India's Price for Public Health Neglect

India faces a whopping US$6.2 trillion bill over the years 2012-2020 in economic losses from non-communicable diseases, many of which would be preventable with proper care - equivalent to nearly nine times the country's health expenditure during the previous 19 years.

The figure comes from a recent study of economic losses by the Harvard School of Public Health. Non-communicable diseases include chiefly cardiovascular diseases including heart disease, stroke, diabetes, cancer and chronic respiratory diseases. They are the major cause of adult mortality and illness worldwide. The increasing burden, analysts reckon, will rob India of the 'demographic dividend' it is projected to reap from its predominantly young population.

By 2020, India is set to become the world's youngest country with 64 percent of its population in the working age group, according to population projections by the United Nations. India aspires to leverage this demographic advantage, with 31 percent of its population under the age of 15. However, inadequacies in government healthcare services, in terms of both physical infrastructure and qualified manpower and insufficient outlay for public health, will likely coalesce to take a toll on productivity.

Doctors say noncommunicable diseases can have an impact on the economy in multiple ways. "Most of the noncommunicable diseases like diabetes or heart disease strike people in the 40s, a person's most productive years," said Delhi-based endocrinologist Sushant Pandey. "They drastically reduce a person's productivity, even leading to early retirement."

Worse, Pandey added, these ailments put an immense strain on public health expenditure as well as in most cases the treatment costs are higher compared to communicable diseases.

The Harvard report, which is based on WHO projections of the mortality trajectory associated with NCDs, says ischemic heart disease is going to be the single most costly NCD in India, causing an output loss of about US$1.21 trillion over 2012-30, followed by chronic obstructive pulmonary disease. A 12.5 percent reduction in ischemic heart disease, for example, could lead to economic savings of US$25 billion per year over the period 2011-2025 for India, the WHO says.

India's poor public health and lack of basic facilities have long been a concern. Universal health coverage eludes India even after six and a half decades of independence. India also missed a good opportunity to augment public spending towards health when the economy was growing at a robust clip of 9-10 percent per annum between 2004-08. Now that growth has significantly decelerated to around 5 percent and the central government - grappling with twin deficits - is scrunched for finances, it will be tough to earmark a large share of spending on public health.

So is the problem intractable? Though lining up additional funds - in an election year when a majority of them have been sucked up by populist schemes including the Food Bill (which will provide food grains to two-thirds of the Indian populace at a cost of US$23 billion), a few cost-effective measures, say experts, can help.

For instance, the Asian Development Bank (ADB) estimates that India can add nearly 4 percent to its GDP by simply upgrading its sanitation which includes working toilets and sewage systems. The economic loss of lack of toilets and sanitation facilities in the country costs US$54 billion, as a consequence of treatment cost for diseases, early deaths, lost productivity, and loss in tourist revenue among other factors.

"If the population is less prone to disease or infection, Indians would be able to work, study and play harder. Healthcare costs, which constitute a higher fraction of income for the poor than the wealthy, would also come down as infection and morbidity levels fall," said Nirmala Pathak of a Delhi-based NGO Health is Wealth.

At 1.2 percent of the GDP, public spending on healthcare in India is one of the lowest in the world against WHO advice of 5 percent. Overall, India's percentage of public spending in overall healthcare spending is just 29 percent, versus 84 percent in the UK, 83 percent in Japan and 77 percent in France and Germany. Even in most major emerging market peers, the ratio is also much higher than in India - 75 percent in Thailand, 62 percent in Russia, 54 percent in Argentina and China, 47 percent in Brazil and Pakistan (39 percent).

In order to compensate for the low public spending, private spending by Indians on healthcare, at 2.9 percent of GDP, is one of the highest in the world. The corresponding ratios for some of the major economies are 1.3 percent in Indonesia, 1.6 percent in the UK, 1.7 percent in Japan. The concoction of low public and high private spending renders the healthcare system highly inequitable in terms of income category, rural-urban residence status as well as statewise residence status.

The National Healthcare Policy 2002, aimed at raising public healthcare spending to three percent of GDP by 2012. Two current flagship public healthcare schemes - the Rural National Health Mission and the Rashtriya Swasthya Bima Yojana - hope to rejuvenate the public system and increase access of the poor to quality healthcare facilities.

However, the twin schemes' benefits are ostensibly not percolating down to the lowest level. This is evident from worrisome health indicators such as an infant mortality rate of 47 per thousand, an under-five mortality rate of 59 per thousand and the proportion of one-year-old children immunized against measles at just 70 percent, way below the Millennium Development Goals.

The healthcare system in India obviously needs mending through a much larger public outlay and better quality of healthcare spending. In certain states, 80 percent of the healthcare outlay goes towards paying wages and salaries, leaving few resources for spending on medicine or medical diagnostics.

The low level of public spending has also led to greater dependence on the private sector for healthcare facilities. Nearly 80 percent of doctors, 26 percent of nurses, 49 percent of beds and 78 percent of ambulatory services and 60 percent of in-patient care are sourced from the private sector. Further, people bear 70 percent of the spending on health from their pockets; the government contributes only 30 percent of the total spending on health.

The macroeconomic benefits of higher public spending on health, argues Biswa Swarup Misra, Associate Dean of the Xavier Institute of Management, have visibly not been appreciated by the powers that be. A study of the empirical relationship between state domestic product, public health expenditure and IMR for 17 major states for 2000-2012 suggests that health outcomes are more impacted by public spending on health, than by economic growth rates. Further, the health status of the population significantly affects output. Therefore, analysts say, higher public spending on health is a win-win - it boosts both health as well as economic outcomes.

(Neeta Lal is a New Delhi-based senior journalist;