If not all can afford private healthcare, does it then make sense to count it as part of a state’s infrastructure? For instance, when measured against the size of the total population of Maharashtra, all beds in the state provide 1.9 beds per 1,000 people. But this count is a bit misleading.
According to 2018 estimates, 37% of Maharashtra’s population fell below the poverty line. Assuming optimistically, even if 50% of Maharashtra’s population could afford private healthcare in 2020, the private infrastructure would provide 2.93 beds per 1,000 for these privileged ones. But everyone can afford public healthcare (even the rich can choose to avail public services) and, in that case, the public infrastructure at everyone’s disposal drops to 0.4 beds per 1,000. Being rich creates a huge difference in the availability of quality healthcare services in India!
Income disparity aside, the flourishing private healthcare in Maharashtra and other states show that, even though a big portion of the population cannot afford it, there is still a part of the population who can, enough to attract and keep the private healthcare business running. That in itself is a huge security for states with poor public healthcare. When needed, state governments can mandate private healthcare providers to serve the whole population at discounted prices in distressing times like the current one (with necessary compensations). This happened in Mumbai and Delhi during the Covid-19 crisis, when the state government capped treatment (at affordable) prices at private hospitals to take care of the poor.
But what about states with huge populations, which do not have enough privileged class? Bihar is a classic example - amongst the poorest states in India - whose population is larger than Maharashtra by 1.6 million, but has a much poorer health infrastructure. While Bihar has a comparable number of total hospitals (3,034) to that of Maharashtra (3,203), Bihar’s, both public and private hospitals, have much less capacity. Bihar in total has only 30,857 beds (11,664 in public, 19,193 in private), compared to Maharashtra that has 231,739. In the saddest state of affairs, 120 million residents of Bihar only have 11,664 public beds at their disposal i.e. 0.09 beds per 1,000 people. The rest of the 19,193 are shared only by a handful of rich ones. At worst, even if Bihar were to mandate private infrastructure to serve its population in an emergency, it would still only have 0.24 beds per 1,000 people, amongst the lowest in India.
A cruel form of allowing private healthcare to lead the industry is that it only caters to the ones who can afford it. Hence, poor states like Bihar and most of the North East have seen little private healthcare, whereas other states that run India’s economy like Maharashtra and Karnataka have had access to a much larger amount. That is natural: businesses will come up where they can be sustained and will only serve those who can pay upfront. The government however has a different mandate – to serve everyone with good healthcare – that it has unfortunately failed to do for years. The country’s health infrastructure does not remotely meet the WHO standards. Ultimately, it is for the public, and not for the private sector to care. The pandemic has in fact very well reflected this.
Modicare and the limited implications of private hospitals in health insurance
The New Health Policy 2017 took a sharp turn and embraced the private sector providing for universal health coverage and "strategically purchasing" private infrastructure. One year after, the Modi government launched the Ayushman Bharat Yojana (Indian Health Scheme), known as "Modicare" because, like in the case of the "Obamacare", the intention was to give access to health care to the 40% of the Indians who were the poorest. Modi described this plan as "the world’s biggest health-insurance plan" because the government committed itself to taking care of the health expenditure of about 500 million persons whose households were eligible to receive almost USD 7,000 a year for hospital expenses.
Eligible patients could seek treatment at any institution, public or private, that had joined the scheme. But this is precisely where the main problem lay: few private institutions joined the scheme because of the low reimbursement rates the government was offering for consultations and surgery. Why? Because the scheme has remained underfunded. The budget for the first year amounted to 0.01% of the GDP. In September 2020, only 23,300 hospitals had been empanelled - half of them public. Only 1% of the 2,000 multi-speciality private hospitals have enrolled under the Ayushman Bharat scheme, which means that hospitals like Max, Medanta, Fortis, Apollo etc. have not come on board simply because they are not non-profit enterprises.
Many large Indian businesses have a stake in private hospitals and most of them are also looked at as business units – with an active marketing component too, vis-à-vis foreign medical tourists in particular. In 2020, medical tourism was estimated to be worth USD 5-6 billion, as half a million foreigners come every year for some treatment (mostly from South Asia, Africa and Central Asia). Only last month, Bajaj Finserv - a financial services conglomerate - entered the healthcare ecosystem to offer its users healthcare packages. For such private healthcare providers, it matters where Bollywood actors seek treatment, where the "rich" feel most comfortable, or where it feels like a resort.