The Indian State of Kerala with a per capita income of around 1% of that of the wealthiest countries, has achieved good health comparable to theirs. For example the infant mortality rate for Kerala in 2000 was 14/1000 live births (1) compared with 7/1000 for the USA (2). Life expectancy at birth was 76 years for women and 70 for men in Kerala; in the United States these figures were 80 and 74 respectively (2). However, Kerala's per capita expenditure on health was only US$ 28 whereas that of the USA was USS 3925 (3). The most important reasons for this good health in Kerala are probably the following: its high level of female literacy (87%); access to health care (e.g. 97% institutional deliveries); a good public distribution system (PDS), which provides essential food items at subsidized rates (the system covers 96% of the population); political commitment (40% of the state budget went to the social sector till recently -- 15% to health, and 25% to education); good communication and transport (newspapers, telephones, rural roads); land reforms (land distributed to the poorest and the landless) which helped reducing inequality in land and income; and Christian missionaries who started schools and hospitals, mostly in rural areas (4). Overall, the achievements of Kerala seem to result from a relatively fair distribution of wealth and resources across nearly the entire population of the state (5).
Globalization as promoted by the World Trade Organization (WTO), the World Bank, the International Monetary Fund and the transnational corporations has created a new world order. One of its major impacts is increasing inequality, which is detrimental to Kerala's health achievements. The Indian government initiated a major economic reform in June 1991 to increase economic growth. Social sector expenditure declined considerably during the first few years of this reform, resulting in stagnation in the development of public sector facilities.
In spite of the high demand for health care, the Kerala government could not increase its hospital beds substantially, for lack of resources for the health sector. During the 10 years from 1986 to 1996, public sector hospital beds in Kerala increased by only 5.5%, from 36 000 to 38 000, while in the private sector there was a 40% increase, from 49 000 to 67 500. Furthermore, the quality of the public health sector decreased because the financial restrictions affected supplies, including drugs, more than the salaries of the well-organized and militant employees (6). Taking advantage of this situation, the unregulated private sector in Kerala opened many hospitals with high-tech equipment, thereby increasing the cost of health care. For example, in 1995, 22 out of the 26 computerized tomography scan centres in the state were in the private sector (6) and even the small remainder in the public sector is decreasing now. The introduction of user charges in the public hospitals as part of the reform process increased the out-of-pocket expenses of those using public health facilities.
Household health expenditure in Kerala has increased over five times (517%) during a 10-year period of 1987-96. This increase was significantly higher (768%) among the poorest people than among the richest (254%). Even after adjusting for inflation the increase in health expenditure was about 4 times higher than the increase in consumer price index (7). The major reasons for this increase in health care costs are the increasing privatization of health care in the state, the increasing and often unnecessary use of technology, and a rise in drug prices. For example, Kerala has one of the highest rates of caesarean deliveries in the world now. Caesarean rates were reported to be 22% of all deliveries in rural areas and 34.5% in urban areas (8). The extra cost of caesarean deliveries in the state was estimated to be Rs 25 million (US$ 540 000) in the year 2000. Around 75% of the pregnant mothers had at least one ultrasonography test without any notable change in the management or outcome of pregnancy (9). …