China and India collectively represent more than 35 percent of humanity. Both countries have lifted hundreds of millions of people out of poverty in the last two decades. However, the developmental challenges that India and China have yet to surmount are mammoth. The public health sector is a crucial part of this challenge.

India and China ranked 95th and 75th respectively in the Social Progress Index’s ‘Health and Wellness’ segment, while the corresponding rankings in the ‘Nutrition and Basic Medical Care’ were 97th and 68th; both figures are unflattering. In the more popular UN’s Human Development Index (HDI), which encompasses health, education, and income variables, India and China ranked a miserable 136th and 101st in 2013. Whichever way one looks at it, the indications betray an absolute health policy failure in two of the world’s most populous states.

Both India and China share lacklustre state participation in the health sector. While public health expenditure as a percent of GDP in the U.S. is in excess of 7 percent and anywhere between 6 to 8 percent in EU countries, in India and China the corresponding figures were respectively a meagre 1.4 percent and 2.3 percent in 2012.

India: The Uninsured Billion

Out of pocket payments (OPP) refer to the direct cash outlays by patients/individuals/families to the healthcare provider. In India, OPP comprise of more than 70 percent of total health-related spending, compared to less than 12 percent in the U.S. There is a near-complete absence of a wide-ranging state-sponsored insurance program in India, even as targeted health programs for the poor suffer from inefficiency, corruption, ill-equipped hospitals, and ill-trained professionals. India has opened up its health sector to the private insurance players, but the latter play an insignificant role in either the health insurance market or the larger healthcare sector. Whatever little of public health insurance exists is in the form of employer-contributed schemes. Naturally, these apply only to the marginal share of population engaged in the urban formal sector.

The idea of a ‘Right to Health’ is now being discussed in India. Under this scheme, health sector spending is likely to be increased to 3 percent of GDP (still likely to be insufficient) and universal access to healthcare made a reality. But there is a proclivity among Indian policymakers to limit their commitments to mere promises.

China: Soaring Health Inequality

Currently, about 50 percent of China’s population pays out of pocket for healthcare facilities. In absolute numbers, this amounts to more than 600 million people. But colossal as it might sound, this does not capture the essence of the Chinese problem fully.

In 2005, 179 million rural Chinese had health insurance coverage, up from a mere 8 million in 2003. Officials proclaimed recently that 800 million individuals are now covered by the country’s New Rural Cooperative Medical Scheme (NCMS). Official data show that nearly 90 percent of the population in China are insured. But the problem lies with the hundreds of millions of (by some accounts 250 plus million) rural-to-urban migrants who are left in the lurch as neither urban insurance schemes nor rural insurance programs apply to them. As proof of identity/citizenship eludes these migrants, they are deprived of any state-sponsored healthcare. Also, city-based insurance programs apply only to formal sector workers, leaving dependents and informal sector workers to fend for themselves.

Moreover, because urban and rural health insurance schemes are operated separately, there are significant differences in risk protection and premium collection (which are sometimes too high in urban areas). Premium collections have steadily risen over the years. The extent of income-related health inequality in China is very high. Studies have also found urban populations to be more vulnerable to diseases and this might have to do with absurd levels of pollution in China’s cities on the back of rapid industrialisation. If a health crisis in urban centers is to be avoided, focusing policy attention on the urban poor and migrants is the need of the hour.

Out-of-pocket health spending among the poor increases poverty rates in developing countries, as a large portion of their lifetime savings is wiped out, thus pushing them back into the below-poverty zone. One has to bear in mind that even a 0.5 percent increase in poverty means 6.15 million people in India and 6.75 million people in China. These are big numbers.

If development in the global south is truly to be achieved, health should take policy precedence. Malnutrition, poor hygiene, and lack of clean drinking water are critical areas of policy focus. Finally, the needs for South-South cooperation in these areas by way of exchange of knowledge and experience are high and need to be tapped. These include sharing technical expertise and exploration of joint R&D prospects in the pharmaceutical sector and public health infrastructure.

Abhirup Bhunia is research analyst with the Institute of Economic Growth, New Delhi and holds a Master’s in International Political Economy from Sussex University, UK. His upcoming book is tentatively titled Sino-Nigerian Developmental Ties and Issues.

This article was originally published in the Diplomatic Courier's July/August 2014 print edition.

The views presented in this article are the author’s own and do not necessarily represent the views of any other organization.