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The Supreme Court seems inclined to urge the Centre to cap private hospital charges in consultation with the States. In a recent order in Veterans Forum for Transparency in Public Life vs Union of India, the SC has given the Centre six weeks to consult the States and possibly come up with a plan to cap rates for procedures at hospitals and nursing homes. While private hospitals do often charge an arm and a leg, it is worth considering whether the malaise can be treated by capping prices and relying wholly on insurance coverage.
As for the case, the petitioners have urged implementation of Rule 9 of the Clinical Establishment (Central Government) Rules, 2012 — which says that hospitals and nursing homes display a list of services and the fees for them. The Centre has said that the onus for implementation of this law lies with the States, whereas only 12 States and seven UTs have enacted such a law. On this, the apex court has observed that the Centre “cannot shirk away from its responsibility”, while suggesting that the Central Government Health Scheme Rates be notified as an interim measure. Indeed, poor implementation of the Clinical Establishments (Registration and Regulation) Act, 2010, shows a lack of political will. This is hardly surprising, given the political interests in this sector. Research shows that the Karnataka Private Medical Establishments Act, 2007, which enforces price caps, has not been enforced owing to lack of awareness, political interference and corruption.
Price caps are likely to be ineffective for a host of economic factors. First, the demand for medical services overwhelms availability (0.6 beds for 1,000 people, as per National Health Profile 2021, cited in a March 25, 2022 Lok Sabha question, and even less so with respect to free beds). According to National Health Policy, 2017, there should be two beds for 1,000 people. Second, even if the supply of private beds improves, the service provider will ramp up prices by exploiting both the lack of information of the patient and her care givers and their vulnerable condition. Third, while free insurance rollout by the Centre and States (with capped rates for procedures) has raised health insurance cover to over a third of the population and reduced out of pocket expenses, it still leaves many, including policyholders, to fend for themselves. This is because hospitals discourage such patients, or bill them for ‘services’ out of the policy cover. The upshot is that insurance and price caps cannot be relied upon to provide affordable healthcare.
However, an indicative rate chart, not caps, can be circulated by the government for raising awareness. After all, as courts have noted before, private hospitals get land for free or at low rates. While Covid has led to increase in Central and States spending on health to 2.2 per cent of GDP from 1.6 per cent earlier, this should be stepped up. Ultimately, there can be no substitute for government hospitals. That government hospitals are the way forward has been demonstrated by southern States.
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