1 of 2 The gateway to Government Medical College Hospital, Thiruvananthapuram. While only 28% of the population sought treatment in government hospitals in the 1990s, this figure has now risen to 35%.
According to the National Health Accounts Committee, Kerala is among the States with the highest OOPE. Why this is so is a subject that demands serious study and identification of remedies
B. Ekbal
Kerala’s public health system has achieved commendable progress in recent years. During the COVID-19 pandemic, the ability of government hospitals in Kerala to provide excellent care to the vast majority of critically ill patients, with the support of ventilators and expensive medicines such as Remdesivir, stood as a testament to their prowess.
Through continuous interventions such as the 1996 People’s Planning Campaign, the 2006 development of infrastructure and human resource, the 2016 Aardram Mission, and the subsequent large-scale availability of modern facilities across almost all treatment departments since 2021, the government health sector has made significant strides.
As a result, while only 28% of the population sought treatment in government hospitals in the 1990s, this figure has now risen to 35%. Despite many limitations, Kerala also boasts the best-performing health insurance scheme in the country.
Yet, why out-of-pocket health expenditure (OOPE) remains exceptionally high in Kerala is a subject that demands serious study and the urgent identification of solutions.
According to the National Health Accounts Committee, Kerala is among the States with the highest OOPE incurred directly by the public.
The recently published National Health Accounts Report (2021-22) indicates that Kerala’s total health expenditure is ₹48,034 crore. Of this, government expenditure is ₹15,618 crore (32.5% of total expenditure; per capita ₹4,338), while private expenditure stands at ₹28,400 crore (59.1% of total expenditure; per capita ₹13,343).
A comforting fact is that the percentage of private expenditure has been decreasing — from 76% in 2013-14 to 68.6% in 2018-19, 65.7% in 2020-21, and 59.1% in 2021-22. Concurrently, the percentage of government expenditure has proportionally increased from 24 of the total in 2013-14 (₹6,000 crore) to 32.5 (₹15,618 crore) in 2021-22. However, while these percentages are reassuring, the concurrent increase in per capita private health expenditure from ₹7,636 in 2013-14 to ₹13,343 in 2021-22 cannot be overlooked.
The reasons why private health expenditure remains high despite significant improvements in public health systems warrant detailed examination.
Some observations
Some preliminary observations provide the following insight.
High disease burden: Kerala is a State with a very high disease burden. The prevalence of non-communicable diseases, infectious diseases, mental illnesses, and physical problems resulting from accidents and subsequent deaths is increasing. The rising number of elderly individuals also significantly contributes to the increased disease burden. A high disease burden naturally drives up healthcare costs.
Increased health awareness and health-seeking behaviour: Due to high literacy rates and increased health awareness, Keralites often seek medical attention even for minor ailments. While this is mostly beneficial, it can sometimes lead to unnecessary expenditure.
Availability of healthcare services: The presence of both government and private hospitals across rural and urban areas in Kerala makes healthcare services easily accessible, which in turn contributes to increased treatment costs. Compared to other States, these factors are major contributors to the higher private health expenditure in Kerala.
Rising treatment costs: The increasing costs of diagnosis and treatment for diseases such as cancer, along with the high costs of newly introduced advanced treatment methods, impose a significant financial burden.
Need for long-term treatment: Many diseases require long-term treatment, some even for a lifetime, further escalating the financial burden.
Lack of regulation in the private sector: In the private hospital sector, some do not adhere to clear treatment protocols and guidelines, and the absence of any regulation over treatment fees imposes an excessive burden on patients.
OP treatment costs: While inpatient treatment in government hospitals and through insurance schemes is often free, the costs for subsequent outpatient (OP) treatment and medicines often have to be borne directly by the public for many diseases over a long period.
High cost of medicines: A major reason for the escalating healthcare costs is the exorbitant expenditure on medicines. Ten percent of the medicines produced in India are sold in Kerala, which accounts for merely 3% of the country’s population. This amounts to approximately ₹15,000 crore worth of medicines.
While the Central government has controlled the prices of many off-patent medicines, this control primarily applies only to single-ingredient drugs. Moreover, about 40%of the medicines sold are Fixed Drug Combinations (FDCs).
The prices of FDCs and patented medicines are not regulated. Most advanced medicines used for cancer and other conditions are patented.
These are sold at exorbitant prices by patent-holding companies for their 20-year patent duration.
Recommendations
Considering these circumstances, here are some urgent recommendations to reduce healthcare expenditure.
Reduce disease burden: As part of reducing treatment costs, various measures to lower the disease burden must be adopted. Interventions such as health education, disease prevention, health promotion, and early detection and treatment of diseases are essential. Currently, the primary focus is on increasing treatment facilities. Disease prevention must be integrated into the mainstream of health policy.
Regulation of private hospitals: To alleviate the excessive financial burden on patients in private hospitals, clear treatment protocols, codes of conduct, and fixed fee structures must be established. These can be incorporated into the Clinical Establishments Act.
Medicine price control: To reduce outpatient treatment costs, medicines and other health products must be made available at reasonable prices.
The State Health department’s decision to provide cancer treatment drugs and post-organ transplant medicines at company prices and to establish more fair-price medical shops is welcome. However, the Central government has the primary role in reducing drug prices.
Revitalisation of Central public sector pharmaceutical companies: The Union government should take steps to produce in large-scale essential medicines through Central public sector pharmaceutical companies, making them available free of charge in government hospitals and at affordable prices to the public through fair-price drug stores. Public sector pharmaceutical companies like IDPL and Hindustan Antibiotics, which performed excellently in the past, are now facing closure due to governmental neglect. Considering that high drug prices disproportionately affect Keralites, the State government and political parties should urge the Central government to promptly revive these public sector companies and ensure essential medicines are supplied at moderate prices. Kerala should also demand the application of compulsory licensing under patent law for patented medicines, allowing other drug companies to produce them at lower costs.
Alongside adopting temporary measures to reduce healthcare costs, a detailed study for formulating long-term strategies should be initiated immediately with the help of health and economic experts.
If appropriate measures are not taken, despite improvements in both private and government health systems, rising healthcare costs could potentially further impoverish economically disadvantaged sections of the population.
(The writer is an academic, a neurosurgeon, and a public health expert)
The recently published National Health Accounts Report (2021-22) indicates that Kerala’s total health expenditure is ₹48,034 crore.
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