EMHN 9: Private Sector Role in India UHC

Another bright and sensible paper from one of our international partners, the Emerging Markets Health Network (EMHN). In a new paper published this week, Indian economist and a friend, Debashis Chakraborty of the Indian Institute of Foreign Trade in Delhi, argued that "PPPs have the potential to help India achieve its healthcare ambitions, although the government should refrain from using its power to dominate the partnership, and will have to allow private partners greater scope both to plan and manage."

In his new seven-pages paper, The private sector’s role in achieving Universal Health Coverage in India, Debashis further argued these points:

• India’s current public healthcare spending and infrastructure is insufficient to achieve universal health care (UHC). Majority of all healthcare in India -- 93 percent of all health facilities -- is provided by the private sector. 

• Indian government attempted to achieve UHC since independence in 1947, but private sector role did not grow well, until the National Health Policy of 2002. From 2004, the government provided incentives to the private sector to cater for the poor, and since then, public private partnerships (PPPs) have become the norm.

• There are several examples of successful PPPs providing care to below poverty line patients,  but there are also many examples of failure. Failures stem from insufficient autonomy granted to the private players by the government.

Debashis showed several tables but Figure 4 caught my attention. Despite high per capita health spending of $8,362 in the US, $4,065 in Japan, $3,368 in the EU, $990 in Brazil, $604 in Mexico, compared to just $54 in India and $77 in Indonesia and the Philippines -- all in 2010 -- out of pocket (OOP) spending  on healthcare for those countries remained high, more than 50 percent of total health expenditure, except the US.

Why is this so, especially in the case of India? Debashis made a good observation:

The poor performance of several PPP initiatives begs the larger question of whether the government considers PPPs as a ‘private initiative supported by the public sector’ or a ‘public initiative supplemented by the private sector’. This distinction is crucial, because if the former is the underlying motive, then the government role will be reduced in the long term to a mere facilitator, and efficiency will automatically be augmented with increasing operational flexibility of private partners. 

However, if the government views itself as the dominant partner in PPPs, they will always prioritise their own political requirements and agendas over the efficient running of the PPP. This could fatally undermine the viability of many PPPs.

And that is one more reason why government role in healthcare should be limited and more focused, so it can optimize its delivery. I believe that government should focus on controlling (a) infectious and communicable diseases, and (b) pediatric diseases like childhood cancer, more childcare especially for those below six years old.

This implies that government should step back on non-infectious, non-communicable diseases (NCDs) for adults. These diseases are mostly lifestyle related. People can buy private health insurance on top of the basic health insurance provided by the government.

Nice work again and congratulations, Debashis. EMHN is doing well with your bright contribution to the network.
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See also:
EMHN 5: Free Trade and Markets in Healthcare, January 17. 2013
EMHN 6: Fake Medicines in Asia, February 15, 2013
EMHN 7: Free Trade Improves Public Health, February 26, 2013 
EMHN 8: Brand Protection and Safe Medicines, March 06, 2013

EMHN 5: Free Trade and Markets in Healthcare

Our regional network, the Emerging Markets Health Network (EMHN) has published a new book, hooray!

It was formally launched last week, January 11 at the Indian Institute of Foreign Trade in Calcutta. Among the major arguments of the book are: 

* Free trade is a powerful agent of improved health, via higher incomes and ‘knowledge spillovers’ 

* Asian governments stand to benefit from enormous savings if they properly open their health sectors to international trade 

* Intellectual property provisions within international trade regimes have little bearing on access to medicines by the poor, and recent attempts by government to expropriate the property rights of foreign pharmaceutical companies are motivated more by industrial policy than concern for patients 

* New technology rather than new regulation is the most sensible answer to stemming the global trade in fake and spurious medicines.

A longer discussion about the book is found here. 

Details of the launch are found here. Photos below lifted from that link. Upper photo includes the two editors, Debashis Chakraborty (left most) and Philip Stevens (right most).

The book has seven chapters from eight contributors including the two editors, and me. The book should be ready for sale and distribution in the next few weeks. The publisher made only a few copies for the book launch.

My paper is 14 pages long including tables and references. I am posting below the first two pages :-)
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Universal Health Care and Private Provision in the Philippines

Bienvenido “Nonoy” Oplas, Jr.

I. Introduction

The pursuit of universal healthcare (UHC) or “Kalusugan Pangkalahatan” in Filipino, of providing each of the nearly 100 million Filipinos, access to good healthcare when they need it, is a noble goal. It is a goal that is shared by all stakeholders in the country.

The big question is how to attain it at the most efficient and least costly way, both to the government and households and taxpayers. The dominant thinking is to follow the European and North American models of universal healthcare, in which government takes the dominant role in the healthcare system, and most costs are underwritten by the public purse.  This explains the rising budget for the Department of Health at the national level, and health spending at the Local Government Unit levels. This is not sustainable as the Philippine government is still heavily indebted, even though the debt/GDP ratio has improved compared to a decade ago.

Fat-Free Econ 23: Penang Workshop on Markets in Healthcare

* This is my article today in TV5's news portal,
http://www.interaksyon.com/business/42796/fat-free-economics-healthcare-as-right-responsibility
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PENANG, Malaysia – Healthcare is a right and an entitlement, a public good that must be provided by the government at the highest quality and at the lowest or zero cost possible. And some people can sit back as this high social expectation and low personal obligation is supposed to be provided by the government.

That is a formula for high disappointment and social conflict, both in the present and in the future. While it is true that healthcare is a right, it is also a responsibility, a personal and parental, guardian, and civil society responsibility, with or without government assistance. Rights without responsibilities, entitlements without obligations, will encourage politically noisy but economically lazy citizens. And society cannot progress in such condition.

Our seminar on “Promoting Markets in Healthcare” ended Sunday. Participants from independent think tanks from China, India, Indonesia, Malaysia and the Philippines exchanged notes on how civil society and the private sector can optimally provide healthcare to the public at the least politics, least coercion and taxation possible. The event was sponsored by a new global think tank, the Emerging Markets Health Network based in London, and the Institute for Democracy and Economic Affairs based in Kuala Lumpur. Both are espousing free market and more individual freedom philosophy.

There were several presentations made by speakers from different countries. Liew Chin Tong, a member of the Malaysian Federal Parliament, observed that the federal government is acting like a businessman in healthcare, banking and many other sectors as the government owns many hospitals, including “private” ones. He said the role of the government is to be an enabler, to provide equal opportunity to the people especially the poor, and not as businessman.

Frank Largo, a fellow Filipino who chairs the Department of Economics of the University of San Carlos in Cebu City, said that while healthcare is often an emotional issue, not every case is an emergency, and there is a big role for market and civil society players and providers especially in non-emergency cases. That there is a big gap between curative and preventive healthcare, and that there is bias among many academics, especially health economists, for more government intervention in healthcare.

Dr. Debashis Chakraborty, an economics professor at the Indian Institute of Foreign Trade noted the role of public-private partnership in India in the provision of various healthcare services, the inefficiencies or even absence of government healthcare service in many rural and far flung areas. This provides big opportunity for civil society and market players in non-state provision of healthcare.

Philip Stevens, the founder of EMHN, noted that the National Health Service of the UK government is a healthcare monopoly and is showing various forms of inefficiency like long waiting period for patients, and lack of innovation, which is a common practice in situations where no competition exists.

Prof. Yu Hui of the Chinese Academy of Social Sciences and director of China Research Center for Public Policy, and Prof. Feng Xingyuan of the China Academy of Social Sciences and vice-director of Unirule Institute of Economics, made a joint presentation, “Development of Private Hospitals in China and Lessons for Other Countries”. Below are some of the presentations.

But while there are explicit announcements by the Chinese government to encourage the development of more private hospitals and other healthcare providers, the entrenched interests in the public health sector is making this far from attainable.

They suggested (a) competition for the sector, (b) equal inclusion of private hospitals in the Social Medicare Insurance scheme, (c) privatization of some state-owned hospitals, and (d) mobility of healthcare providers in terms of fair promotion, especially among health professionals in the private sector.

Dr. Chua Hong Teck, director of the Healthcare and Low Income Households, Performance Management and Delivery Unit under the Office of the Prime Minister, presented lots of data about the healthcare system in Malaysia (see below).

Healthcare is the fastest growing sector in the Malaysian government. This is a result of high expectations by both the public and policy makers, that healthcare should be provided to all citizens at the highest quality and at the lowest cost, free for the very poor, as much as possible. This is not happening of course, as the presence of private hospitals is rising, implying there is rising demand and expectations on public healthcare that are not met and provided.

The lower table shows that the number of beds in private hospitals was rising from 2000 to 2011,but the number of health professionals for the same period was declining. This implies one thing: physicians and other health professionals in private hospitals are over-worked or simply more efficient, producing more health services at lower manpower input, while those in public hospitals are underworked or simply bloated. I could be wrong but this is the most proximate explanation that I can see.

Dr. Chua said the following are the challenges for the non-state sector in healthcare: (a) enforcement of Private Healthcare Facilities Act of 1998 with regulations of 2006, (b) financing of these services and management of these facilities, and (c) ability to co-exist and compete with the public healthcare system.

I do not believe that it is possible to have real competition between private and public healthcare providers as favoritism is inherent in the latter. For one, the former is taxed while the latter is subsidized. Second, the former is regulated while the latter is the regulator.

High spending in public healthcare is among the major deficit generators and debt creators in many rich countries now. If a service is provided for free or at highly subsidized rates, expect the demand to be larger than the supply always. The result of such a wide gap between demand and supply is (a) healthcare rationing like long waiting period for non-emergency cases, or (b) generally poor quality delivery or provision of a service, or (c) continued bleeding of fiscal condition with sustained high borrowings to finance the system, or (d) all of the above.

If we recognize that healthcare is a right and a responsibility at the same time, then it should be recognized that those who want good quality healthcare must pay for it as much as possible. This will open up the discussion on the importance of preventive healthcare, that people own their bodies, not the government. So if people will abuse their body, no amount of government healthcare subsidy and borrowings will remedy the situation.

And secondly, recognize the need to deregulate private and civil society health insurance schemes. Government health insurance system like PhilHealth in the Philippines can be retained but people should not be coerced and obliged to become mandatory members and contributors to it. It should co-exist with private and civil society health insurance schemes in order to encourage more competition, more innovation, and more efficiency at least cost possible to the public.

The case of infectious diseases on certain occasions like the spread of leptospirosis during heavy flooding, and pediatric diseases like childhood cancer, can be a separate case where taxpayer-financed healthcare is justified.

Removing or reducing the fat and bureaucracies in government healthcare system is the way not only to help address the bleeding public debt problem in the Philippines and in many other countries, but also to inculcate the age-old dictum: rights and responsibilities, entitlements and obligations go together.
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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012
EMHN 3: Penang Workshop Report, September 10, 2012

Fat-Free Econ 8: Drug Price Regulation is Wrong, May 04, 2012
Fat-Free Econ 9: Drug Pricing Bureaucracy is Not Cool, May 11, 2012
Fat-Free Econ 18: Healthcare Corruption and Physician Entanglement, July 30, 2012
Fat-Free Econ 22: Three Years of Drug Price Control Policy, August 30, 2012

EMHN 3: Penang Workshop Report

* This is my article in the online magazine yesterday,
http://www.thelobbyist.biz/perspectives/less-gorvernment/1349-healthcare-competition-and-government.
I also wrote a longer version in interaksyon.com.
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Penang, Malaysia – The seminar that I attended here on “Promoting Markets in Healthcare” ended yesterday. It was another learning experience listening to various speakers and fellow participants from free market think tanks and groups from India, China, Malaysia, Indonesia and the Philippines. The activity was sponsored by a new global think tank, London-based Emerging Markets Health Network (EMHN) and the Kuala Lumpur-based Institute for Democracy and Economic Affairs (IDEAS), and was held in Red Rock Hotel.

The focus was how to free from politics, or how to minimize political interventions and the various inefficiencies associated with it, in the delivery of healthcare to the public, with greater role to be assumed by civil society and the private sector. In short, healthcare provision at the least politics, least taxation and borrowings possible.

Among the speakers yesterday were the following.

Liew Chin Tong, a member of the Malaysian Parliament. He noted that the main role of a government is to provide equal opportunity to the people, to be an enabler of the less privileged so they can improve their lives later on. But the Malaysian federal government has been acting like a big businessman, owning many banks and hospitals, even private hospitals with substantial share ownership in them.

Frank Largo, the head of the Economics Department of the University of San Carlos (USC) in Cebu City. Frank has a unique role because he teaches Economics not only to Econ majors, but also to Nursing and Pharmacy majors who are required to take a subject on health economics. He said that while there are lots of emotions involved in the discussion of health policies, not all health cases are emergency. That the gap between curative and preventive healthcare is big, public resources is heavily focused or biased on curative health.

On a side note, Frank’s graduate Economics students organized a forum about the Cheaper Medicines Law in USC about two years ago, and I was one of the speakers there. I talked about “Property right and policy left” of the law.

Prof. Yu Hui of the Chinese Academy of Social Sciences (CASS) and Prof. Feng Xingyuan of the Rural Development Institute and Vice-Director of Unirule Institute of Economics, made a joint presentation entitled “Development of Private Hospitals in China and Lessons for Other Countries”.

In their presentation, they showed some data like as of 2011, there were 457,000 private healthcare providers including private hospitals or 48 percent of total. But these private enterprises comprise only 10 percent of total hospital beds.

Below are some data regarding the dominance of government hospitals despite public pronouncements of encouraging private hospitals and other healthcare providers, as well as the reforms they think should be done.

Dr. Debashis Chakraborty, a Professor of Economics at the Indian Institute of Foreign Trade in Delhi said there is an important role for public-private partnership (PPP) in providing healthcare services.

Philip Stevens, the founder of EMHN, narrated how the UK government healthcare monopoly, the National Health Service (NHS), is one proof of the problem of centralizing and politicizing healthcare provision. Long waiting period for patients, insufficient supply of certain medicines in some government hospitals, lack of innovation and cost-cutting measures, are among the ills that plague the NHS and other government-nationalized or centralized healthcare systems.

Dr. Chua Hong Teck, Director of the Healthcare and Low Income Households, Performance Management and Delivery Unit (PEMANDU) under the Office of the Prime Minister, presented a number of interesting of data on Malaysia’s healthcare system.

Government healthcare expenditure is growing at an average of 11 percent per year, with the Ministry of Health (MOH) spending alone rising at 12 percent per year on average. Since 2009, total healthcare spending comprises about 5 percent of GDP and 55 percent of it is from public sources.

The number of beds in private hospitals is rising from eight percent of total beds in 2000 to 24.5 percent in 2011, but the number of health professionals is declining from 67 percent of national total in 2000 to only 29 percent in 2011. This suggests to me that health professionals in private hospitals are over-worked or simply are more efficient, while those in government hospitals are underworked or bloated.

Tables below, healthcare spending is led by MOH at 43.7 percent of total, followed by out of pocket (OOP) or private spending at 35.6 percent, then the Ministry of Higher Education (MHE) at six percent, and the other agencies have small or minimal shares. The Ministry of Defense also has its own hospital and they treat not only its own personnel and their dependents, but even ordinary citizens can go to their facilities and get free or subsidized healthcare.

As of 2011, 42 percent of all dentists, 40 percent of all pharmacists, and 33 percent of all nurses, are working in the private sector healthcare providers.

Can healthcare, especially those provided by the government, national and local, be depoliticized? Can real competition happen between public and private healthcare enterprises?

From my observation in the Philippines and other countries, the answer I think is No. Government being a regulator and a player at the same time already gives undue advantage to public health institutions. Besides, they get subsidies from taxpayers while private enterprises are being taxed.

When a commodity or a service is provided for free or at highly subsidized rate, we can expect that the demand will be larger than the supply, always. For instance, someone who has a headache might demand a CT scan or MRI tests to find out if there are other hidden causes of the headache. And why not demand, it is free or heavily subsidized anyway. This will put heavy pressure and use on the facilities and personnel of the public healthcare sector, resulting in high costs, healthcare rationing like long waiting period for non-emergency cases patients, or poor quality delivery or provision of a service.

Healthcare competition among different service providers – national government, local government, civil society and charity organizations, corporate and for-profit businesses – will result in better health service provision to the public at lesser cost. Competitors are always under pressure to give value for money to their clients as the latter have the option to opt out and go to another service provider.

On another note, I enjoyed the food and local cuisine here. There are many food shops and stalls almost everywhere, selling Malaysian, Chinese or Indian food. Our local hosts told us that if one is busy, it is much cheaper to eat outside than do groceries and cook food in the house.

The food competition in Penang and other parts of Malaysia, and almost elsewhere in the planet, is perhaps the best and solid proof that depoliticizing an important service like healthcare is best for the public, whether in the short- or long-term.
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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012
EMHN 2: IDEAS Forum in Penang, Malaysia, September 01, 2012

EMHN 2: IDEAS Forum in Penang, Malaysia

This coming Friday, September 7, I will go to Penang, Malaysia. The Institute for Democracy and Economic Affairs (IDEAS, http://ideas.org.my/) will organize a seminar on Promoting Markets in Healthcare to be held on September 8, Saturday. IDEAS partnered with a new think tank, the Emerging Markets Health Network (EMHN) in organizing and financing this important forum.

Only three topics to explore that day.

1. What is the appropriate role for governments in healthcare provision?

Speakers will be Liew Chin Tong, a member of the Malaysian Parliament from Democratic Action Party, and Philip Stevens of EMHN.

2. Challenges in strengthening private sector healthcare provision in Asian countries

Speakers will be Dr. Debashis Chakraborty of India Institute of Foreign Trade, Prof. Yu Hui of China Academy of Social Science (CASS, Beijing), his talk to be translated by Prof Xingyuan Feng of the Cathay Institute for Public Affairs (CIPA, Beijing), and Dr. Chua Hong Teck, Director of the National Key Economic Area: Healthcare, Malaysia.

3. Markets in healthcare: communicating free market ideas to a sceptical public

Group discussion moderated by Philip Stevens, EMHN.

It will be a small group discussion with participants from China, India, Indonesia, Philippines and Malaysia. Philip is from London.  I am excited to join this seminar.

This is the book that was jointly edited by Philip and Debashis, "Towards a Healthy Future?" published in 2009 by the Liberty Institute in Delhi.

Debashis also wrote a chapter on "The Health Scenario in India: A Cross State Analysis", Philip wrote three chapters here, (a)  Free Trade for Better Health, (b) Diseases of Poverty and the 10/90 Gap, and (c) Counterfeit Medicines in LDCs: Problems and Solutions, co-authored with Julian Morris. Julian was the Executive Director of the International Policy Network (IPN) before while Philip was the Research Director of IPN.

Dr. Amir Khan, a fellow participant in this training, also wrote a chapter in this book, "IPRs under the WTO - Examining the Public Health Concerns".

Photos below, from left: me, Amir, Philip and Julian, were the speakers in a "Think tank IPR meeting" in January 2011 held in  Singapore. The three of them spoke on various IPR and drug patent issues while I contributed on the case of drug price control policy in the Philippines, and dealing with local NGOs engaged in healthcare policies.

Lower photos, the book Fighting the Diseases of Poverty edited by Philip and published by IPN in 2007. I and about 10 other people co-authored one chapter of that book.

As I have argued in several papers in this blog, I believe there is role for government in healthcare, and that is to deal with (a) infectious or communicable diseases, (b) pediatric diseases like childhood cancer, and (c) people with physical and mental challenges or problems.

For me, the following are NOT functions of government in healthcare:

1. Setting the price of medicines, whether by innovator or generic manufacturers.

2. Setting the price of other healthcare products and services, like medical devices and laboratory instruments, diagnostic tests, professional fee, and so on.

3. Monopolize or nationalize health insurance system.

4. More government funding for adults with lifestyle-related diseases, or a result of their high consumption of alcohol, tobacco, fatty/sweet food and drinks, and sedentary lifestyle. Such lifestyle is a choice and the diseases that often come with them are not biologically inherited.

Market providers of healthcare -- private health insurance, private hospitals and clinics, private health professionals, etc. -- competing with each other, will have optimal role here. And while there is role for them in dealing with the above three cases that I mentioned above (infectious, pediatric diseases, people with physical and mental challenges), it will be the government (a Department or Ministry of Health, local governments, a state health insurance corporation, etc.) that will mainly provide the healthcare financing, to be sourced from taxes and related mandatory healthcare contributions.

Let me add that even in infectious diseases, there is big role for personal and parental/guardian responsibility in preventive healthcare. For instance, to avoid or minimize the risks of mosquito-borne diseases like dengue and malaria, people should clean their house and surroundings of stagnant water where mosquitoes can thrive and multiply. Or constantly remind children to properly wash their hands before eating. Or avoid living in low lying areas that easily get flooded and hence, be more prone to leptospirosis and other water-borne diseases.

I wish to hear other opinions from the above speakers and my fellow participants, if my points above is justifiable or not. The beauty here is that there are participants from the planet's two most populous countries, China and India. And these are independent thinkers who are not enamored by the idea that for almost all social and household problems, more government is the solution.
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See also:
EMHN 1: Forum on Promoting Markets in Healthcare, IDEAS-Malaysia, June 23, 2012

Healthcare Competition 6: United States, May 05, 2011
Healthcare Competition 7: Moral Hazards in Healthcare Subsidies, May 24, 2011
Healthcare Competition 8: Centralization vs. Deregulation of Healthcare, December 31, 2011
Healthcare Competition 9: Deregulate Further the Supply of Healthcare, August 25, 2012