Waning Visions of Equity: Healthcare Privatisation in India and its Many Discontents

The bhore Committee reoort Of 1946 charted a course for public health investments and infrastructure for the emerging nation state. Its recommendations were manifold, all with the aim of making healthcare equitable and universal. Among them, some key ones included a vision of a healthcare system that had – 

1. three levels – primary health centres (‘PHCs’) at the village level, secondary health centres (hospitals) in districts, and tertiary level hospitals in metropolises 

2. a focus on preventive health, over curative services; free and universal healthcare and,

3. investment in human resources for health through medical and nursing education at scale.

Vitally, it recommended a significant proportion of the government’s budget – 15 percent – to be dedicated to health. Its vision included a thirty year timeframe within which all these components were to be fully realised.

What is visible today is, at best, a partial implementation of these recommendations, and a healthcare system which is the opposite of the egalitarian and humane approach that the Bhore Committee espoused. Over time inequity in Indian healthcare has become further entrenched. Although a three-tier system was implemented, reporting reveals the abysmal state of much primary healthcare, the shambolic condition of district hospitals, and increasing number of poorly resourced government tertiary health institutions due to lower financial outlays for public health. 

What is visible today is, at best, a partial implementation of these recommendations, and a healthcare system which is the opposite of the egalitarian and humane approach that the Bhore Committee espoused.

While certain preventive programmes such as immunisation, maternal and child health services, and sanitation have been put in place, a large emphasis of healthcare in India has historically been around curative medicine. And, the shortfall in human resources for health in rural India has been abundantly recorded. Finally, the Union government’s budgetary commitment to health has reached nowhere near the figures envisioned by the committee.

There are many reasons why quality healthcare in India has skewed in favour of those who can afford it, making it one of the many starkly unequal sectors in India. One of them has been the stepping away of the government from being the primary provider of healthcare. Indeed, one of the better-known appalling facts about financial precarity in India is that out-of-pocket expenditure (‘OOPE’) on healthcare is the chief reason that drives families and individuals into poverty. This is because with the shrivelling or under-resourcing of government healthcare provisioning, most turn to a largely unregulated private sector to seek care, where expenses lead to severe indebtedness.        

Policy trajectories

In 1983, as the Indian government issued the first National Health Policy (‘NHP’), a path which increased the role of the private sector opened up. Simultaneously, the public exchequer’s contribution towards provision of healthcare remained stagnant. While the NHP 1983 envisioned a larger role for private providers to alleviate the burden on government, the introduction of user fees in public healthcare during the Eighth Five-Year Plan (1992-1997) demonstrated another step in the commodification of healthcare. To be sure, neither of these policy moves were devoid of welfare-oriented instincts. The NHP in 1983 spoke of decentralising healthcare to move resources closer to needy communities, and of cost-effectiveness that elevated affordable healthcare solutions. Planning in the 1990s, around the time of liberalisation of the Indian economy,  was pre-occupied with how to generate revenue for a resource-constrained health sector, while also acknowledging the need to encourage greater use of public health services, and improve access for the poor. User charges were seen as a panacea for this, with a push coming from the World Bank of its Health Systems Development Project. Many states implemented this approach in the next decade.

Succeeding this, and among other things that it recommended, the NHP of 2002 was notable for its push to increase government health spending from 0.9 percent to 2 percent of GDP by 2010, primarily driven by a larger contribution from the central government, including at the state level. The policy noted that it “welcomes the participation of the private sector in all areas of health activities – primary, secondary or tertiary”  while envisaging “the enactment of suitable legislation for regulating minimum infrastructure and quality standards in clinical establishments/ medical institutions by 2003. Also, statutory guidelines for the conduct of clinical practice and delivery of medical services are targeted to be developed over the same period.” Notably, the Clinical Establishments (Registration and Regulation) Act (‘CEA’) was passed by Parliament in 2010, as were guidelines and standards to govern healthcare delivery. The CEA provides for the regulation and registration of healthcare establishments, and minimum standards for facilities and services.

Most recently, the Union government issued the NHP of 2017. It is under this policy framework and the preceding Rashtriya Swasthya Bima Yojana of 2008 that earlier visions of universal health ‘care’ were morphed into the idea of health ‘coverage’ – a healthcare access system anchored in insurance schemes, realised today in the form of Ayushman Bharat  – Pradhan Mantri Jan Aarogya Yojana (‘AB-PMJAY’). While encouraging the use of digital technologies in health, the policy suggests an increase in public health expenditure to 2.5 percent of GDP by 2025 and allocating two-thirds of health spending to primary healthcare. NHP 2017 also encourages private sector collaboration in healthcare delivery through public-private partnerships (‘PPPs’). 

Now the private sector has also entered health delivery at the primary level – through working with the government in setting up Ayushman Arogya Mandirs (‘AAMs’, formerly PHCs or Health & Wellness Centres) under the AB-PMJAY.

What of access and equity?

Hitherto health policy in India envisioned a complementary role for private healthcare provision, partly at the secondary and mostly at the tertiary level. Now the private sector has also entered health delivery at the primary level – through working with the government in setting up Ayushman Arogya Mandirs (‘AAMs’, formerly PHCs or Health & Wellness Centres) under the AB-PMJAY. Entities such as the Federation of Indian Chambers of Commerce & Industry (‘FICCI’) and NATHEALTH are partners in primary healthcare delivery. 

Such involvement of the private sector has also been espoused by the Niti Aayog, which suggested a new model for financing public healthcare – blended finance – in a 2022 White Paper. While doing so the paper notes: “But the investments and capital raised [for health] have been from established market players with a strong focus on profitability and growth and not necessarily on accessibility and affordability.” It goes on to respond to this by stating that AB-PMJAY is the vehicle through which these concerns of accessibility and affordability are addressed. 

But does the AB-PMJAY meet this challenge? Are the most serious concerns of access and affordability to quality healthcare truly addressed so that the constitutional right to health is fully realised in a domain which is witnessing rampant privatisation? 

The answers to ensuring healthcare access and equity are hardly as straightforward as that. 

While ambitious, the AB-PMJAY has limitations. The scheme restricts eligibility, although it does cater to the neediest in the populace (and, it has been encouraging to note that governmental intent is to increase the pool of beneficiaries that it covers; most recently the scheme was extended to include all citizens above seventy years, irrespective of socio-economic status). The packages it offers, while considerable, are not comprehensive, thereby excluding some medical care and procedures from its fold. 

In a context such as this, the sanguine manner in which the private healthcare sector – one which has the driving motive to make profits – has been made a partner in schemes like AB-PMJAY coupled with how it has mushroomed essentially unregulated, suggests that it will inundate healthcare in a country with vast socio-economic disparities.

But most importantly, it applies to only empanelled government and private hospitals. Available information points to 34,678 hospitals being empanelled under the scheme, of which around 43 percent have historically been private hospitals. How will private healthcare institutions not empanelled under PMJAY be governed to ensure that access and affordability are satisfactorily addressed? A recent report notes that over 600 private hospitals have opted out of the scheme since 2018. 

What of them, and the thousands of other private hospitals that are not empanelled? How are they governed? Does the answer lie in the CEA and its complementary Rules (‘CER’)?

Unaccountability in private healthcare

While the CEA should be the robust legal basis on which the private healthcare sector is made to conduct its work in a transparent and accountable manner, the law’s uptake has been poor. It has been adopted by only 15 states and union territories. While some states have their versions of the CEA, these are varied in their rigour.* Vast gaps remain in the implementation of the CEA and similar laws. A report of the Comptroller and Auditor General of India (‘CAG’) in 2024 painted a dismal picture for Haryana, where registration of several establishments was not undertaken, leaving them outside the regulatory ambit, and where the State Clinical Establishments Council was non-functional. 

Similarly, the CAG denounced the management of health services in Maharashtra under that state’s relevant law, noting that periodic inspections are not undertaken, and many healthcare institutions fall outside the scope of the law. Research indicates many other flaws such as the uneven registration of clinical establishments in other states, inspections of establishments by designated authorities being infrequent, and penalties being levied rarely against violating institutions. 

Among the many things that the CEA and its Rules are supposed to regulate are price transparency and price standardisation of medical procedures and services. This is critical in the context of India, which is replete with profiteering by the private healthcare sector. During the COVID-19 pandemic, a private hospital in Delhi priced a bed at Rs. 25,000 in a general ward and 72,000 within ICU with a ventilator. Also in Delhi, private super-specialty hospitals were found by the Competition Commission of India to have profit margins on syringes in the range of 269.84 percent to 527 percent in 2014-15 and 276.96 percent to 527 percent in 2015-16 by forcing patients to purchase these products from the hospital’s pharmacy. In Chhattisgarh, OOPE for outpatient services (including healthcare provider fees, medicines and diagnostic tests) revealed that private healthcare establishments charge amounts six times greater than costs incurred in public healthcare. Another study found that OOPE incurred on hospitalisation was almost twice in the private sector than in the public sector in Haryana.   

In a context such as this, the sanguine manner in which the private healthcare sector – one which has the driving motive to make profits – has been made a partner in schemes like AB-PMJAY coupled with how it has mushroomed essentially unregulated, suggests that it will inundate healthcare in a country with vast socio-economic disparities. Compounded with the appalling disregard that governments have demonstrated in weakening public healthcare by squeezing it financially, it would be reasonable to be deeply sceptical about whether the constitutional right to health will ever be delivered to the populace.

A word about the law. The government’s obligation to deliver on the right to health is clearly articulated through its international commitments, and by constitutional courts in India. The International Covenant on Economic, Social and Cultural Rights (‘ICESCR’) binds India to ensure the right in all its dimensions – by guaranteeing availability,  accessibility, acceptability and quality of health, and respecting, protecting, and fulfilling the right. Much is contained within these terms, including access to health facilities, services, hospitals and clinics; non-discrimination, economic and informational accessibility, medical ethics such as consent and confidentiality, skilled medical personnel, scientifically approved unexpired drugs, regulation of the private sector, and ensuring a robust public health sector. Courts in India have repeatedly and emphatically reified the right to health, and in doing so enjoined the government “to seriously consider expanding its health budget if their right to life and right to equality as enumerated in Articles 14 and 21, are not to be rendered illusionary.” This being the basis for all healthcare policy and programming adherence, surely a serious reconsideration of enthusiastic privatisation and the disintegration of public sector provisioning of health is of the essence.

In most developed countries, widescale healthcare access is largely achieved through public financing. Studies show that increased public health expenditure has led to a surge in the utilisation of public healthcare facilities, particularly among poorer sections of society, both outpatient and inpatient care across different regions. This shift resulted in a substantial decline in OOPE, consequently reducing the overall financial burden on patients. The need of the hour, then, is a recommitment to improving the public healthcare architecture – investing significantly more funds, and augmenting human resources and infrastructure, while ensuring accessibility, affordability, quality and transparency.

Note: *Maharashtra Nursing Homes Registration Act, 1949; Tamil Nadu Private Clinical Establishments (Regulation) Act, 1997; West Bengal Clinical Establishments (Registration, Regulation, and Transparency) Act, 2017; Punjab Clinical Establishments (Registration and Regulation) Ordinance, 2020; Karnataka Private Medical Establishments (KPME) Act, 2007; Andhra Pradesh Allopathic Private Medical Care Establishments (Registration and Regulation) Act, 2002; Telangana Allopathic Private Medical Care Establishments (Registration and Regulation) Act, 2002.

Vivek Divan heads the Centre for Health Equity, Law & Policy at the Indian Law Society, Pune. 

Courtesy: The Leaflet