New Health Policy: Preparing for Privatisation


The Modi govt. has proposed a new National Health Policy 2015 (NHP). Itcorrectly identifies the reasons behind the poor record of health services and the consequent hardships faced by the people in the form of financial burden and poor access to necessary services. However the proposals to remedy the situation fall well short of requirements and are often out of sync with the analysis.

Provider Payer Split and Purchasing of Services

The overarching premise that informs prescriptions in the NHP is what is known as the ‘provider payer split’. While the Government’s role in financing health care services is acknowledged, its role as provider of care services is circumscribed by the description of it being a ‘purchaser’ of services. While the NHP claims that the priority would be to ‘purchase’ services from public and not-for-profit private facilities, it also foresees purchasing from for-profit private facilities. It is not clear why the policy shies away from saying that the government will finance AND provide services, based on needs and priorities. Instead, by retaining the insurance language of ‘purchase’ the underlying attempt seems to be to continue and expand insurance based schemes.

Continuance of Insurance Schemes

This dovetails with its stated objective to integrate the public funded insurance schemes into a single payer system, thus maintaining the possibility of purchase from private for-profit facilities. Given the past experience of public funded insurance schemes (RSBY and others), where he bulk of ‘purchasing’ is done for private facilities, it is not unreal to apprehend that public money will be used to purchase secondary and tertiary care services from private facilities. This is contrary to the different problems associated with the existing insurance schemes, including: “denial of services by private hospitals for many categories of illnesses, and over supply of some services” and “resort to various fraudulent measures, including charging informal payments”.

Incorrect definition of Primary Health Care

The NHP proposes free services for all at the primary level of care. However by calling such a model as being based on the ‘Primary Health Care’ (PHC) model, it makes the error of conflating ‘Primary Health Care’ with ‘Primary Level Care’.  PHC is not just primary level care, but includes care at all levels (including secondary and tertiary). Instead the NHP proposes a disjunction, with primary level care being provided by public facilities and secondary and tertiary services being ‘purchased’ from an array of facilities under an insurance scheme. There are no clear linkages between the different levels of care. The NHP trivializes this vital aspect of a PHC model, where health systems need to be networked and interlinked with clear backward and forward linkages, by proposing improved transport services to secondary and tertiary services as the solution! At the secondary and tertiary levels of care the NHP does not commit to free services for all patients. Instead it proposes free ‘emergency services’.

Benevolence towards Private Sector

The NHP appears to characterize the rapid growth of the private sector as a positive trend, when it says: “The second important change in context is the emergence of a robust health care industry growing at 15% compound annual growth rate (CAGR)”. Read along with the claim that the growth of the private medical sector is not only because of deficiencies in the public system betrays a clear benevolent outlook towards the private sector. There is no indication or evidence provided regarding what other reasons lay behind the rapid expansion of the private sector, thereby appearing to argue that the growth of the private sector is a natural process. Such an understanding is not borne out by global evidence.In fact the existence of a strong and growing private sector has a perverse impact on the public sector by drawing away human and financial resources. The NHP correctly identifies concessions and benefits provided to private sector by the government but it does not mention any concrete ideas of the obligations of the private sector towards promoting health and not merely its own profits. Regulation of the private sector is mentioned in several places in vague generalities without spelling out concrete measures for regulation, or even the proper implementation of the Clinical Establishments Act.

No Concrete Commitment towards increasing financial support

The NHP correctly identifies, in the case of public services, that “Much of the increase in service delivery was related to select reproductive and child health services and to the national disease control programmes, and not to the wider range of health care services that were needed”. It further states that: “The budget received and the expenditure there under was only about 40% of what was envisaged for a full re-vitalization in the NRHM Framework”. Both these would imply the necessity of increase in financial support to the health sector by an order of magnitude – at least to 3-5 times the present levels – if comprehensive quality care is to be made available that the entire population can access. In addition the NHP proposes various measures that would require additional resources, including provision of free medicines and diagnostics in public facilities, enhanced staffing, new infrastructure, setting up of new medical colleges, etc. Yet the NHP refuses to commit a concrete roadmap for enhanced allocation. It states: “It would be ambitious if India could aspire to a public health expenditure of 4% of the GDP, but most expert groups have estimated 2.5 % as being more realistic”. The NHP goes on to argue: “At current prices, a target of 2.5% of GDP translates to Rs. 3800 per capita, representing an almost four fold increase in five years. Thus a longer time frame may be appropriate to even reach this modest target”. In other words the NHP refuses to commit to even a target of 2.5% of GDP as public expenditure at the end of five years from now. In the absence of such a commitment it is inconceivable that the plans proposed in the NHP have any possibility of being met.

The NHP claims that the prices of drugs are being monitored effectively but glosses over the fact that the New Drug Policy of 2013 legitimisedthe inordinately high prices of many drugs by switching over from a ‘cost based’ formulation of ceiling prices on essential drugs to a ‘market based’ formula for price fixation. The NHP speaks in two voices regarding availability of free drugs in public facilities. In the initial part the NHP refers to a commitment to make available free drugs and diagnostics in private facilities. Yet in the latter part this claim is circumscribed by the following proposal. “The drugs and diagnostics available free would include all that is needed for comprehensive primary care including all chronic illnesses in the assured set of services. At the tertiary care level too, at least for in-patients and out-patients in geriatric and chronic care segments, most drugs and diagnostics should be free or subsidised with fair price selling mechanisms for most and some co-payments for the “well to do”. Clearly the NHP is reluctant to commit to a system where all drugs and diagnostics that are essential and life saving would be available free in public facilities. This is in fact a retrogressive step from the system already followed in states such as Tamil Nadu and Rajasthan.