Globalisation, Reforms And Health Care

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 infrastructurehealth, 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 peoples 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!