1. HEALTH INSURANCE IN INDIA
Dr. Padma Bhatia
Assistant Professor
Department Of Community Medicine
G.M.C., Bhopal. M.P.
India.

2. HEALTH IS A HUMAN RIGHT
ITS AFFORDABILITY & ACCEPTABILITY HAS TO BE ASSURED FOR URBAN A/W/A RURAL, WELL TO DO TO THE POORER SECTION OF THE SOCIETY.
Health is a human right, which has also been accepted in the constitution. Its accessibility and affordability has to be insured. While the well-to-do segment of the population both in rural & urban areas have acceptability and affordability to wards medical care, at the same time cannot be said about the people who belong to poor segment of the society. It is well known that more then 75% of the population utilizes private sectors for medical care unfortunately medical care becoming costlier day by day and it has become almost out of reach of the poor people. Today there is need for injection of substantial resources in the health sectors to ensure affordability of medical care to all. Health insurance is an important option, which needs to be considered by the policy makers and planners.

3. Agenda Healthcare and health insurance in India
Macroeconomic trends and indices
Current schemes and coverage
Global experience and the objectives of health insurance reform
Devising an appropriate model for India
Segmenting the market
Framework for reform
Managing the reform process .

4. Health Care scenario Before independence - dismal condition.
High morbidity, mortality and Infectious diseases.
After independence - emphasis on PH care.
Present Problem-
High mortality, negligible MCH care.
Urban-Rural divide:70:30.
Population Size of the country.
Declining funds to HealthCare Sector-CG/State.
HEALTH CARE SCENARIO:
Health care has always been a problem area for India, a nation with a large population and a larger percentage of this population living in urban slums and in rural area, below the poverty line.
Before independence the health structure was in dismal condition i.e. high morbidity and high mortalities, and prevalence of infectious diseases. Since independence emphasis has been put on Primary Health Care and we have made considerable progress in improving the Health Status of the country.
CG:Central Government
PH:Primary Health
MCH:Maternal and Child Health

5. Health Care Scenario……contd
At any given point of time 40 to 50
million of population on medication for major sickness. About 200 million days are lost annually.
The annual rate (range) of out-patient: rural /1000, urban 9-81/1000 and for hospitalization: rural 16-76/1000, urban 5-38/1000.

6. HEALTH CARE FINANCING IN INDIA
The share of public financing in total health care is just about 1% of GDP compared to 2.8% in other developing countries.
Beneficiaries are both poor a/ w/ a well-fed section of society.
Over 80% of the total health financing is private financing,much of which is out-of-pocket payments (i.e. User charges) and not any prepayment schemes.
a/ w/ a: as well as

7. Health care spend in India is considerably lower than that in other countries
2004 US UK
Mexico
Brazil
China
India
Life expectancy (avg. # of years)
77.4
78.3
72.6
71.4
72.5
64.0
# of Physicians per 1,000 people
2.7
1.9
1.7
1.2
0.4
Healthcare spend (USD per capita)
5,365
3,036
336
236 62 32
Healthcare spend (% of GDP)
13.2
8.4
5.5
7.5
5.0
5.3
Access to health care service providers and availability of physicians is one part of the issue
Financing for health care is the other aspect of the issue

8. 83% from private sector spending 86% from out-of-pocket expenses
The proportion of insurance in health care financing in India is extremely low
Health care financing in India 2002, %
83% from private sector spending
86% from out-of-pocket expenses
Public spending in health care is very low at 17% and the National Health Policy has recognized this
More than 86% of healthcare financing is through unplanned for, non-contributory spending

9. Total health expenditure
The World Health Organization has defined possible approach to financing of health expenditure
Using central / state revenues for health
Tax-funded
Channeling loans, grants etc to healthcare
Public
Social security
Compulsory premium contributions to health
Externally funded
Total health expenditure
Payments to health care providers for services
Tax-based and out-of-pocket expenses are direct expense related outlays
Health insurance involves a fund pool for future health care
External fund sources rely on donations, grants
Out-of-pocket
Private
Premium contributions towards health support
Private health ins.
Channeling donations etc. to healthcare
Externally sourced

10. Social Security: Concept
Defined as “the security that the society furnishes to some organizations against certain risks to which the members of society are exposed”

11. Social Security: Advantage
The financial burden of sickness cannot be borne by the individual It must be widely distributed throughout the country.
Sickness is not an individual’s misfortune but the calamity is to taken as community & state responsibility.

12. Patient expenditure (INR) Health care expenditure (INR)
Health insurance typically helps a patient manage health care costs beyond a threshold amount through pooling
Patient expenditure (INR)
As a contingent claim instrument, health insurance is an efficient way to help individuals prepare for health care
Insurer payment
(from premium pool)
Stop-loss level
Individual payment
Co-insured
Deductible
Health care expenditure (INR)

13. WHAT IS HEALTH INSURANCE?
SYSTEM OF ASSURANCE TO MAKE CONTINGENCIES OF HEALTH CARE EXPENSES.
TO PROVIDE PROTECTION AGAINST FINANCIAL LOSS BY UNFORSEEN SICKNESS.
TO MEET COST OF GOOD MEDICAL CARE.
RELIEVES ANXIETY AND TENSION.

14. Origin of Health Insurance:
International
1883 Bismarck- sickness benefit to workers.
1911 Lloyd George- National Health Insurance Scheme to cover sickness expense, medical relief, drugs & compensation of wages lost, to improve quality of life and improve industrial production.
J.F.Kimball: prepayment system of health care.

15. Origin of Health Insurance:
National:
1923: Workman’s compensation Act.
1948: ESI Act passed.
1952: First ESI hospital established.
Mudaliar Committee( ) recommendations:
Long range health insurance policy for all.
Small fee for availing health services.

16. Origin of Health Insurance…contd
National:
1999: IRDA act passed.
2001: Insurance amendment Act:
Emphasis on TPAs.

17. Forms of Insurance Available
Indemnity Insurance: where the insurer first pay to the hospital and claim is made. E.g. Jeevan Asha II, Asha Deep II, Mediclaim.
Cashless Claim Facility:TPAs who bear the expenses on behalf of insurance company. Patients need not to pay directly as a rule e.g. Bajaj Alliance.
CBHI (Community Based Health Insurance).

18. The key issue related to financing of health care in India revolves around the lack of adequate insurance . . .
Limited coverage
Only around 10% of the population is covered through health financing schemes
Geographic spread in terms of health care facilities and financing awareness is limited
Selection criteria by suppliers often restricts the poor (and more likely to be ill) from affordable pre-payment schemes
Moral hazard and Adverse selection
Claims ratios for Mediclaim and Jan Arogya policies have been in the range of 120 – 130%.
The extent of coverage as well as the type of coverage are the key issues related to insurance penetration

19. Lack of universal schemes
The key issue related to financing of health care in India revolves around the lack of adequate insurance … contd
System leakages
Provider malpractices leading to over-charging or pre-selection / selective recommendation
Lack of universal schemes
Limitations in terms of coverage of illnesses as well as treatment options
Alternative therapies often not considered / included under insurance
Some companies have put-off plans for India due to potential leakages in the system

20. The experience of different countries suggests that private insurance has an important role to play in overall health care
Source of health insurance in countries with targeted, non-universal access to health care coverage
e.g. Netherlands restricts public health coverage to an income threshold
Private health insurance has enhanced access to timely hospital care
e.g. In UK, waiting time reduction and private health insurance coverage have led to a virtuous cycle.
Private health insurance has led to expansion of health coverage and expenditure in other countries.

21. The experience of different countries suggests that private insurance has an important role to play in overall health care
Private health insurance has increased service capacity and supply by injecting financial resources up front e.g. In the US, private health insurance has financed hospitals in terms of doctors and facilities through the HMO set-up
Private health insurance increases choice (provider, benefits, cost-sharing) for the individual e.g. In Australia, private health insurance offer the option of access to spare capacity and elective care in non-public institutions
However, regulation as well as the role of public health expenditure cannot be ignored

22. Global experience provides some key learning on health insurance policy design
Balancing risk-spreading and incentives offered
Balancing the need to encourage health insurance against moral hazard (individuals choose more care) and principal-agent problems (providers supply more care)
Integration of insurance and health care provision
Managing doctor loyalties with patient and insurer under managed care
Various economic studies have suggested some key learning around health insurance policy design

23. Global experience provides some key learning on health insurance policy design . . .contd
Approach to competition and portability
Balancing the need for consumer choice against adverse selection (sick preferring more generous plans)
Focus on health as against financing of health care
The over-riding objective should be to improve health rather than the financing of health care services
Various economic studies have suggested some key learning around health insurance policy design

24. Some key considerations related to formulation of approach to HI in India . . .
Differential approach
-Formal sector (government and non-government workers)
Self-employed segment
Poor / Unemployed segment
Scope and structure of health insurance cover
Product and segment coverage
Portability across service providers
Cap on premium amounts
Risk-adjusted approach
Nature of fiscal incentives
Subsidies and tax incentives for health insurance as against health care
The approach to health insurance in India must take into account specific considerations

25. As a result, the traditional model for health insurance needs to change...
Voluntary premiums
Fixed fees
Service charges
Insurer/
Mandatory premium
Inter-mediaries
Mandatory premium
Government / Employer
TPAs etc.
Costs up to deductible
The traditional model has focused on insurers or intermediaries working with the employed segment only as the front-end
Individual
Provider
Could be allied to insurer or be a government approved provider
Financial flows
Service flows

26. … to one that allows the flexibility to serve different segments of the population, in an efficient manner
Health insurance providers may need to align themselves to overall health care including financing, preventive health care and health outreach in order to grow coverage
Regulations and policy must be designed to encourage this

27. Community-based initiatives have been particularly cost- efficient in reaching out to the poor / unemployed segments
Role in Community-based health initiative (CBHI)
Health intermediary
Health
manager
provider
Example of some CBHIs / NGOs
SEWA / ACCORD
Tribhuvandas Foundation
Sewagram / VHS
Nature of health risk covered
Inpatient, non-health related
Inpatient
Inpatient, Outpatient
Access to benefits
After certain period
At time of discharge
At time of utilization
Administrative costs
Moderate
Low
Nature of pool formation
Occupation / geography-based
Geography-based
Typical administrative costs associated with health insurance are around 20% of premium but could fall to 5 – 6% under CBHIs
CBHIs must however be designed to target specific segments

28. How CBHI can be made Reachable
Effort for social mobilization & strengthening of people organization
Training and capacity building, special emphasis on PRIs and Women Organization
Demand Driven social services, Building of alliances and partnerships
Advocacy for Pro poor policies.

29. Managing the reform process would require several infrastructural and market changes to be effected
Appropriate market segmentation, awareness initiatives, product innovation, and incentives
Easing of entry norms for specialist health insurance companies
Provider rating and credentialing
Centralized database for health insurance experience statistics
Efficient back-office support for underwriting and claims processing
An appropriate health infrastructure is an essential pre-requisite to health insurance reform

30. Conclusion
Health insurance is an emerging important financial tool in meeting health care needs of the people of INDIA. CBHI is to be further explored so that the disadvantaged section get maximum benefit.
In India at present no Pan-India Model of HI.
All different forms need to be explored.