Unifying India’s Healthcare Markets

Abstract

This paper delves into the structure of the healthcare market in India, contending the existence of three distinct markets: the government monopsony market, the institutional market, and the retail market. Each of these markets has unique characteristics in terms of healthcare service provisioning, pricing, and accessibility. We underscore systemic failures resulting from a lack of clarity about the structure of these markets, including disparities in service provision, lack of awareness about available services, and skewed incentives favouring private sector provisioning. We suggest unification of India's disparate healthcare markets, advocating for a more prominent role for the government. The proposed unification is a modification of the school voucher program, aimed at ensuring competitiveness on the supply side, and thereby improving service quality. While acknowledging the challenges of scale and state capacity, we argue that the proposal is worthy of further discussion and research, given its potential to harness the government's purchasing power to improve accessibility, affordability, and promote a competitive landscape that encourages innovation and quality in healthcare services.