Tipping Point For Healthcare

PAYMENT SHOULD BE BASED ON VALUE, NOT ACTIVITIES.

- Rita Mcgrath & M. Muneer

CAPITALISM 101 stipulates that prices for products/ services are set by market mechanisms. Buyers try to get the lowest prices possible and sellers try to get the highest. Depending on supply and demand, they eventually negotiate a deal. Not so with healthcare where prices are made up depending on who the payer is.

Healthcare expenditure as a percentage of gross domestic product (GDP) is the highest in the US at 17.5 per cent where the availability of medical insurance has driven up the costs steadily for years now. Healthcare expenditure in India is just 4.9 per cent of GDP, but 75 per cent of this is paid as an out-of-pocket expense by private citizens. The government spends just 1.2 per cent of GDP on health, which is lowest among BRICS nations. Worse, the quality of public healthcare is nothing short of a disaster: Remember the Gorakhpur hospital tragedy last year where, on an average, 25 per cent of the children died.

Interestingly, the healthcare cost growth rate is slowing down in the US and almost mimicking GDP growth while India’s is ballooning. In the last decade alone it has gone up by more than 200 per cent. In India, private healthcare costs much more than public healthcare (nearly four times); yet, the majority of the cases are treated by the private sector. What is the raison d’être? It is the poor quality of treatment in the public healthcare system. Whether Modicare will resolve this problem is a Catch 22 debate.