Health policy is a less mature field in India

The raging second wave of Covid-19 hasn’t just collapsed the Indian healthcare, it has devastatingly uncovered preexisting public health policy deficits and healthcare frailties.

[As of May 3, 2021]
[As of May 3, 2021]

In India, there is a need to revive a serious conversation around public health policy, along with upgrading healthcare. But wait, isn’t the term ‘public health’ interchangeable with healthcare? Actually, no. ‘Public health’ is the population-scale program concerned with prevention and not cure. In contrast, healthcare essentially involves a private good and not public good. Most public health experts point out, the weaker the healthcare system (such as in India), the greater the gains from implementing public health prevention strategies.

India focused its energies on preventing malaria by fighting mosquitoes in the 1970s and then regressed to treating patients who have malaria, dengue or Zika ineffectively. A developing public health policy got sidelined for a more visible, vote-grabbing, yet inadequate healthcare program. Why? Indian elites tend to transfer concepts and priorities, from the health policy debates of advanced economies, into Indian thinking about health policy without much thought. As a result, there is considerable confusion around terminologies. There is a need for a sharp delineation between: ‘public good,’ ‘public health’ and ‘healthcare.’ The phrase ‘public health’ is frequently misinterpreted to imply ‘healthcare.’ On the contrary, ‘healthcare’ is repeatedly assumed as a ‘public good.’ In official Indian directives, the phrase ‘public health expenditure’ is often applied for government expenditures on healthcare. It is confusing because it contains the term ‘public health,’ which is the antonym of ‘healthcare.’

Many of the advanced economies of today have been engaged in public health for a very long time. As an example, the UK began work on clean water in 1858 and on clean air in 1952. For over forty-five years the Clean Air Act in the U.S. has cut pollution as the economy has grown. Therefore, the elites in the UK and US can worry about the nuances of healthcare policy. On the other hand, the focus of health policy in India must be upon prevention, as it is not a solved problem. Problems such as air quality has become worse today in India. Can the Ministry of Health do something about it? Not much, because plenty of public health-related issues lie outside the administrative boundaries of the Ministry of Health. Air quality—that afflicts North India—lies in the Ministry of Environment and internal bureaucracy—“officials love the rule of officials”—deters the two departments from interacting and working out such problems productively. Economist Ajay Shah points out, Indian politicians who concern themselves with health policy take the path of least resistance—to use public money to buy insurance (frequently from private health insurance companies) for individuals who would obtain healthcare services from private healthcare providers. This is an inefficient path because a fragile public health policy bestows a high disease burden, which induces a market failure in the private healthcare industry, followed by a market failure in the health insurance industry.

In other words, Ajay Shah implies that the Indian public sector is not effective at translating expenditures into healthcare services. Privately produced healthcare is plagued with market failure. Health insurance companies suffer from poor financial regulation and from dealing with a malfunctioning healthcare system. No matter the amount of money one assigns into government healthcare facilities or health insurance companies, both these routes work poorly. As a consequence, increased welfare investment by the government on healthcare, under the present paradigm of the Indian healthcare, is likely to be under par.

The long-term lessons from the second wave of COVID-19 is that inter-departmental inefficiencies cannot be tolerated anymore. Public health considerations and economic progress need to shape future elections and the working of many Indian ministries in equal measure. India deserves improved intellectual capacity in shaping public health policy and upgrading healthcare to obtain a complete translation of higher GDP into improved health outcomes. This implies that health policy capabilities—data sets, researchers, think tanks, local government—will need to match the heterogeneity of Indian states. What applies to the state of Karnataka will not necessarily apply to the state of Bihar. The devastating second wave is not arguing for imposing more centralized uniformity in the working of healthcare and public health policy proposals across India, as it will inevitably reduce the quality of executing these proposals in its diverse states with various hurdles. Instead, Indian elites need to place ‘funds, functions and functionaries’ at the local level for better health outcomes. After all, large cities in India match the population of many countries. They deserve localized public health and healthcare policy proposals.

The need to address the foundations of public health and healthcare in India around the problems of market failure and low state capacity has never been greater.

From the Comments: Regulations, Market Failures, and the Fait Accompli

Dr Amburgey raises an excellent point in Adam’s equally excellent, most recent post. Responding to a link by economist Peter Boettke on the effects that institutions have on political economy, Dr Amburgey writes:

Very nice post; it crystalizes many of my objections to what I sometimes see here, a neglect of the literature on market failure in general and opportunism specifically.

[Dr Amburgey quoting Boettke:] “In my book, Why Perestroika Failed I argue that in assessing the workability of utopian schemes we must first subject them to a coherence test, and then a test of their vulnerability to opportunism. Schemes that are incoherent are deemed impossible; schemes that are coherent but vulnerable are impractical; and only schemes that are both coherent and invulnerable should be considered in the feasible set of workable utopias.”

An anarchist regulatory regime *is* a utopia, but raising taxes on corporations as an alternative is not? Then why propose such a policy in the first pace? I think it’s because Dr A doesn’t realize that his utopia is incoherent. Workable, absolutely, but not coherent.

Do you see how his argument is proposing a utopia, though? There are a number of theoretical responses to the market failure argument. Economist Peter Boettke lists four general responses to the market failure argument: Definitional, institutional, entrepreneurial, and comparative analysis. Adam’s post is an example of a defintional rejection of the market failure argument. I make institutional arguments all the time. Rick’s post on entrepreneurship is a good example of the third. Perhaps we need to do a better job of explaining that our arguments are rebuttals of market failure arguments, but I also think that such rebuttals are implicit in most of our writings.

Dr Amburgey also takes Adam to task for ostensibly failing to see the current regulatory apparatus in place (even though Adam’s initial post was all about current regulations and what to do about them). Dr Amburgey thinks Adam’s argument is all about unicorns and pixie dust:

Unicorns: We’ll completely deregulate one of the most oligopolistic industries in the history of the universe and then the invisible hand of market competition will make everything ok.

Okay, but market competition would include a market for buying and selling regulatory apparatuses. That is to say, regulations themselves would not disappear were they to be withdrawn from the purvey of the State, but rather they would be subject to market competition.

There is also the fact that the oligopolies Dr Amburgey identifies are a result of the state-sponsored regulations.

Pixie dust: “The oil companies should be liable for the full cost of any damages done by their rigs.” Yup. We’ll just add that on to the long list of tort reforms barrelling through the American legislative and judicial systems.

Just because the political system is currently preventing the reforms necessary for full liability does not mean that Adam’s argument is “pixie dust.” Is it not logically sound? If the logic is there (and I see no reason why it is not) then the reforms necessary can take place. Whether or not they will take place is an entirely different topic. I think they could, but only if we can get enough smart people like Dr A to see how they are not thinking their arguments through.

Sure. But they weren’t doing anything they didn’t want to do anyway [see the point just above] they were just externalizing the downside risks. As Adam points out “If the site is not economically viable then there is no reason to drill there.” Classic corporate capitalism in the contemporary US. If it works we get the profit, if it doesn’t you bear the cost.

I don’t think we are disagreeing here. Here is where our misunderstanding begins: Adam’s argument (as I understand it) is that Big Oil is able to externalize these costs through the regulatory apparatus. I think you would have to agree provided you think through the logic of your statement. We all agree that Big Oil was able to externalize the risks involved in drilling off the Gulf, but how, for example, do firms go about “socializing the costs”? If they don’t go through the existing regulatory apparatus, how do these firms achieve the externalization of costs?

“It looks to me like Adam is proposing an alternative for regulating how oil is drilled for by corporations.”

It looks to me like Adam’s alternative for regulating oil [NOT just drilling] is to not regulate it at all. Did I miss some regulations that he would keep?

Again, I don’t know how I can be more clear: Just because government regulations would not exist does not mean that no regulation would exist.