharmaceutical ingredients used in many common drugs, and encouraged oligopolistic behaviour. This lack of effective cooperation between the government and private sector doesn’t bode well for the National Health Policy’s aims of public-private partnerships and steering the private sector to best meet the country’s health needs.

Healthcare is a tricky issue, subject to a number of ethical considerations and constraints. Its fundamental importance to citizens’ lives and the inelasticity of demand that skews market dynamics mean that the government must play a role. But calibrating that role effectively, keeping specific population and market dynamics in mind, is the difficult part. A rich country with a small population like Singapore might be able to run one of the world’s best healthcare systems based on health insurance designed by the government and paid for by users—but such a system would be a disaster in India. Similarly, a healthcare system dominated entirely by the public sector, such as the Bhore committee envisaged and as exists in the UK, has its own constraints when it comes to capacities and funding. It would be a non-starter in India given the narrow tax base.

Every country must arrive at its own modus vivendi—and in India, that will involve the private sector, when it comes to both supply of services and insurance. Effective regulation and enforcement of greater transparency are necessary. But the government’s current statist approach is fundamentally at odds with its stated mission.

Should the private sector have a role in providing healthcare? Tell us at views@livemint.com

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