Aparna Nathur and Thomas P. Miller respond to two papers from the July/August issue of Health Affairs.

Research Fellow Aparna Mathur

Resident Fellow Thomas P. Miller

The two papers on the regulation and financing of health care in India and China, by Gerald Bloom and colleagues and by Ashoke Bhattacharjya and Puneet Sapra, are adequately descriptive but prematurely prescriptive. After some apparently nostalgic longing for the good old days of Maoist centralized health care, the general lament is that the two nations have not yet repeated the mistakes of overregulated, third-party-financed, Western-style health care.[1] Ironically, the latter's more lavish regulatory arsenals and financial resources also still struggle to influence providers to follow a reasonably standardized set of procedures, reduce unsupportable price variations, and limit inappropriate treatment practices.[2]

In the cases of China and India, how effective a regulator might government be when the quality of care at its own hospitals and clinics is abysmal? Both countries were heavily state-controlled in past decades.

A striking feature of these economies, particularly India, is their very low level of insurance coverage in the face of high medical costs (nearly 80 percent of all health care spending is out of pocket). Are people unaware of the existence of private health insurance or unwilling to buy it--when poor-quality, low-cost, government-organized health care remains widely available and crowds it out?

The image of all Indian health care portrayed in these papers also is at odds with that nation's becoming touted as an attractive health care destination. A growing number of spotlessly clean private hospitals are positioning themselves as the best medical tourism hot spots for procedures ranging from coronary bypasses to orthopedic surgery at the most affordable costs. Growing numbers of foreign patients opt to undergo surgery in India for reasons such as long waiting times in the United Kingdom and high costs or lack of insurance coverage in the United States. A natural outcome has been growing demand for global accreditation and an improvement in medical standards, including hospital documentation standards. Indeed, more-vigorous market competition for self-paying consumers in this realm yet may lead to more effective self-regulation and better health care options.

Aparna Mathur is a research fellow at AEI. Thomas P. Miller is a resident fellow at AEI.

Notes:

1. "A standard for health systems in developing countries," Bhattacharjya and Sapra, p. 1007; and "Institutional arrangements that supported cost-effective health services with wide access during the command economy were no longer in place by the 1990s," Bloom and colleagues, p. 954.

2. See Bloom et al., p. 958.