The Role of Private Sector in Health Care Services: Empirical Evidence from a Less Developed Region in India

Presenter: Sailabala Debi, Centre for Multi Disciplinary Development Research

Abstract

Rationale: The Post liberalization period (1991 onwards) significant changes in the Indian economy have brought out. It has attracted private participation on a large scale in almost all the sectors of the economy including education, primary health care and sanitation etc. The post reform period has witnessed severe resource crunch in these sectors and consequently more and more private sectors have participated in all the sectors particularly education and health. The paper concentrates to the health sector only. The main players considered in the present paper from the private sector are Households, NGOs and Corporate bodies.

Objectives:

-How much is the private sector’s expenditure on health care?
-Is the burden of expenditure distributed equally among different players (Households, NGOs and Firms) of health?
-What are the effects of the private sectors expenditure on health on the vulnerable groups of population?

Methodology: The study is based on both primary and secondary data. The private expenditure on health care was estimated by collecting the primary data from the households, NGOs and corporate firms selected through sampling covering three regions with varying levels of development (developed, medium developed and less developed). The study covered the year 2004-05 fiscal year. In order to estimate the expenditure for each items of expenditure on health by each entities, the methods of NHA have been adopted in the study.

Results:

-The share of private sector is 83 % of THE (Total Expenditure on Health)
-Of the private sector expenditure, the households alone bear 3/4th of the total expenditure and the rest is by NGOs and corporate sector which is less than 2 percent of the total expenditure.
-The household expenditure shows that around 66 per cent of the total health expenditure by household is made for the purchase of drugs and medicines.
-The travel cost for the households in the backward regions and among the backward population is the highest which implies that the medical facilities are far away in these regions.
-The insurance, both private and public plays a very negligible role in health sector as it is less than 1 % of the expenditure on health.
-Since private sector do not spend much on the preventive care, higher incidence of communicable diseases is found in the backward region and among backward population
-Per capita expenditure on health is found to be more in backward region and among backward population yawning inequality in burden of expenditure

Conclusions: It is suggested that a sound health policy following the criteria of equity and efficiency which can be implemented if (i) the burden of expenditure on households be reduced to a considerable extent with the government initiatives; (ii) private sectors allocate the funds for preventive care; (iii) the entry of private sector should not result either in squeezing the fund by the public sector or crowed out the public sector.