Liberal economists promoting the power of markets often believe that markets ultimately allow for a ‘perfect’, symmetric allocation of resources. This is assumed to lead to an optimal or ‘equilibrium’ price in the case of all goods and services, maximising welfare for all stakeholders.

In recent decades, however, development economists (such as Kenneth Arrow, Angus Deaton, Gerard Debreu) have debated extensively on whether privatising shared goods like primary education and healthcare, especially in late developing societies, leads to economically efficient outcomes.

An unhealthy situation

In 2012, as per an OECD study, India witnessed 253 deaths per 100,000 persons due to communicable diseases alone, much higher than the global average of 178.

The country still faces a higher disease burden than other emerging economies such as China, Indonesia, Brazil, Mexico and Sri Lanka; even poorer neighbours such as Nepal and Bangladesh are better off. Life expectancy in India, currently at 68, is lower than China (76), Bangladesh (72), Nepal (70) and Sri Lanka (75).

The poor health of an average Indian has been attributed to low public investments in preventive health facilities such as sanitation and waste management. The same holds true for PHCs (primary health clinics) and health professionals.

Apart from financial neglect, the quality of public health services is another serious problem. The average middle income Indian has shifted to private centres, thereby, increasing the average out-of-pocket health expenditures.

Owing to unreliable public health services and an unviable health insurance model, the poor are compelled to spend heavily on private medical care when faced with health shocks; this drives many people into the fold of poverty. Studies show that out of pocket expenditure on health in India accounts for a sixth of India’s poverty burden.

The New National Health Policy (2015) was conceived in addressing some of the above challenges. It is yet to be debated in Parliament. The Policy in its vision aims to: a) ensure that public health spending touches 2.5 per cent of the gross domestic product by 2020, of which 70 per cent would be on primary healthcare alone; b) increase per capital public spending on healthcare to ₹3,800 at 2015 prices; c) Centre government shall contribute around 40 per cent of the resources instead of its present 20 per cent share and d) States would allocate at least 8 per cent of their total budget on health.

It seems that India’s new planning think tank, the NITI Aayog has been against increasing public investments on health, suggesting an increase in private sector financing and insurance as a substitute to public health expenditure.

NITI Aayog in its own recommendations, suggests that States must step up their allocation in the public health sector vis- a-vis the Centre’s outlay on health, but advocates that the primary source of funding must come from private financial sources.

Further, it suggests that measures like corporate social responsibility (CSR) and public private partnership (PPP) models can be used in addressing financial and operational challenges related to the health system. But can increasing outlays and creating scope for more private financing resolve the public health sector woes across States?

To say that an atrophied primary healthcare system imposes huge, implicit economic costs is to emphasise the obvious.

Moving forward

It is, in a way, also pointless to always compute and cite the financial cost imposed at a national level by poor health. If free and compulsory education of all children in the age of six and 14 years can be constitutionally recognised as a right, under the Right of Children to Free and Compulsory Education (RTE) Act at a State level, surely the same can be done with respect to primary health care for dependents (those below the age of fifteen and above the age of sixty).

This can be a first step towards enhancing primary health facilities in both rural and urban areas.

An increase in public investments (complimented with support from the Centre) through more scholarships and higher wages for health professionals, and incentivising medical practice amongst medical students in rural areas, are measures that warrant the attention of the Centre and State governments.

International precedent

Countries like Rwanda and Thailand have already demonstrated that State-wide health coverage is possible for primary healthcare facilities. Rwanda, classified as a low income country and with a lower GDP than India, has a system of universal health coverage covering 7.8 million of its 11.8 million population.

In China too, its government over the last five years has pushed for significant reforms in its aim to fully cover the primary health care service cost for all its people at a provincial level by 2020.

In its Immediate Health Care reform package, the Chinese government (in 2009-10) outlined five major programmes in its implementation plan. This includes establishing a national essential drug system and providing equal access to basic public healthcare services for all dependents. Even within India, States such as Tamil Nadu and Kerala have shown it is possible to achieve superior health outcomes with a well-funded and well-designed public health system.

The basic issue is to implement such a right to healthcare at a State level. This holds true for the population of dependents. It will bring down the out of pocket expenditure for those lacking the means to increase their real income.

Preventive health services and access to quality, primary education are public goods that offer incalculable benefits. They are instruments for achieving both development and natural liberty.

The writer is assistant professor of economics, OP Jindal Global University