Private spending accounts for more than four-fifths of the total health expenditure in India; it is one of the highest such ratios anywhere in the world.
The State of California in the United States has for a while been the standard-bearer of policy measures that reduce state responsibility in critical areas that were typically the responsibility of public provision earlier. The privatisation of electricity utilities was one infamous example, in which California led the world and ended up providing a textbook case of how not to privatise power distribution.
Similarly, the health system in California has been one of the most private and market-dependent even among States in the U.S. An aggressively profit-oriented system, based essentially on private initiative of health providers and insurance companies, has led to a situation where an estimated 6.5 million people - around one-fifth of the State's population - do not have access to any health insurance and are therefore outside the purview of organised health care.
This is not simply an issue about inequality and welfare of citizens - it is also something that has high social costs, both direct and indirect. And this must be why the demand for a universal health care system has now come from a rather unlikely source: the otherwise rightwing "he-man" Governor of California Arnold Schwarzenegger.
Schwarzenegger has announced a new scheme that would provide universal health care coverage to all of California's residents. The scheme calls for many employers who do not offer health insurance to contribute to a fund that would help pay for coverage of the working uninsured. The proposal would prohibit insurance companies from denying coverage to people because of their age or health status, and would require them to put 85 per cent of their profits directly into health care services. It would also require doctors to pay 2 per cent and hospitals 4 per cent of their revenues to help cover higher reimbursements for those who treat poorer patients enrolled in the subsidised state programme.
There is currently a wave of recognition across the U.S. that provision of health care must be universal. If this scheme is implemented, California would be the fourth State in the U.S. to do so, and several other State governments are also considering it.
This reflects a sharp reversal from the tendency over the past decade to allow the poor in particular to fend for themselves in terms of health care, which effectively meant denying them access.
Surely, we in India, who are otherwise looking so eagerly to the U.S. for so many of our policy models, should also note this important trend. It is particularly important because public provision of health care has so far been so inadequate and even so iniquitous.
Everyone in India, but most of all the poor, is acutely aware of the sheer inadequacy and incapacity of the physical infrastructure and human resource required to provide essential health services. These are of course compounded by the inefficiencies that persist in public delivery systems, and the inequalities of access that are determined by gender, caste, community, income and class.
So poor is the provision of public health care that it forces even the poor to spend out-of-pocket for health care. As a result, private spending accounts for more than four-fifths of total health expenditure in the country, which is one of the highest such ratios anywhere in the world.
But this is not inevitable in poor developing countries, as examples from within the South Asian region such as Sri Lanka show.
The superior human development performance of Sri Lanka is often recognised, but the critical role played in this by public provision and government regulation is less advertised. In Sri Lanka, universally accessible, free health care is provided at a basic level, subsidised by progressive taxation measures and ensuring that the rich pay for out-of-pocket health expenses more than the poor.
Given the absolute importance of providing free and universal access to basic services as far as possible, there is a strong case to abolish user fees and increase public allocations to provide essential services to all. This is important not only in welfare terms or because the poor have a human right to health and education, but because the social costs of poor health and inadequate educational development are large and will be even greater for future generations. So it is in society's interest to invest substantially in these areas. The call should therefore be for rebuilding public health infrastructure and regenerating the ethos of public service.
In this context, the proposal currently under consideration by the State government of Kerala, of providing free health care to those below the poverty line, is greatly to be welcomed and it should ideally be extended to ensure universal health care. Such a commitment to providing a public service is essential not only for greater equality and democracy, but also for the very future of our societies.