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Mainstream, Vol XLVII No 21, May 9, 2009

Global Financial Crisis, Health Care and Poverty

Wednesday 13 May 2009, by Aasha Kapur Mehta

The impact of the global financial crisis on growth rates, trade flows, remittances, jobs and incomes has led to a range of policy responses by the state. However, the fact that the crisis will reduce access to health care for a large segment of the population, has yet to receive attention. There are strong links between poverty and ill-health. Ill-health creates immense stress even among those who are financially secure and can drive those who are not poor into poverty. There is a gender dimension to ill-health for while women and girls provide home-based care for those who are ill, their health care needs are often neglected.

The global financial crisis will worsen this scenario for several reasons, which include:

i) demands on public spending and pressures on the fisc will crowd out the already low levels of spending on health care by the state;

ii) reduction in employment opportunities and incomes will reduce access to/expenditure on health care for all those who are poor and especially for women and girls;

iii) reduction in dedicated global aid flows for the health sector.

Mortality (infant, girls, maternal) and morbidity levels are already unacceptably high despite the fact that we can successfully and significantly reduce their incidence. There are large gaps between estimates of morbidity provided by national data systems and those collected by micro studies. Estimates provided by the latter are as high as 27 per cent in some States and far higher for vulnerable groups.

Neither privatisation nor insurance are a solution for “while the middle and upper middle classes can choose to use either the public or private sectors, the poor may not be in a position to access either of them because of rising costs of medical care. Where the public sector is weak this will clearly affect utilisation by the poorer sections of the population.”1 Insurance requires money and paperwork that prevent the poor from access to medical care and create difficulties in enforcing reimbursement of expenditure.


Public provisioning of quality health care can cushion the impact of the global financial crisis through reducing vulnerability of women and men (and girls and boys) due to neglect of ill-health. This requires strengthening of all Primary Health Centres and Public Hospitals to ensure:

• Mandatory access to medical care and treatment of disease and infections for all as health related shocks and costs lead to debt and force entry into poverty.

• State provisioning of effective, quality health care (preventive, promotive and curative treatment and care) for all citizens (and especially so for vulnerable groups) that is easily accessible, reliable and high quality.

• Functional and maintained Diagnostic Testing facilities, adequate beds and doctors in all PHCs and peripheral hospitals.

• Availability of ambulances to link PHCs to Hospitals for timely transportation of patients as needed.

• Effective drugs through revised schedules.

• Provide information about symptoms and treatment regimen for malaria, TB, HIV, and other illnesses as this leads to debilitation and loss of income plus expenditure on medication. Reallocate HIV/AIDS funding with more for treatment and care.

• Provide funding and support for community care homes and hospices to enable support in times of difficulty and reduce the burden on home-based caregivers.

• Since many diseases are related to poor quality drinking water, provide priority to access to safe drinking water in the home.

• Poverty stricken homeless persons suffer extreme hardship due to lack of access to toilet facilities and having to pay for use. Therefore to reduce the extreme hardship due to lack of access to toilet facilities and having to pay for use, plan for access to public toilets at regular intervals in urban and rural areas. This will reduce contamination of water bodies and is additionally a major gender issue.

• Special provisions for women patients (separate from family planning budget) in the primary health centres and public hospitals.

• The training and infrastructure needs of health care providers at all levels must be identified and met.

• Monitor and regulate private and public care providers.

• Do not charge user fees/money for case papers.

The reduction in growth rates, remittances, jobs and incomes caused by the global financial crisis will especially adversely affect those who are poor. Public provisioning of quality health care can go a long way towards reducing vulnerability to ill-health and poverty. The state is committed to providing essential health care service to people below the poverty line based on their need and not on their ability to pay for the services. Hence there is a need for priority provision of substantial government resources for the health sector.

[Note prepared for a Meeting of the Group of Feminist Economists at the Planning Commission, April 28, 2009.]


1. Rama Baru, ‘Privatisation of Health Care in India: A Comparative Analysis of Orissa, Karnataka and Maharashtra States’, cited in Sujata Singh, Aasha Kapur Mehta and R.K. Tiwari (eds.), Pro -poor Dimensions of Economic Reforms: Health, Agriculture, Services and Infrastructure, UNDP and IIPA, 2006.

The author is a Professor of Economics, Indian Institute of Public Administration, New Delhi.

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