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BW Businessworld

So Far, So Good

India ought to have been watching closely as US President Barack Obama unveiled his controversial healthcare reform on 10 September, after three months of bickering between Democrats and right-wing critics. "I am not the first President to take up this cause," Obama said, "but I am determined to be the last."

The US may boast of being the world's largest economy, but it has one of the worst healthcare systems among developed nations. In the US, an estimated 20,000 people die every year because they aren't insured. Under the new healthcare proposal, whose details were released by Senate Finance Committee Chairman Max Baucus on 16 September, it will be illegal for insurers to deny coverage because of a pre-existing condition or to cap the amount that can be claimed — practices that Indian companies have happily embraced. A marketplace where one can shop for cheap health insurance — which will become mandatory — will also be set up.

Whether Obama will succeed where many of his predecessors have failed remains to be seen. The committee is scheduled to vote on the bill this month.

The US experiment holds many lessons for India, which is yet to shape a payment system for healthcare — today about 80 per cent of medical expenses are borne by individuals. Much like the US (and this bill is no departure from this), India has already decided to go the private way. The paltry government spend of 0.9 per cent on healthcare is a testimony to that choice. However, India can still learn from the US's mistakes and push its nascent health insurance in the right direction.

(This story was published in Businessworld Issue Dated 28-09-2009)

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