BBS healthcare cost data raises more questions than answers

Rural inflation numbers have been higher than urban inflation numbers since June this year with the gap widening to nearly 50 basis points in November.

Infograph: TBS

But health inflation data, released by the Bangladesh Bureau of Statistics (BBS) on 4 December, points the other way – the rural health index dipped to over 7% in the negative in November, while urban rate was 3.63%.

BBS data show massive decline in rural healthcare costs, driving down overall health sector inflation to a negative territory for the last three months in a row.

However, there is no market data that suggests medicine prices have dropped in recent months, or costs of tests or doctors visits have declined.

Rather, prices of some common medicines, prescribed or over-the-counter, have gone up substantially.

Any official explanation for the negative figures was not forthcoming from the BBS, but officials hinted that the changes in methodology and rearrangement of products and services in the health basket might have resulted in negative health indices.

Analysis and market data show that the BBS's health inflation index does not reflect reality. General inflation still remained high – 9.49% – in November.

According to BBS data, health inflation in urban areas was 2.27% in September, 3.75% in October, and 6.63% in November.

In a counter-intuitive way, the reported trend in rural areas goes the other way, where health inflation was reported at -6.70%, -4.16%, and -7.01% for the same three months.

General health inflation – rural and urban combined – has also been negative due to the largely negative impact of health inflation in rural areas at -3.92%, -1.73% and -3.83% respectively.

Negative inflation in a month means that the prices of goods or services we purchase in the health sector, such as medicine, doctor's fees, or health supplies, fell in comparison to the same month of previous year.

What BBS says

TBS made four visits (6, 7, 10, 11 December) to the BBS office, seeking explanation of this perplexing data.

On the first two visits, officials of the BBS's Price and Wages Wing were reluctant to speak on the issue.

However, an official seeking anonymity explained that a new method of calculating inflation was being used to prepare the health inflation data on the advice of the International Monetary Fund.

The current inflation basket has been revised as per IMF Manual 2020. Also FY22 has been made the new base year instead of FY06 since last April, they said unofficially, and that was the reason for the negative numbers.

General inflation is computed on a point-to-point basis, meaning the rate of price increase in November of the current year is determined by comparing it to the same period in the previous year.

In view of this, BBS officials were asked if the November 2023 health basket is comparable to that of November 2022 due to changes in the inflation basket.

They replied that it is comparable, only loosely.

They explained that the health inflation basket has been reorganised with new products and services added. Some 36 products are listed in the new health basket, which, a source said, was previously 22.

However, they did not provide any further information specifically on the changed items in the basket.

On 10 December, Mohammed Mizanur Rahman, director general of the BBS, gave the same explanation about the negative figures but also could not describe the specific differences between the old and new baskets.

However, in the presence of the DG, other BBS officials informed The Business Standard that two health sector products had exceedingly high prices last year. This year, the prices of these products have decreased, resulting in a negative health inflation.

The BBS DG then instructed the officials to identify the two products within one day.

The next day on 11 December, the DG said they were unable to identify those two products reported to have influenced the downward push in rural health inflation.

What the market shows

TBS correspondents reviewed the prices of health materials in rural areas and did not find any information about reduction in price of health materials in the last one year.

Besides, there was no proof of a decrease in doctor's fees or any test fees. 

Talking to several pharmacy owners in upazila level in multiple districts, it was learned that the price of most widely consumed medicines has increased in a year.

Farhan Ishrak, owner of Tiash Pharmacy in Pragpur Union of Kushtia, told TBS there has been a slight upward adjustment in the prices of most commonly prescribed drugs. 

For instance, Ishrak said the price of widely used Napa syrup has increased by Tk15 and Orsaline by Tk1 in a year.

Household Income and Expenditure Survey (HIES) 2022 shows high cost of treatment keeps more than 10% of households away from seeking treatment, while over 82% do not see a doctor as they feel their ailments are not serious. 

Medicine accounts for the highest cost in treatment, followed by cost of investigation. Doctor's fee matters less as more than 66% of households go for medical advice from a pharmacy or non-qualified doctor's chamber, says the BBS's latest flagship household data.

"In all aspects, expenditure on medicine was the highest expenditure," the HIES 2022 says, giving a break up, of an average monthly household outpatient expenditure of Tk1,378, medicine accounts Tk749, cost of tests Tk355 and consultation fee Tk142. 

It shows that urban medical costs were slightly higher than rural medical expenses.

M Shafiuzzaman, secretary general of Bangladesh Aushad Shilpa Samity, told TBS that prices of medicines have increased a little more than last year due LC opening restrictions and the ongoing dollar crisis.

"Medicine prices should be increased more but authorities are not allowing it," he added. 

Experts question the methodology 

Zahid Hussain, a former lead economist at the World Bank's Dhaka office, questioned the use of BBS's calculation method if it produces inaccuracies due to methodology. 

He suggested that if the IMF has endorsed a new methodology, the BBS should communicate to the IMF if it doesn't produce reliable numbers. 

He suggested that if incorrect information arises from changes in the basket, the methodology should be reformed.

Dr Syed Abdul Hamid, health economist and Dhaka University professor, told TBS that it is better to update the basket to find inflation realistically. 

"However, it cannot be compared with the previous basket if big changes are made in the basket. This comparison is a mistake. Comparing the previous basket will give wrong results," he said.