India has been chronically underspending on health, and Covid-19 has put in stark focus the damage that can do, K Sujatha Rao, former Union health secretary says. “We need to have a constant vigil and it is very important to keep investing in basic healthcare, surveillance systems, and public health functions.”

Rao describes this as a “tragic moment” when, even as we ought to increase spending on health, the economy is badly affected, adding that the government has to re-prioritise and look for more reliable and less costly options to tackle the crisis – including community participation and co-opting small and medium nursing homes and clinics at a fair rate.

In this interview, we discuss what public health finance means and how it can be administered more effectively, including the lessons that we have learnt from Covid-19.

K Sujatha Rao, former Union health secretary.

Excerpts from the interview:

We all access some form of healthcare, either in the private or public space. Where does public health finance come in? And when people say that India spends a very low percentage of its gross domestic product on health – less than 2% – what do they mean?
All expenditures incurred on health – direct and indirect, which are spent by households, by the private sector setting up a hospital, or by the government which implements programmes where they give drugs or set up hospitals like AIIMS [All India Institute Of Medical Sciences] – constitute the total health expenditure.

It is normally believed that for the country to get at least a reasonable quality of healthcare, it should be spending at least 5% of its GDP, a majority of which should be public health financing – which means the government pays out of the taxes it collects, from its revenue. The only outlier here, of course, is the United States. But even in the US, 50% of the total health expenditure is incurred by the government through its various programmes. So it is not all private sector.

Here, when we say that we need to spend more, India has been chronically – right from the beginning – spending about 0.9% to 1.2% of the GDP. It has never gone beyond that. Sometimes, expenditures incurred on water and sanitation are also included because they do have health outcomes, and so they raise it up to saying we are spending 1.4%.

But in reality, if you just were to take the total health spending incurred by the Government of India –ministries of health, railways, defence, labour, etc, all these departments spend on health for their own target groups – and complemented by the state governments, last year we spent 1.15% of our GDP. We are one of only 15 countries in the world that have spent less than 1.2% of the GDP [on health]. It is extremely low and that is the reason why most spending is through out-of-pocket expenditures. That means people are paying for their healthcare, and so they say that health security in India is extremely low.

When we say, for instance, that the private sector represents almost 70% of India’s healthcare sector, does that mean in terms of expenditure as well?
No. Private sector also means private sector healthcare givers – the hospitals and those who are providing service. It also means households. [If] I go to a quack and buy some drugs from him, or [if] I go to a solo practitioner or a pharmacy shop, buy drugs, or go to a diagnostic centre and get an X-ray done – all that comes under the private sector spending.

So if you say private sector expenditure is 69% of the total health expenditure, that is right in the sense [that] it is households who are spending the money because more than half of this is going just on diagnostics and medicines. So it is believed that if the government were to intervene just on those two, the out-of-pocket expenditures or private expenditures would reduce.

So there are two aspects to the private health expenditures – One, spent by the healthcare givers in the private sector and the other by households taking the services by paying for them.

You said that the health sector has been chronically underfunded, and maybe that is not likely to change so soon. But if you look at Covid-19 and what we have experienced in the last four to five months, what are the stark insights which should tell us how or where things could have been better or different, if we had more investment in public health?
Covid-19 has, more than any other disease programme that we have faced, really put in stark focus the importance of health, what damage health can do. Look at our GDP, it is kind of plummeting. That is the impact that infectious and communicable diseases have, and all systems and all countries are vulnerable to such an attack.

Therefore, we need to have a constant vigil and it is very important to keep investing in basic healthcare, surveillance systems, and public health functions – which are an imperative function of the government because it is the population’s health. It is not something you can leave to the private sector.

The reason why I would say that compared to other countries, India has not done well on Covid – apart from several other shortcomings you might find in decision-making – is that our health system is so fragile. We have not invested enough because of this chronic low public spending. We have not spent enough on public health, on primary care, on communicable disease control programmes.

In fact, if you look at the budgets of the last three to four years, we have been reducing our expenditures on malaria and other infectious diseases in proportion to the total amount that has been allocated for health. So disease surveillance has been a weak point. When Covid hit, it has hit us very badly because we are not even able to afford enough test kits to make it available for anyone on demand. We do not have adequate laboratories. The whole delay – we wasted two months, March and April – because we did not have the kits and the laboratories to test those kits. So we were so weakly and poorly prepared. It is largely because we have never invested enough in public health infrastructure.

Representational image. Photo credit: Dibyangshu Sarkar/AFP

If you were to look ahead, including lessons that Covid-19 has given us – perhaps to invest more in surveillance or in terms of community healthcare infrastructure – where do you think we can bring in that money from, and what kind of money are we talking about? Secondly, can the government better focus on improving access to finance or improving access to healthcare or both?
This is a very tragic moment because this is the time when we really ought to be investing huge amounts of money on health, and really double the money to 2.5% or 3% of the GDP so that we give it the necessary push. But this is also the time when the economy is off badly. So it is not possible.

It is not just the public finance which is in deep trouble, it is also the private sector for investment. They have lost a lot during the lockdown where they could not operate their hospitals, and now they are stuck with Covid-19 cases only, with the result [that] they get only a limited amount of money. So they are also in a financial crisis. It is not as if the private sector is sitting with mountains of money, which with a few incentives and appropriate policy frameworks, they could go and invest in health. So it is a very tight situation we are in.

Given this moment of crisis, the government should sit down to re-prioritise the spending that they have been doing so far. Not that there is much room, but whatever little room they have – because even as I speak today, much of the budget is going towards buying test kits and setting up laboratories and for Covid-19 management; their own regular programmes like immunisation and all have had to [take a hit] – besides other reasons, funding has also taken a hit.

Therefore given this little money that they have at their disposal, they may have to reprioritise, and look for more reliable and also less costly options by engaging more community, [and] start shifting to nurses – kind of re-strategising the entire human resources and technologies that we have and the health systems, to make it much more affordable.

If you had a clean slate, and if you could go from 1.2% to 2% of GDP, which is tens of thousands of crores, what would your primary focus be? Where would you spend that money for the impact that you would desire?
I would spend it immediately on the primary healthcare system – the infrastructure, the manpower and all that. You have to realise that even when Ebola struck Sierra Leone and Liberia, where they lost GDP by more than 5 to 10% points, it was not the $1 billion aid that came from abroad to set up hospitals that helped them tide over the crisis. It was the community participation and community-led efforts that helped them overcome it. So infectious diseases and pandemics, which hurt so much, require community participation. I would really spend on bringing in behaviour change – and all these are done in the primary care space, not by AIIMS or the Hindujas. They are done at the community level and that requires a lot of money.

So I would fill up the vacancies, I would spend money on training, on seeing that the people get access to healthcare, and ramp up my entire primary healthcare even in terms of bed capacity. You have to realise that as you speak today, in Bihar, about every 7,000 people have access to one bed. That is not going to help us if Covid goes into the rural areas. It is critical that we get our primary care and district hospitals into shape before we get on to other investments.

And where would I get this? I would co-opt small and medium nursing homes in the private sector. They are there, they have made the investment. I would negotiate a fair rate with them and I would seek them also to work with the government – so that together, we ramp up the capacity much faster than if I were to go alone, working with the government alone.

You are saying that the capacity is there – particularly at the primary healthcare centre level or at the rural or the district level. But it is more about using or co-opting that capacity that is more important. Is that correct?
In the private sector, we are not co-opting the smaller nursing homes as effectively as we should. But I think, with a few incentives, they can be brought up to the minimum standards that we would like to enforce and they could become good partners at the field level.

And do you feel that would ameliorate the problem of healthcare access to some extent?
Yes. I would not want to look at the Apollos or the corporate sector hospitals in that sense, because they are just 3-4% of the whole private sector. They are not the major players in this game. Of course, unless we need the oxygen and the ventilators – that is the tertiary care treatment, that is separate. But basic healthcare, basic doctors are really both in the private and the public sector, and I would use them in a much more intensive and imaginative way. What we need today is imagination – not just money. The leap has to come by imagining [based] on real data.

Countries like Italy, the United Kingdom and the United States are also facing huge attacks on their healthcare systems and have been overwhelmed. These are countries, if I were to see them as a layperson, which seem to have some of the best healthcare systems. Why is it that these countries have also suffered, while India, where healthcare is underfunded, may not be so badly affected at this point of time?
You have mentioned three countries and that is a good sample to take. In Italy, if you remember, it was sheer carelessness. They allowed the Chinese from Wuhan to keep coming. They did not control and block the borders the way Australia and New Zealand did in time. And therefore once it caught on, it really caught on badly. In fact, the province that was most affected in Italy has also the largest number of the very elderly – 80-year-olds to 85-year-olds. So, there was a demographic angle to Italy and their initial carelessness in taking appropriate decisions of closing down their borders.

Where the UK was concerned, they were in denial. For a long time, the Prime Minister kept talking about [how] herd immunity will be the way to go, [that] there is no need for any lockdowns, [or] to take any precautions and so on. But having recognised the problem, today they are much more controlled, [and have shown] much better performance and outcomes after they decided to act, as compared to the US.

The US has run away largely because they just have never invested enough in preventive and primary healthcare. It has all been hospital-based, insurance-based, hospital-care-driven health systems. You fall sick, I cure you. But their own preventive and promotive healthcare – which falls into the spectrum of primary care – has always been a problem.

And public health is something they never really paid much attention to. Over and above that, is the poor leadership; they did not allow CDC [Centers for Disease Control and Prevention]... It is not as if the Americans lacked the expertise and did not know where they were going. It was just that a lot of other political considerations crept in and made a mess.

If you were to look at finance from the personal side, insurance is one way to protect anyone facing a healthcare situation. We have a system, but can we improve that?
If you notice, the government has done quite well in spreading the health security net across the poor people – whether through Ayushman Bharat or whether through the state-run health insurance programmes. For instance, in Andhra Pradesh, 90% of the people – not just the poor – are covered with insurance for Rs 2 lakh to Rs 3 lakh, and that is ample amount of money in terms of providing basic and secondary healthcare, and even some procedures in the tertiary care.

But again, what really happens is that we are not paying promptly, and the private sector does not have the deep pockets to wait for one year for you to repay the claims that they have submitted. So overall, the investment has to increase. In Kerala, they have used demand-side financing to ramp up their own supply side. That kind of creative use can be made. But even if we were to use that route, we would still need some money to be able to pay off those private sector providers. So there is a bottomline, that you have to increase your overall public investment.

How can technology – whether in conjunction with finance (such as in insurance products) or with health (such as in telemedicine) – make things simpler and give us a better bang for the buck?
Technology certainly can [help]. Particularly, tele-medicine has huge potential. Not all of it, but the boundaries have really been blurred with technology because you can get access to a specialist sitting 300 miles away and that is a huge step forward.

So, technology is not only giving iPads to a health worker in the villages, but using more of this for rapid diagnostic kits that can be used at the village level; using telemedicine to get access to a specialist consultation in time – all these are cost-saving. Quick diagnosis is possible and therefore better treatment and outcomes are possible.

So technology, along with public-financed health insurance, could be a real big bang for the buck because people do not have to then spend money from their own pocket, shopping with hospitals or going to diagnostic centres and getting unnecessary tests done, and buying unnecessary drugs and so on. So the spending has to be on drugs, diagnostics and technology that gets you to access to healthcare.

Let us assume that we increase spending, which then finds its way into better primary care, and we are able to augment capacity in working with the private sector. How do you build more trust in the public health system?
Wherever we have delivered good quality care, there has been trust. There is so much cynicism on government programmes. But just think about it. Malaria, TB, HIV/AIDS, maternal and infant care – all these are provided by the government free of cost to every citizen in the country. Immunisation for 12 vaccine-preventable diseases is in the public domain, free of cost for every citizen.

So, the public sector – with its little resources – is doing quite a lot, if you come to think of it. It only means that it requires a further 1% [spending] for capital infrastructure and for appointing the key personnel in all the facilities as required. This is where we are running short. So when there is reliability or supply of services, people will come. But if you have a facility but do not have a doctor or drugs, how does the trust then develop? So I think these are budget-bound: Increase finances, develop the systems, and people will come. There is no doubt in my mind at all.

A child receives polio vaccination drops from a medical volunteer during a National Pulse Polio Immunisation programme. Photo credit: Noah Salem/AFP

You have held the position of health secretary, you are also deeply interested in the subject and you have also written a book. Tell us one or two instances that give you confidence in what public health can deliver, and why people should trust it.
I have been fortunate to have been directly involved with both HIV/AIDS and polio eradication, and these are the two biggest public health initiatives in the country. We are the one country that had the highest fall in incidence of HIV/AIDS, which still does not have a cure in the world. We brought the incidence down by 70%, and it was a homegrown strategy. Today, we have around 10 million people on ART [antiretroviral therapy] drugs. I think it is a remarkable achievement that we can be proud of. And eradicating polio is not small. Can you imagine millions of children on a single day, at a particular time, getting a vaccine shot?

I think that is a remarkable achievement and that indicates the breadth, depth and the span of operations that a government can reach out to. No private sector or no one can achieve what a government can and has demonstrated in both these programmes. We have the knowledge, we have the experience and the ability and capacity in India. We need not have done so badly on Covid as we have, if we had utilised all this experience.

I am afraid I have to end on this note, but I really think India is second to none in terms of being able to handle an infectious disease or a public health problem. It is only that we have neglected it so long; that neglect has its own consequences, and that is what we are seeing today.

This article first appeared on IndiaSpend, a data-driven and public-interest journalism non-profit.