Dr. Padma Bhatia Assistant Professor Department Of

Community Medicine G.M.C., Bhopal. M.P. India.

HEALTH IS A HUMAN RIGHTHEALTH 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.

AgendaAgenda 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

Health Care scenarioHealth 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……contdHealth 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 30-152/1000, urban 9-81/1000 and for hospitalization: rural 16-76/1000, urban 5-38/1000.

HEALTH CARE FINANCING IN INDIAHEALTH 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.

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 1.7 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

Health care spend in India is considerably Health care spend in India is considerably lower than that in other countrieslower than that in other countries

8

The proportion of insurance in health care The proportion of insurance in health care financing in India is extremely lowfinancing in India is extremely low

0%

100%

Source of finance Means of finance

86% from out-of-pocket

expenses

83% from private sector

spending

Health care financing in India 2002, %

9

The World Health Organization has defined The World Health Organization has defined possible approach to financing of health possible approach to financing of health

expenditureexpenditure

Total health Total health expenditureexpenditure

PublicPublic

PrivatePrivate

Social Social securitysecurity

Externally Externally fundedfunded

Tax-Tax-fundedfunded

Private Private health ins.health ins.

Externally Externally sourcedsourced

Out-of-Out-of-pocketpocket

Using central / state revenues Using central / state revenues for health for health

Compulsory premium Compulsory premium contributions to healthcontributions to health

Channeling loans, grants etc. Channeling loans, grants etc. to healthcare to healthcare

Payments to health care providers Payments to health care providers for servicesfor services

Premium contributions towards Premium contributions towards health supporthealth support

Channeling donations etc. to Channeling donations etc. to healthcarehealthcare

Social Security: ConceptSocial Security: Concept

Defined as “the security that the society furnishes to some organizations against certain risks to which the members of society are exposed”

Social Security: AdvantageSocial 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.

Health insurance typically helps a patient Health insurance typically helps a patient manage health care costs beyond a threshold manage health care costs beyond a threshold

amount through poolingamount through pooling

As a contingent claim

instrument, health insurance

is an efficient way to help individuals prepare for health care

Insurer payment

(from premium pool)

Individual payment

Deductible Co-insured

Health care expenditure (INR)

Patient expenditure

(INR)

Stop-loss level

WHAT IS HEALTH INSURANCE? 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.

Origin of Health Insurance:Origin of Health Insurance:

International1883 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.

Origin of Health Insurance:Origin of Health Insurance: National:1923: Workman’s compensation Act.1948: ESI Act passed.1952: First ESI hospital established.Mudaliar Committee(1959-1961)

recommendations:

1. Long range health insurance policy for all.

2. Small fee for availing health services.

Origin of Health Insurance…contdOrigin of Health Insurance…contd

National: 1999: IRDA act passed. 2001: Insurance amendment Act:

Emphasis on TPAs.

Forms of Insurance AvailableForms 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).

The key issue related to financing of health The key issue related to financing of health care in India revolves around the lack of care in India revolves around the lack of

adequate insurance . .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 key issue related to financing of health The key issue related to financing of health care in India revolves around the lack of care in India revolves around the lack of

adequate insurance …adequate insurance … contdcontd

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

The experience of different countries The experience of different countries suggests that private insurance has an suggests that private insurance has an

important role to play in overall health care 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.

The experience of different countries The experience of different countries suggests that private insurance has an suggests that private insurance has an

important role to play in overall health care 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

Global experience provides some key Global experience provides some key learning on health insurance policy design 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

Global experience provides some key Global experience provides some key learning on health insurance policy learning on health insurance policy

design . . .contddesign . . .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

Some key considerations related to Some key considerations related to formulation of approach to HI in India . . .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

25

As a result, the traditional model for health As a result, the traditional model for health insurance needs to change...insurance needs to change...

IndividualIndividual

Insurer/Insurer/

ProviderProvider

Government / Government / EmployerEmployer

Fixed feesFixed fees

Service chargesService charges

Voluntary Voluntary premiumspremiums

Mandatory Mandatory premiumpremium

Mandatory Mandatory premiumpremium

Costs up to Costs up to deductibledeductible

Could be allied to Could be allied to insurer or be a insurer or be a government government approved providerapproved provider

Inter-Inter-mediariesmediaries

TPAs TPAs etc.etc.

Financial flows

Service flows

… … to one that allows the flexibility to to one that allows the flexibility to serve different segments of the serve different segments of the

population, in an efficient manner 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

Community-based initiatives have been particularly cost- Community-based initiatives have been particularly cost- efficient in reaching out to the poor / unemployed segmentsefficient in reaching out to the poor / unemployed segments

Role in Community-based health initiative (CBHI)

Health intermediary

Health

manager

Health

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 Low

Nature of pool formation

Occupation / geography-based

Occupation / geography-based

Geography-based

How CBHI can be made ReachableHow 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.

Managing the reform process would require Managing the reform process would require several infrastructural and market changes several infrastructural and market changes

to be effectedto 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

ConclusionConclusion

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.