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A doctored service

The healthcare systems of the US and India are different. There is, however, one trait common to the two democracies: inequality. Abhijit Banerjee writes.

india Updated: Sep 24, 2009 22:32 IST

As someone who lives in the United States but studies healthcare for the poor in India, the current debate on healthcare reform in the US offers some interesting perspectives. The Indian and the US healthcare systems have one thing in common — inequality. The US, of course, is where the whole world comes seeking specialised care, but India too has a number of hospitals that are, by all accounts, world class and remarkably cheap at that. Yet, when it comes to delivering everyday care to the average Joe or Joyita, both systems falter. Take infant mortality for example: the US performs worse than almost every other rich country and India gets handily beaten by both Bangladesh and Eritrea — not the countries we usually benchmark ourselves against.

Yet the two systems are dysfunctional for different reasons. The problem in the US comes from the power of the private healthcare establishment. An oligarchy of large health insurance companies, in collaboration with the doctors’ trade union, the American Medical Association (AMA) decides everything from who should have health insurance, at what price, what treatment regimes should be followed for particular conditions, who can be a doctor and much more. And since both doctors and insurance companies benefit from increased healthcare spending, the result is that care is usually excellent if you can get it, but extraordinarily expensive.

The US, today, spends 15 per cent of its national production on healthcare (compared to a rich country average of about 9 per cent), and is projected to cross 30 per cent of GDP in the next 30 years and 50 per cent soon after that. In other words, it is beginning to strangle the rest of the economy — if 30 per cent goes to healthcare, how does the country pay, for example, for investment or infrastructure? Yet the US is also one of the only rich countries where everyone doesn’t have automatic access to routine care; many people simply cannot afford it.

If the American system is an instance of what private greed does in the absence of real competition, the Indian system represents the anarchy of a hyper-competitive market. The AMA ensures that the supply of doctors grows very slowly by regulating the number of new medical schools. It, thereby, also ensures that doctors get paid much more in the US than any other rich country (all in the name of maintaining quality).

In India, anyone can become a doctor by simply deciding to be one. Near Udaipur, I met a polite and friendly young man who explained that he could not find a job after completing Class 12, which is why he became a doctor. (He proudly showed his certificate — his subjects were psychology, geography and Sanskrit.)

The result is that even in the poorest and remotest parts of India, you have several healthcare providers competing for your business. Prices are typically remarkably low: the average visit to a private provider — based on the data from almost 10,000 visits — costs around Rs 100, which is less than what a US hospital bills for the time of the receptionist who tells you “the doctor will now see you”. The problem is that you quite literally do not know what you are getting: the doctor may not have more than a high school degree, but he is usually ready to treat anything.

He usually does not tell you what are you suffering from or why he is sending you for a test, though he might check your temperature and take your pulse; then he gives you a shot: in Udaipur two-thirds of the thousands of visits we recorded involved a shot. And lest you think Udaipur is special, a study by Jishnu Das and Jeff Hammer — from the World Bank — found the same pattern in Delhi. We do not know what is in the shot — the doctor does not tell the patient, nor does the patient expect to know. But medical experts in the area think it is either an antibiotic or a steroid or perhaps both. In other words, there is a lot of unnecessary use of antibiotics, which creates resistances that make them less effective when you really need them. The overuse of steroids can, quite simply, kill you.

Despite this, most Indians, including the very poor, get most of their healthcare from the private sector. In our data, only 20 per cent of all visits are to government health facilities, even for the poorest people (under Rs 200 a month per capita). Why is this the case has a lot to do with the way the public sector functions, which deserves a separate column by itself. Here I just want to point out a paradox. In India, where the market rules, and the government spends less than 20 per cent of the total amount spent on healthcare, the policy conversation is premised on the fact that the government is central to the health system. Almost no one talks about how to fix the ills of the private market for health.

In the US, by contrast, the market is anything but free and the government already bears 65 per cent of all healthcare costs (mostly because it pays for the elderly). Yet the right-wing opposition to government provided health insurance for the uninsured is in the name of saving the free market from encroaching socialism. What is it about healthcare that makes it so prone to nonsense?

Abhijit Banerjee is Director, Poverty Action Lab, Massachusetts Institute of Technology