Public Spending

Politics, The Economy

There has been a fair amount of discussion lately about how nationalized health care actually works better than the crazy system we have here in the US Ezra Klein profiled France’s system, and Kevin Drum compared US citizens on government programs to those who depend on private insurance plans. One thing nobody has looked at is health care in the developing world. I suppose this is because American’s like to think of themselves as living in the world’s most developed country. This is an unfortunate oversight, because there are some important lessons to be learned from the developing world.

Take India for example.

Despite an extensive public health system, the major part of health care in India is in the private sector.

This is a fact which no doubt surprises many people. The private system provides excellent care, which has resulted in an exploding medical tourism industry for India. However, basic health statistics for India are still rather dismal. Private health care is not affordable for most Indians. Infant mortality is shockingly high.

Why is India doing so badly? Several major studies have shown that

improving health care in a poor country depends not so much on the proportion of GDP spent on it as it does on the extent of public funds that are invested in health care. In Sri Lanka, for instance, health expenditure constitutes 3 per cent of the GDP. But of the total, 45.4 per cent is public health expenditure. Under 5 mortality in Sri Lanka is just 19. In comparison, India’s health expenditure is 5.2 per cent of its GDP but only 17 per cent of the total is public health expenditure. And Under 5 mortality is 95.

In other words, how much money is spent on health care in the developing world doesn’t matter as much as how much of that money comes out of public health expenditures. This seems like a fairly powerful indictment of health care privatization. Moreover, it is India’s most socialist state, Kerala, that has the highest life expectancy and lowest infant mortality rates in the country.

India’s life expectancy is on the rise, soon set to outpace China, where the state has been beating a steady retreat from providing basic services to the nation’s poor. Amartya Sen believes it is India’s democracy that will ultimately ensure that India’s economic development remains more sustainable than that of China.

America can learn a lot from looking at the developing world, rather than simply trying to impose our failed system upon it.

UPDATE: A similar comparison of India with Bangladesh by Nipa, guest posting on Shashwati’s blog.

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