Public funding, not individual contributions, can ensure universal healthcare

If a country wants to ensure universal access to healthcare, then it should avoid charging user fees for providing public health facilities, argues a recent Economic and Political Weekly (EPW) paper by Ravi Duggal of International Budget Partnership and Nitin Jadhav, a community health practitioner. They argue that Maharashtra’s experience in charging user fees has proved counter-productive because a lot of effort and human resources are devoted to collecting the charges, despite the proceeds being insignificant. Nevertheless, the user charges added to ‘out of pocket’ expenses for the poor. The authors advocate following the model of UK, Canada, Thailand and Sri Lanka wherein healthcare is financed by pooling together resources under the government, either through social insurance, tax revenues or payroll deductions, but never through individual modes of payment such as user fees or private insurance.

The government should find ways to reduce its interest payment burden, which devours a third of the Centre’s total revenue receipts, argues a recent EPW paper by K. Kanagasabapathy, economist with the EPW Research Foundation, and co-authors. One option for the government is to issue more inflation-indexed bonds (IIB), which would generally carry a lower nominal interest rate compared to normal bonds. Besides, IIBs also provide protection to bond investors against price rise and guarantee a constant real yield. A well-functioning IIB market can also provide useful cues on inflation expectations. However, indexed bonds can actually end up being more costly for the government than nominal bonds if actual inflation is higher than expected inflation. The other option for the government is to strategically conduct debt buyback and issue bonds of different maturities to try and reduce interest outgo.

Better management practices can lead to tangible benefits for firms in the form of higher worker productivity, according to a National Bureau of Economic Research paper by Nicholas Bloom, professor at Stanford University, and co-authors. The researchers conducted an experiment involving cotton textile companies near Mumbai during 2008-2011. Only some randomly selected firms received recommendations for improving factory operations, quality control and inventory control, human resource management etc. These firms received additional consulting help in implementing the recommendations. On a revisit in 2017, it was found that these firms showed 35% higher worker productivity than those which did not receive any recommendation. It was common among firms to discard some of the recommended practices. However, the tendency to drop practices was higher where the plant manager had changed or directors were busier or when the practice was not commonly used in other firms.

The mechanism to divide taxes and funds among states has inadvertently penalized poorer states and might have encouraged out-migration from them, argues a research paper by Pinaki Chakraborty and Shatakshi Garg of the National Institute of Public Finance and Policy (NIPFP). The use of dated 1971 population data to determine state-wise distribution until recently meant that poorer states with higher population growth could not claim a greater share in national funds despite an increased population burden. Consequently, poorer states such as Bihar, Uttar Pradesh and Rajasthan witnessed relatively high out-migration while states with more fiscal resources saw influx for jobs or education. The use of 2011 population data for the devolution of resources by the Fourteenth Finance Commission since 2015-16 is a step in the right direction.

The shift in government’s focus from merely raising agricultural production to raising farmers’ income is a step in the right direction, according to a blog-post by P.K. Joshi, South Asia Director, IFPRI. However, in order to tackle farm distress, the government should also provide incentives to encourage self-employment in agro-processing, agro-advisory, agriculture and rural transport, etc. Besides, agriculture would also benefit from adoption of better technologies, diversification in favour of high-value commodities and government support to mitigate risks.livemint