Health System in Transition in India: Journey from State Provisioning to Privatization

• DOI: https://doi.org/10.13169/worlrevipoliecon.11.4.0506
• Pages: 506-532
• Published date: 01 December 2020
• Date: 01 December 2020
• Author: Shailender Kumar Hooda
• Subject Matter: neoliberalism in health,health system transition,privatization,health insurance

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Shailender Kumar Hooda holds a PhD in Economics from Jawaharlal Nehru University, and is

currently Associate Professor at the Institute for Studies in Industrial Development (ISID), New

Delhi, India. He works on the political economy of health and healthcare, health economics and

policy-related issues, especially decentralization in health, equity and financing, corporatization

and the healthcare industry. He specializes in handling large-scale survey data relating to the

Indian economy, and in conducting and designing primary surveys. He has previously taught at the

University of Delhi and Maharshi Dayanand University, Rohtak, and has worked with the National

Council of Applied Economic Research and the National Institute of Public Finance and Policy, New

Delhi. Email: hoodask@isid.edu.in

HEALTH SYSTEM IN TRANSITION IN INDIA

Journey from State Provisioning to Privatization

Shailender Kumar Hooda

Abstract: This paper highlights how privatization in healthcare is being promoted and

its further growth facilitated through the adoption of neoliberal policies in India. The

approach to financing healthcare has been shifting from public provisioning to tax-

funded health insurance merely to achieve health coverage. The idea of the strategic

purchasing of care from private providers promoted through insurance seems likely to

aggravate the crisis in access and healthcare delivery. Such a crisis will escalate costs and

promote concentration and monopolies in the healthcare market. Under the recently

promoted neoliberal policy, India is compromising the goal of comprehensive provision of

public health services, which is essential for creating a healthier society.

Keywords: neoliberalism in health; health system transition; privatization; health

insurance

1. Introduction

As an important commodity for individuals and nations as a whole, healthcare has

been on the political agenda of every government across the world. Historically,

there have been different ideological and practical approaches to designing health-

care systems in different countries. The healthcare system in Western industrial

states and societies places emphasis largely on curative aspects, and is limited to

hospital-provided health services, medical practice, and pharmacies. Preventive

care (prevention of diseases) has occupied a relatively small place in these health

systems. However, at the first World Health Assembly organized by the World

HEALTH SYSTEM IN TRANSITION IN INDIA 507

World revieW of Political economy vol. 11 no. 4 Winter 2020

Health Organization (WHO) in Alma Ata in 1978, it was increasingly realized that

health services in the so-called developing countries could not share the same

orientation as Western industrial states and societies (WHO 1978; Fisk 2000).1

The consensus was that the majority of disease cases in developing countries can

be prevented easily under a primary healthcare system. The primary health care

(PHC) approach emerged as a central concept for attaining the goal of Health for

All (HFA) by 2000. This concept was heavily concerned with people, with the

principles of social justice, accessibility, appropriateness, and acceptance of medi-

cal services, with consideration of the needs of people in the communities, their

participation, and their orientation to the concept of health services. This strongly

reaffirmed the position that health, which is a state of complete physical, mental,

and social well-being, and not merely the absence of disease or infirmity, is a fun-

damental human right and that the state should take prime responsibility for fulfill-

ing this goal.

The consensus that was reached on how to design the healthcare system in India

after independence was almost the same as that expressed in the Alma Ata declara-

tion. The recommendations of the 1946 report of the Health Survey and Development

Committee (Bhore Committee), India’s foremost committee on health, enunciated

the principle that “nobody should be denied access to health services for his inabil-

ity to pay,” and that the state should take the prime responsibility for delivering

healthcare (Bhore Committee 1946). Several other committees on health (the

Sokhey Sub-Committee in 1948, the Mudaliar Committee in 1962, the Chaddha

Committee in 1963, the Kartar Singh Committee in 1974, the Srivastava Committee

in 1975, and the Joint Panel of the Indian Council of Medical Research–Indian

Council of Social Science Research ICMR-ICSSR in 1980) also supported the con-

cept of a comprehensive (primary) healthcare system in the public sector (for details

about these committees see Sen 2012; Hooda 2017). India in its first National

Health Policy (NHP) in 1983 embraced most of the tenets of Alma Ata in the health

policy agenda (GOI 1983). This agenda called for a more integrated and compre-

hensive health system comprising a three-tier structure in the areas of primary,

secondary, and tertiary care services. At that time, it was felt that under a pure

market system healthcare would typically be allocated inefficiently, and that in the

absence of a reasonably well-organized system of public healthcare people would

be distressed by the cost of private healthcare. The ideas and dynamics of health

system development, however, changed over time. Especially since the 1990s, neo-

liberal thinking has argued consistently in support of privatization, and has exerted

a strong influence on health system design and financing. This paper aims to high-

light the changes that neoliberal thinking and policies have brought to the Indian

healthcare sector, and to list the implications. Specifically, we aim to understand

and describe health in the context of neoliberalism. This includes how, as a result