Private Medicine in India is No Free Market

Screen Shot 2015-10-01 at 9.46.12 AMOn the surface, the proposition that medical care in India is a free market seems plausible.

Setting aside the perennially underfunded public healthcare system, there is a large second tier system where patients get care without any apparent oversight. Sure, laws and rules abound, but these are easily overcome with bribes paid to bureaucrats. A “cost of doing business,” you might say.

In that private system, the care rendered is up to the doctor and patient, and the terms of the transaction are simply decided on the basis of cash exchanging hands. What could be more free market than that? A libertarian paradise!

But Voltaire wisely advised debaters to define their terms, or else engage in fruitless conversations. So perhaps we should make it clear that a free market is not solely defined on the basis of voluntary exchanges, although I recognize the prevalence of that unfortunate misconception.

Without getting into the nuances distinguishing various schools of thought on capitalism, a free market system is defined as one that abides by three principles: freedom of exchange which derives from the respect due to persons and the respect due to private property. One author summarized it pithily as “Don’t hurt people and don’t take their stuff.”

These principles dictate the rules of conduct which logically call for a mechanism of enforcement. Because of the inherently coercive nature of government, a free-market system will tend to restrain state power, limiting the government’s role to defending the rights to personal integrity, property, and voluntary exchange. Some free market theorists may even advocate privatized law enforcement and courts, but whatever the approach one wishes to take, it is clear that capitalism demands rules and accountability.

With that in mind, it becomes readily apparent that India’s medical system, which demonstrates an appalling lack of respect for persons and property, utterly fails to qualify as a free market system.

A recent 2-part article in MEDPAGE TODAY documents widespread and horrendous abuses of power by some hospitals and some doctors who, up to now, can malpractice egregiously with hardly any fear of legal action or a reprimand.

Physicians spend on average less than 4 minutes per patient, may demonstrate particular callousness, show up drunk at work, or even use rusty and poorly sterilized surgical instruments. Unjustified procedures abound, drugs are over-prescribed, quackery is rampant, and many so-called physicians practice without having gone to medical school.

The patients, on the other hand, have essentially no recourse when harm has been done. The legal and bureaucratic regime is so corrupt, that the chance of having any tort redressed is next to nil. Those who dare to speak up—including brave doctors willing to blow the whistle—are harassed, demoted, and may even be killed.

The Medical Council of India, the governmental body established in 1934 to oversee practice standards, has not only been woefully ineffective at its given task, but has also been mired in controversies, including a recent looting scandal that involved physician leaders of the regulatory body.

The situation may conjure an image of a medical Wild West (or Wild East, as it were), but the blame cannot be put on capitalism, on the contrary.

In fact, for many decades after its independence, India has been governed under strong central planning and socialist principles. During those many years, a bloated and notoriously corrupt bureaucracy was running the country for the profit of a small ruling class, and most sectors of the economy were cartelized, including the health care industry.

Let’s also recall that with its government-granted cartel power, the Indian medical community has been more than willing to participate in the atrocious campaigns of compulsory sterilization that were waged in the 1970s under the socialistic regime of Indira Gandhi. Today, and with authorities turning a blind eye to existing laws, many physicians participate in gender-based abortions on a wide scale, violating the legal rights of female babies to live.

The Heritage Foundation’ s Index of Economic Freedom, which tracks objective factors of free market conditions, such as observance of the rule of law, limited government, regulatory efficiency, and open markets, ranks India 128th in the world, with a summary ranking score of 54.6 placing it in the category “Mostly Unfree.” In the early 1990s it was in the “Repressive” category.

When unaccountable malpractice is rampant, and when coercion, bribery and corruption rule, people get hurt and get their stuff taken from them. Not exactly free market conditions.

Fortunately, there are reasons to be hopeful. In recent years, some modest measures of liberalization have been implemented. Trade restrictions and heavy business regulations have been eased, giving much needed relief to millions who are now emerging out of poverty. And with the newfound prosperity, medical services are becoming available that would have been unthinkable just a short while ago.

More important, with information barriers breaking down, awareness of personal and property rights is increasing. A burgeoning movement of citizens is beginning to succeed at holding unscrupulous physicians and bureaucrats accountable.

Two remarks as we conclude. First, one may be tempted to imply from this analysis of the Indian system that the American one is a free market. That would be mistaken. As I have shown recently, American medicine is a triumph of progressivism. In contrast, Indian medicine is a failure of progressivism (and failed progressivism does not one capitalist system make).

Second, one may also be tempted to correct the situation with more government interventions to promote quality care in India. That would be mistaken as well. Quality care naturally follows when principles of liberty, mutual cooperation, and non-violence are simply respected. Guidelines enforced with bureaucratic rules and penalties are poor promoters of quality and poor teachers of free-market ideals, especially when a government is ignoring its own laws.

Let’s not call on governments to correct massive government failure. Indians deserve better than that.

Michel Accad, MD practices cardiology in San Francisco in a free market setting. Follow him on Twitter @michelaccad. He blogs at alertandoriented.com

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2 replies »

  1. Thank you, John. Saurabh raised interesting points too and almost had me convinced!

    You are correct about India being fragmented and that’s not cheating. All countries are “mixed economies” and trying to parse the free from the socialized is methodologically problematic, if not futile. Even the inveterate Marxist’s point Saurabh refers to (that true communism was never tried), though absurd, is empirically valid. After all, the Soviet Union had a bit of a market economy…the black market!

    The defense of the free market (or of any economic system) cannot be made on empirical grounds but through reasoning. These two pieces were primarily an exercise in polemics. If readers come out perplexed and are made to think beyond their immediate reflexes, then we will have reached our goal.

  2. Michel

    You raise some interesting points. I’d argue that India is actually a fragmented country with a both a free and a nonfree market, but that’s cheating!

    But this line made me laugh: “Sure, laws and rules abound, but these are easily overcome with bribes paid to bureaucrats. A “cost of doing business,” you might say.”