Role of Government in Health care Delivery

Despite common knowledge that good health care has a multiplier effect on India’s GDP, the existing public health programs and systems are proving to be inadequate to meet population needs. This deficiency was the key to the growth of private infrastructure in healthcare supported by various policy level initiatives made by the government.  However, a large section of private healthcare delivery is scattered and quality of medical care continues to remain a matter of concern. The situation advocates for fundamental change in the role of Government from providing health care to financing health care by encouraging competition among private providers.

In the absence of any comprehensive health insurance coverage and increasing cost of health care more than 40% of all patients admitted to hospital have to borrow money or sell assets to cover expenses and are driven below the poverty line by the costs. Even then, only 23.5% of urban residents and 30.6% of rural residents choose to visit a government health facility, preferring private services instead, for the lack of quality care.

The great challenge in health care is to improve the health of the population through the effective & efficient use of the scarce resources having alternative applications. While subsidized products and services in health care are made available by the state, the private sector plays a for-profit role.

Economical Rationale for Private Providers

  1. Competition will bring out efficiency in health care and decrease welfare loss.
  2. Expanding services to the areas where public system is not able to cover thus reducing transaction costs.
  3. It will bring more resources into the health care sector and also create positive externalities
  4. Encourage the rich to use private health care and decrease burden on the public sector so that resources can be directed to the poor.

It is not possible to replace private players by a universal public health care system as recommended by the HLEG to the Planning Commission and certainly not through the $5.4 billion scheme to distribute free medicine to the public. The attention should instead be focused on making their role more defined and complementary to the public system in achieving universal coverage of essential health services. To reduce asymmetry of information, create innovative financing options for the poor and reduce transaction costs, integration of private health care providers in to existing public programs is the need of the hour. This can serve to improve the health of the poor by reducing poverty and facilitating health access simultaneously.

Scientific evidence demonstrates that microfinance institutions (MFIs) can implement health programs that increase knowledge, change health-related behaviors and improve access to health services. MFIs can provide a global infrastructure platform for integrating poverty alleviation and health improvement programs. MFIs offer health-related services, such as education, clinical care, community health workers, health-financing and linkages to public and private health providers. The microfinance sector offers an underutilized opportunity for delivery of health-related services to many hard-to-reach populations.

Another possible solution to improving rural healthcare in India might come through innovative uses of technology. Given the scale of India’s resourcing issues, this might prove to be a more effective means of improving rural healthcare provision than trying to equip hundreds of thousands of remote villages with trained medical staff and expensive medical equipment.

3 thoughts on “Role of Government in Health care Delivery

  1. very well written Salil. i think access to medical care is a major issue in india for the rural 70% of our population. Infrastructure development will address this and many other economic issues.


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