Gist of EPW April Week 4, 2019

The Economic and Political Weekly (EPW) is an important source of study material for IAS, especially for the current affairs segment. In this section, we give you the gist of the EPW magazine every week. The important topics covered in the weekly are analysed and explained in a simple language, all from a UPSC perspective.

TABLE OF CONTENTS

1. Public Health Systems and Privatised Agendas
2. Do Sanctions Violate International Law?

1. Public Health Systems and Privatised Agendas

Context

  • Examining how health policy has fared in India during the last five years shows the constriction of finances for major programmes like the National Health Mission and Reproductive and Child Health Programme that has led to under-resourced public systems.
  • Schemes like Pradhan Mantri Jan Arogya Yojana health insurance scheme would only end up diverting public resources towards commercial insurance companies and private hospitals, while having doubtful benefits for community health.

Choking Resources

  • In a shocking incident in 2017, over 70 children died within a few days at a Medical College Hospital in Gorakhpur.
  • The immediate cause of most deaths was interruption of hospital oxygen supply, linked with the long-standing failure of the government to pay the oxygen supplier.
  • These avoidable child deaths symbolise the consequences of the government’s health financing policy, with nearly stagnant or declining budgets for public health services, in real terms.
  • This is substantiated by analysing trends in the NHM budgets over the past five years, which have been downsized as a proportion of total health budgets, reducing from 61% in 2014–15 to 49% in the 2019–20 interim budget.
  • The Reproductive and Child Health (RCH) component of the NHM, responsible for a wide range of health measures concerning women and children, has experienced major budget cuts in the last few years.
  • Such constriction of health budgets with the lack of expected improvements in public health services in many states is eroding care for low-income communities.
  • Government’s priorities have undermined public health services catering to vulnerable sections of the population, they have benefited other, more powerful constituencies.

The central Clinical Establishments Act

  • One major policy area where the current union government spectacularly failed to act: regulation of the private medical sector.
  • The central Clinical Establishments (Registration and Regulation) Act, 2010 was meant to regulate private hospitals, and has so far been adopted by 11 states.
  • However, during the last five years, the progress on implementing this act has been close to zero.
  • The key provision for regulation of rates in private hospitals appears to have been side lined, since the onus for the complex task of developing standard costs has been shifted to state governments.
  • As a result, the Clinical Establishments (Registration and Regulation) Act remains largely on paper, encouraging many corporate and large private hospitals to continue with exploitative practices.
  • The National Pharmaceutical Pricing Authority (NPPA) published a report in February 2018 showing that reputed private hospitals were imposing super-profit margins up to 1,700% on drugs, consumables and diagnostics.
  • The NPPA recommended that the government should effectively cap the profit margins that hospitals can charge on consumables, but the union government took no action against this profiteering.
  • Instead, the chairperson of the NPPA was transferred within 10 days of the critical report being published under his leadership.

Backtracking on Medicine Access

  • Finance Minister Arun Jaitley had promised that their government would ensure free medicines for all. This was an extremely necessary measure, since spending on medicines constitutes around 70% of out-of-pocket expenditure on healthcare.
  • Experiences from Tamil Nadu, Kerala, and Rajasthan show that providing free, good quality medicines to all patients in public facilities is eminently possible.
  • This can be done, provided that an autonomous, empowered, and transparent procurement and distribution system is put in place.
  • Regarding the prices of medicines in the open market, since November 2016 India has experienced higher inflation of medicine prices compared to general inflation.
  • Today, only around 10% of the medicine market is under price control because fixed dose combinations (FDCs), including many banned combinations, and “me-too” analogues (more expensive, but offering no additional benefit to the patient) are out of price control.
  • Further, the Drugs (Prices Control) Order (DPCO), is based not on cost pricing, but on market-based pricing which being overall higher is beneficial to big pharma companies rather than ordinary patients.
  • Although cost-based pricing would bring down prices of essential medicines by two to four times, the current government has avoided taking such measures.

Ayushman Bharat & PMJAY

  • Perhaps, the only notable initiative taken by the current union government in the health sector is the Ayushman Bharat Scheme, under which the Pradhan Mantri Jan Arogya Yojana (PMJAY) would provide health insurance coverage to around 10 crore poor households.
  • However, this scheme, launched at the fag end of the government’s term, is based on a deeply flawed model, where hype far outstrips substance due to many reasons.
    • Budget provision for the scheme is grossly inadequate, and if fully funded, this scheme alone would gobble up 75% to 100% of the centre’s total health budget, raising a fundamental question on the scheme’s financial viability.
    • The scheme covers less than 40% of the Indian population, while 60% Indians are left out.
    • It only covers certain kinds of inpatient care, but does not cover outpatient and other types of healthcare spending, which amount to nearly 70% of out-of-pocket healthcare expenditure
    • This scheme focuses not on promoting comprehensive health, but only on selected operations and hospitalisations, with the strong likelihood of unnecessary procedures being done.
    • A study that examined hospitalisation under government health insurance schemes found that only 3% of patients actually get cashless treatment, and 70% of beneficiaries had to spend more than ₹ 1,000 out-of-pocket.
    • Another analysis of the Rashtriya Swasthya Bima Yojana (RSBY) showed that this major health insurance scheme has not provided any significant financial protection for poor households
    • This scheme is dependent on patients approaching the larger empanelled private hospitals, which are mostly concentred in metros and large cities, but are scarce in rural and remote areas.
    • Even if a low-income family has the PMJAY card, this does not mean accessible healthcare since the nearest empanelled hospital may be hundreds of kilometres away, implying substantial travel expenses and loss of wages.
    • The experience of similar schemes in India until now, while it is unlikely to reduce costs of care for people in any significant way, PMJAY will mostly boost profits of insurance companies and corporate hospitals.
    • In fact, while public hospitals remain starved of essential funds, the current government is now proposing to dole out funds to the private sector for setting up hospitals in Tier 2 and Tier 3 towns.

Conclusion

  • The driving logic of the union government in the health sector can be summarised as:
    • Constricting funds for major programmes such as the NHM and RCH leading to under-resourcing of public systems, with negative implications for low-income populations
    • Promoting profiteering by the private sector in both healthcare and pharmaceuticals, by refusing to implement regulations which are essential to protect public goods
    • Diverting already scarce public resources towards private entities through a health insurance scheme that is of doubtful benefit to health of communities, but would boost the financial health of select insurance companies and corporate hospitals.
  • It would have been much better to adequately fund and staff public hospitals in the first place, rather than introducing a profit-making insurance company and cumbersome reimbursement procedures through this scheme.

2. Do Sanctions Violate International Law?

Context

  • The use of force is prohibited under Article 2(4) of the United Nations Charter but there is no general prohibition on coercive economic sanctions under international law.
  • However, sanctions do, in certain circumstances, violate international law and attract international responsibility.

Definition of Sanctions

  • There is no authoritative definition of sanctions under international law.
  • Sanctions commonly refers to the “deliberate, government inspired withdrawal or threat of withdrawal of customary trade or financial relations”

Analysis of US Sanctions

  • The United States’ (US) decision to re-impose sanctions on Iran, led to Iran filing a claim before the International Court of Justice (ICJ) that the US’ actions violate provisions under the Treaty of Amity
  • The ICJ held that the US shall, in accordance with the Treaty of Amity, remove any impediments of free exportation to Iran of medicines and medical devices, foodstuffs, etc.
  • The US has been an ardent and frequent user of sanctions, albeit unsuccessful in many cases.
  • The US decision to cut all economic and trade relations with Cuba ultimately failed, given Cuba’s relation with the Russian federation, as well as its proximity to the American mainland.
  • Such bilateral issues also affect countries via secondary sanctions. For instance, sanctions imposed on Central Bank of Iran affect other countries and foreign companies that conduct business with this bank.

UN Sanctions

  • UN sanctions are adopted by the UN Security Council (UNSC) to pass resolutions short of war.
  • The legal basis for such sanctions is often cited from the UN Charter. Article 39 and 41 are key provisions governing the sanctions by the UNSC.
  • The ICJ has noted that the presumption should be that UNSC is working within its mandate unless proven otherwise.
  • The UNSC is obliged to pass resolutions in conformity with these peremptory norms, else they do not have any legal standing.

Non-UN Sanctions

  • Non-UN sanctions, or countermeasures or unilateral sanctions, imply that an individual state has imposed sanctions unilaterally without the authorisation of UNSC resolution.
  • Developing countries have argued that unilateral sanctions should be eliminated, as it infringes upon their right to economic and social development.
  • To this effect, The UN General Assembly has passed a resolution which calls upon all states not to recognise unilateral extraterritorial coercive economic measures or legislative acts imposed by any state.
  • The Asian-African Legal Consultative Organisation (AALCO) has also suggested that unilateral coercive economic measures constitute extraterritorial sanctions, and, therefore, violate international law.

ICL on Non-UN Sanctions

  • The International Law Commission (ILC) calls these unilateral sanctions “countermeasures”.
  • The ILC details circumstances to allow such countermeasures, which would otherwise not be in conformity with international obligation of the state concerned in Articles on Responsibility of State for Internationally Wrongful Act (ARSIWA)
  • However, these countermeasures imply non-armed measures such as coercive economic measures.
  • ARSIWA states that an injured state may only take countermeasures against a state which is responsible for an internationally wrongful act.
  • These countermeasures, however, are not without restrictions.
  • Countermeasures must end once the erring state has complied with its obligations under international law.
  • ARSIWA says countermeasures shall not affect obligations to refrain from
    • The use of force, to the protection of fundamental human rights,
    • Obligation of humanitarian character prohibiting reprisals, and
    • Other obligations under the peremptory norms of international law.

ICJ on Non-UN Sanctions

  • International Court of Justice (ICJ) recognises the condition where the countermeasures taken on erring nations must be discontinued when the state has complied with its obligations under international law.
  • The countermeasures must therefore be reversible in nature.
  • Also ICJ has opined that Countermeasures are only lawful if the response is proportional to the initial wrong.

Concerns of unilateral Sanctions

  • The lack of any judicial scrutiny of these sanctions and countermeasures makes it an arbitrary exercise of power on the part of the states.
  • While they are an attractive tool of foreign policy, they fail to pass the test of legal requirements under international law and end up, in certain circumstances, violating them.
  • The use of coercive economic measures is a double-edged sword, with the potential both to resolve disputes and to trigger war.
  • Economic sanctions may not have been prohibited by the UN Charter, UNSC sanctions and resolutions are not immune from review and judicial scrutiny.

Conclusion

  • Checks and balances must be observed while adopting sanctions resolution in order to comply with the letter and spirit of the UN Charter.
  • Although most non-UN economic sanctions serve to further a state’s foreign policy objectives, the legal scrutiny of such economic sanctions is desirable.
  • The UN General Assembly resolutions have called all states not to recognise unilateral extraterritorial coercive economic measures.
  • In the recent Iran-US sanctions case, ICJ has found prima facie jurisdiction over US re-imposition of sanctions against Iran. The court has also indicated provisional measures in favour of Iran.
  • This case, perhaps the first of its kind, will put the act of coercive economic sanctions to judicial scrutiny.
  • Currently in the merit stage, this case could possibly throw some light on the current practices of non-UN sanctions and their legal consequences under international law.

For more EPW articles, read “Gist of EPW”.

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