globalisation, reforms and health care

 sickle_s.gif (30476 bytes) People’s Democracy

(Weekly Organ of the Communist Party of
India (Marxist)


No. 06

February 10, 2002

Reforms And Health Care

Amit Sen Gupta

INDIA embarked
on its present path of economic liberalisation, on instructions from the World Bank and
the IMF, relatively late. But in 1991 the infamous Manmohan Singh budget set things in
motion. The immediate fallout was a savage cut in budgetary support to the Health sector.
The cuts were severe in the first two years of the reform process, followed by some
restoration in the following years.

Compression of
funds has had a number of far reaching effects. Generally, expenditures on salaries tend
to take up an inordinately large part of total expenditure. Salaries constitute 70-80 per
cent of expenditure for most major programmes, and the trend is most distorted in the case
of rural programmes, viz. rural hospitals and primary health centres. Faced with limited
funds, while salaries still require to be maintained at previous levels, the burden of
cutbacks are increasingly placed on supplies and materials. Ultimately a skeletal
structure survives, incapable of contributing in any meaningful manner to amelioration of
ill-health. We are now seeing this as a major contributory factor to the disruption of the
rural primary health care system.

In GDP terms
health expenditure in the country (already one of the lowest in the world) has declined
from 1.3 per cent in 1990 to 0.9 per cent in 1999. While Central budgetary allocation has
remained stagnant at 1.3 per cent of total outlay, the budgetary allocation to health in
state budgets (which account for over 70 per cent of total health care expenditure of the
country) has fallen in this period from 7.0 per cent to 5.5 per cent. This is a direct
consequence of the squeeze imposed on the finances of the states by the economic
liberalisation policies. In reaction to this, desperate state governments are queuing
up in front of the World Bank to receive Bank aided projects. This is proving even more
disastrous as these projects impose strict conditionalities like cost recovery.


Cost recovery is
the lynchpin of the Bank sponsored policies in the country, in spite of irrefutable
evidence that such schemes, without fail, result in the exclusion of the poorest. The case
for the utility of user fees uses the particularly seductive argument of equity. Seen in
abstract it appears to make sense that those who can pay should, and the benefits would be
shared by those who cannot. Unfortunately user fees do not work in this manner in the real
world. The concept of user fees, rather, is used to legitimise the withdrawal of the
state. Let us remember that the user fee argument is being forwarded in a situation where
public funding of health care expenditure has fallen from 22 per cent in the early
nineties to 16 per cent in 2000. India has one of the most privatised health systems in
the world (see Table). To harp on user fees while not arguing for a quantum jump in health
care expenditure by the state lets the state of the hook and shifts the basic terrain of
debate on health care expenditure.

The concept of
user fees uses the old and tested model of cross subsidisation—some pay more to
subsidise expenditure for those who pay less or nothing. This model has been used
successfully in infrastructure sectors like power, telecom, air transport etc. For the
model to be successful there is an assumption that a majority of users are part of the
public funded system. In health care in India this is far from the case. Public facilities
are utilised by those who do not have any other recourse or a powerful elite who can milk
the public funded system. To expect that the latter will pay is unrealistic. As we move
towards greater privatisation, those who can pay (even to a limited extent) move
increasingly to the private sector. This further undermines the quality of care in the
public funded system, as the relatively vocal sections have lesser stakes in its survival.

Moreover the
concept of user fees is a thin end of the wedge, used to legitimise greater levels of
private expenditure in health care. Let us not forget that the whole argument used in
favour of private participation in physical infrastructure (power, telecom, etc.) was
built around the claim that it would free scarce resources for social
infrastructure—health, education, PDS. In all these sectors we see a rolling back of
the state and reduced expenditure.
Any mechanism of cross subsidy requires an arbiter
who consciously works in favour of the poor. To believe that the present Indian state is
going to play this role is to delude us.


In addition to
the key area of IMF/Bank induced health sector reforms, globalisation impinges on the
health sector in myriad other ways. Globalisation leads to transnationalisation of
public health risks. A major effect has been the resurgence of communicable diseases
across the globe.
Every phase of human civilisation that has seen a rapid expansion in
exchange of populations across national borders has been characterised by a spread of
communicable diseases. The early settlers in America, who came from Europe, carried with
them small pox and measles that decimated the indigenous population of Native Americans.
Plague travelled to Europe from the orient in the middle ages, often killing more than a
quarter of the population of cities in Europe (like the plague epidemic in London in the
fifteenth century). This is a natural consequence of exposure of local populations to
exotic diseases, to which they have little or no natural immunity.

Today what
incubates in a tropical rainforest can emerge in a temperate suburb in affluent Europe,
and likewise what festers in a metropolitan ghetto of the global North can emerge in a
sleepy village in Asia – within weeks or days. However those that are most badly affected
are the poorest that live in developing countries, because their immunity is compromised
by under nutrition and because they have little or no access to health facilities. In the
case of AIDS the combination of global mobility and cuts in health facilities has been
lethal for many developing countries – a whole generation has been ravaged by the disease
in Africa, and now in Asia. Let us not forget that AIDS first manifest itself in the US,
but it was Africa that feels the real force of its wrath. In the 1960s scientists were
exulting over the possible conquest to be achieved over communicable diseases.

Forty years
later a whole new scenario is unfolding. AIDS is its most acute manifestation. We also
have resurgence of cholera, yellow fever and malaria in Sub-Saharan Africa, malaria and
dengue in South America, multi-drug resistant TB, plague, dengue and malaria in India. We
see the emergence of exotic viral diseases, like those caused by the Ebola and the Hanta
virus. Globalisation that forces migration of labour across large distances, that has
spawned a huge “market” on commercial sex, that has changed the environment and
helped produce “freak” microbes, has contributed enormously to the resurgence.


While unleashing
new horrors in the form of disease, globalisation has also compromised people’s
ability to combat them. The WTO agreement on Patents (called the Trade Related
Intellectual Property Rights – TRIPS) has sanctified monopoly rent incomes by
pharmaceutical MNCs. The TRIPS agreement has placed enormous power in the hands of MNCs,
by virtue of the monopoly that they have over knowledge. They have generated super profits
through the patenting of top selling drugs. But drugs which sell in the market may
have little to do with the actual health needs of the global population—for, often,
there is nobody to pay for drugs required to treat diseases in the poorest countries.
Research and patenting in pharmaceuticals are driven, not so much by actual therapeutic
needs, but by the need of companies to maintain their super profits at present levels.

Given their
monopoly over knowledge, these companies will decide the kind of drugs that will be
developed—drugs that can be sold to people with the money to buy them. Thus on one
hand we have the development of “life-style” drugs, i.e. drugs like viagra,
which target illusory ailments of the rich. On the other hand we have a large number of
“orphan” drugs—drugs that can cure life-threatening diseases in Asia and
Africa, but are not produced because the poor cannot pay for them.


The present
phase of globalisation also has grave consequences for food security, which is an integral
part of good health. The Agreement on Agriculture (AoA), under WTO has further skewed the
balance against developing countries. India is just beginning to feel the rigours of the
Agreement on Agriculture that was part of the WTO agreement of 1995. Specifically, the
lifting of restrictions on imports, as required by the AoA has resulted in widespread
disruption of the rural economy. The spate of suicides by farmers in many states is a
testimony to the grim situation that is fast unfolding before us. The AoA ensured that
subsidies provided to domestic agriculture by developing countries would be phased out
while those being provided by developed countries would be retained. This has resulted in
exports of primary commodities by developing countries becoming uncompetitive while their
domestic markets are being flooded by subsidised imports from developed countries. This
has been compounded by pressures of the SAP induced policies to produce for the export
market. As a result vast tracts in India now grow “cash” crops like cotton,
tobacco, sunflower, etc.

We in India
would recall the devastation and violent reactions that were provoked by forced indigo
cultivation in Bengal in the nineteenth century. The actors have not changed, only the
excuses offered have! Because the global rules of the game are controlled by a few
developed countries, in the past decades the global prices of agriculture exports from
developing countries have fallen steadily. As a result farmers get less and less for their
products, while the growth in production of staple food grains has fallen sharply. All
these pose a major threat to the sustainability of agriculture in the Third World and to
the safeguarding of food security.

Control over
global agriculture is sought to be exercised by other means too. MNCs are pushing through
a regime that will allow Patenting of seeds. At the same time they are using Biotechnology
to research new varieties that are genetically modified. These two measures can allow
virtual monopoly to such MNCs over seed production, and consequently total control over
agriculture. If allowed, a handful of companies will decide who will grow what and what
will be consumed in the globe. The implications are clear!

gohome.gif (364 bytes)