Medicine & Doctors · Public health

Is Private Health Care the Answer to the Health Problems of India’s Poor?

In November 2008, PLOS Medicine published an article (as part of its Debate series) titled Is Private Health Care the Answer to the Health Problems of the World’s Poor? I have tried to extract the more important points from that article (which can be found here) and created a compact post here.

Argument 1: There Is No Alternative to Strengthening the Public Role in the Health System

  1. Theory tells us that it is not whether a health facility is publicly or privately owned that determines health provider performance. Instead, it is the nature of incentives that providers face and the quality of management and oversight. Theory also suggests that the profit-making incentive dominant in much of the private sector is likely to be problematic for health care.
  2. Private health services range from sophisticated inpatient facilities delivering advanced medical care of the highest international standard, through to the individual practices of doctors, nurses, and midwives, sometimes working in parallel with their public practice, and to unqualified peddlers of drugs from market stalls. What evidence there is suggests that poor people are more likely to use the lower-quality, highly dispersed, and fragmented end of this spectrum.
  3. Even where private services are low cost, they are not necessarily affordable. There is also no evidence that private commercial insurance can reach the poorest groups, and the limited and seasonal cash income of these groups is likely to hamper attempts to include them in such schemes. There is therefore no alternative to strengthening the public role in financing health care, which can help achieve protection both against the cost of care and also against loss of income caused by illness.
  4. Responding to the health needs of the poorest will require a major scale-up of coverage of good-quality primary care, referral to first-level hospital care, and mechanisms to protect poor households from catastrophic health care payments. But context will influence what role private providers play: in some environments, ensuring quality care through private provision may prove effective in reaching the poorest. In other settings, it may be more appropriate to focus on improving the way that public providers operate.
  5. In every context where private providers operate, governments need to oversee and regulate the health sector as a whole, including both public and private providers.
  6. Building stronger health systems will require more innovation, more learning-by-doing, and more careful evaluation to understand what works and why, before it will be possible for countries to reach a firm conclusion about what range of solutions offer the most promise for the world’s poor.

Argument 2: We Must Engage the Private Sector to Improve Health Care in Low-Income Countries

  1. The private sector’s role in health care should be strengthened and more closely aligned with the public interest. The relevant question is not how governments can finance and provide all health services, but instead how can private sector activities ‘be influenced so that they can help meet national objectives?’
  2. The core of our argument is that, with a complicated problem such as improving health care under constrained resources, two heads are better than one. The public and private sectors have different strengths and weaknesses, and a judicious blending of the two can produce optimal results. Indeed, there is no health system that is entirely public or private.
  3. No “public” system produces its own drugs or equipment, and increasingly, governments in low- and middle-income countries are turning to the private sector to improve quality and deliver value for money.
  4. Loevinsohn and Harding reviewed ten studies in which public authorities in developing countries had contracted with private organisations [find the article here]. All ten found that use of the private sector produced positive results, and importantly, the more rigorous the study the more positive the results. The review showed that private contractors can operate on a large scale, be more cost effective than government-provided services, and increase coverage in poor and remote areas.
  5. Many countries, and the donors that have supported them, have tried to address these challenges through an implicit policy of creating a public sector monopoly, ignoring the large and growing private sector gorilla in the room. Some countries are now exploring pluralistic models that partner with the private sector to serve public policy goals. These models should be encouraged and supported. Improving health care for the world’s poor means harnessing everyone’s capacity, not just that of governments.

Contentions against Argument 2

  1. Unfortunately, as they [the authors of argument 2] also recognise, the evidence to support their position is limited. In an era where national governments and donors are encouraged to embrace evidence-based policy making, blanket exhortations to harness the capacity of the private sector are unhelpful.
  2. They pay insufficient attention to the diversity of the private sector in developing countries. Different types of providers offer different opportunities and threats for public health, and policies and interventions must be tailored to the provider type and context. For example, they use evidence presented in the review by Loevinsohn and Harding to advocate the use of private contractors, but fail to mention that many of the interventions cited in that paper involved non-governmental organisations.
  3. They place considerable weight on the proportion of private spending in total health financing. However, this is an imperfect measure of the size of the private sector. For instance, significant amounts of out-of-pocket spending (which gets included in ‘private spending’) go to public providers, through official user fees or drug purchase etc. Moreover, high rates of out-of-pocket spending are a symptom of malaise in the health system rather than something to build on. It is widely recognised that a strong public role in health spending (whether through payroll or general taxes) is essential for health systems to protect the poor.
  4. The lack of evaluation of private sector initiatives is acute. They suggest that responsibility for this failure to evaluate interventions lies with the government stewards of the sector, but most private sector interventions have been donor supported. The global public health community must commit to developing a strong evidence base on private sector engagement so that future debates can be grounded in better understanding.

Contentions against Argument 1

  1. These two viewpoints agree much more than they disagree. Both agree that the public sector cannot be ignored and both agree that there is a role for the private sector in improving the health of the world’s poorest. The disagreement is about emphasis. We believe that many countries will benefit more from harnessing the energy of the private sector rather than continuing to invest solely or mainly in the public sector.
  2. Five decades of attempts by governments in low-income countries to build state monopolies in health care have failed miserably in most of the poorest countries. Our experience of working with health systems across the world is that the complexity of health care plus the bureaucracy and politicisation of government creates a lethal combination.
  3. We agree with them that more research is needed on the role of the private sector. But we have shown that there is more research than they may have recognised, and this research points in the same direction, showing that the private sector can help the world’s poorest. The absence of evidence is not, however, the same as evidence of absence of effect.
  4. In well-structured public-private partnerships, the private partners are fully accountable for the delivery of specified services and outcomes, and arrangements for financial rewards and penalties require that there is rigorous measurement of process and outcomes. None of this is true in a public system.

I personally opine that the public sector, for all its inefficiency issues, should still be the major provider and financier of health services in our country if we wish to ensure universal health coverage. While inefficiency of governmental services can be dealt with fairly successfully, the profit motivations (and the resulting harmful practices) of private sector are a lot more intractable – when it comes to providing good quality healthcare to ALL citizens. As for corruption, both the public and private sectors in India suffer equally from it, and in fact depend upon each other for its spoils.

As a final piece of argument, I reproduce some lines from the book An Uncertain Glory: India and its Contradictions. Here the authors (Jean Dreze and Amartya Sen) talk about how Indian policymakers should refrain from considering private commercial insurance as the ‘magic pill’ that will eventually ensure healthcare for all – in other words, there is no alternative to strong and constant governmental involvement in the country’s health system:

Irreversibility issue: Last but not least, the private health insurance model can be, in effect, something of a one-way street – the health insurance industry can easily become a powerful lobby and establish a strong hold on health policy, making it very difficult to move away from that model if it proves ineffective. The current drift in India towards private health insurance, without developing a solid base of public health care, has that problematic feature.

The private insurance model is essentially the American model. Despite top-level medical care in the USA, the country has paid a heavy price for taking this route, in terms of limited access to, and exclusions from, health care. The US health care system is one of the most costly and ineffective in the industrialized world. This system is also highly inequitable, with nearly 20 per cent of the population excluded from health insurance, and terrible health conditions and risks among deprived groups. Further, attempts to reform the health care system in the US have proved extremely difficult, partly due to the power of the health insurance business. The contrast with Canada, with so-called ‘socialized medicine’, which achieves more at far less cost than the USA for normal health care through government-provided health care, brings out some of the problems that the USA has to overcome. This is not to say that Canada itself is a flawless model: its exclusion of private health insurance, except for very limited purposes, may be seen as too extreme (it is not clear why the rich should not be allowed to pay for extra health insurance while remaining quite free to spend money on expensive holidays or yachts), and surely there is much to learn also from the European system of reliance on national health services and social insurance without ruling out private health insurance.


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