Problems of Health Insurance Market in Pakistan

8/6/2019 Problems of Health Insurance Market in Pakistan

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Presented to: Mr.

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Problems of Heal

market in PPresented

by:

A,Mi06

S,Mi07

K,Mi07

M,Mi07

M,Mi07

H,Mi07


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Problems of Health Insurance market in Pakistan

June 6, 2011

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PREFACE

Assignments, Term reports and Internship programs are the vital teaching

techniques of University of the Punjabs BBA Insurance & Risk Management

program. The aim of such activities is to develop a practical evaluation approach in

students along with their studies.

As an integral part of BBA studies, every student has to make research reports.

In order to fulfill this purpose for Health and Disability Insurance subject we

selected Problems of health insurance market in Pakistan as are research topic.

We are thankful to our respectable teacher Mr. Imran Yasin who gave us the

chance to make this report.

We have tried our best to make this report comprehensive to provide information

about the strategic and functional problem areas of Health Insurance Market in

Pakistan. We have illustrated differences between four Asian countries to

demonstrate the heath care pros and cons.

Authors

A, Mi06

S, Mi07

K, Mi07

M, Mi07

M, Mi07

H, Mi07


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ACKNOWLEDGEMENT

We bow our heads in gratitude to almighty Allah, Who blessed

us with the ability and energy to complete this work.

The guidance of Holy Prophet (S.A.W.W) is the continuous source of help for us

in what so ever field we are. Through the blessing of God and the spiritual efforts

of the Holy Prophet (S.A.W.W) we have been successful in completing this report.

We wish to express our deep sense of gratitude to our honorable and loving teacher

Mr. Imran Yasin for his friendly behavior. He provided us guidelines to achieve

our target. During the assignment whenever we faced any problem he said

welcome to us and solved our problem.

Authors

A, Mi06

S, Mi07

K, Mi07

M, Mi07

M, Mi07

H, Mi07


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Table of Contents

Sr. No Topic Page

1 Prefaceand Acknowledgement 2-3

2 Introduction to Health Insurance 5

3 Health Insurance in Pakistan 9

y Insurance in Pakistan 10y Economy of Pakistan 11y Public Health Care System 12y Pakistan Health Insurance System 15y Private Health Care System 17

4 Problems of Health Insurance Market in

Pakistan23

5 Comparison 26

6 Pakistan 32

7 India 38

8 China 40

9 Bangladesh 49

10 Recommendations

11 Conclusion 52

12 Bibliography 54


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Introduction

of

Health Insurance


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Health Insurance

Health insurance is insurance against the risk of incurring medical expenses. By

estimating the overall risk of health care expenses, an insurer can develop a routine

finance structure, such as a monthly premium or payroll tax, to ensure that money

is available to pay for the health care benefits specified in the insurance agreement.

The Greeks and Romans introduced the origins of health and life insurance in 600

AD when they organized guilds called "benevolent societies" which cared for the

families and paid funeral expenses of members upon death

Before the development of medical expense insurance, patients were expected to

pay health care costs out of their own pockets, under what is known as the fee-for-

service business model. During the middle to late 20th century, traditional

disability insurance evolved into modern health insurance programs. Today, most

comprehensive private health insurance programs cover the cost of routine,

preventive, and emergency health care procedures, and most prescription drugs,

but this is not always the case.

A health insurance policy is a contract between an insurance company and an

individual or his sponsor (e.g. an employer). The contract can be renewable

annually, monthly or be lifelong. The type and amount of health care costs that will

be covered by the health insurance company are specified in advance, in a member

contract or "Evidence of Coverage" booklet. The individual insured person's

obligations may take several forms:

y Premium: The amount the policy-holder or his sponsor (e.g. an employer)pays to the health plan to purchase health coverage.


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y Deductible: The amount that the insured must pay out-of-pocket before thehealth insurer pays its share. For example, policy-holders might have to pay

a 500 deductible per year, before any of their health care is covered by the

health insurer. It may take several doctor's visits or prescription refills beforethe insured person reaches the deductible and the insurance company starts

to pay for care.

y Co-payment: The amount that the insured person must pay out of pocketbefore the health insurer pays for a particular visit or service. For example,

an insured person might pay a 45 co-payment for a doctor's visit, or to obtain

a prescription. A co-payment must be paid each time a particular service is

obtained.

y Coinsurance: Instead of, or in addition to, paying a fixed amount up front (aco-payment), the co-insurance is a percentage of the total cost that insured

person may also pay. For example, the member might have to pay 20% of

the cost of a surgery over and above a co-payment, while the insurance

company pays the other 80%. If there is an upper limit on coinsurance, the

policy-holder could end up owing very little, or a great deal, depending on

the actual costs of the services they obtain.

y Exclusions: Not all services are covered. The insured are generally expectedto pay the full cost of non-covered services out of their own pockets.

y Coverage limits: Some health insurance policies only pay for health care upto a certain amount. The insured person may be expected to pay any charges

in excess of the health plan's maximum payment for a specific service. In

addition, some insurance company schemes have annual or lifetime

coverage maximums. In these cases, the health plan will stop payment when

they reach the benefit maximum, and the policy-holder must pay all

remaining costs.

y Out-of-pocket maximums: Similar to coverage limits, except that in thiscase, the insured person's payment obligation ends when they reach the out-

of-pocket maximum, and health insurance pays all further covered costs.

Out-of-pocket maximums can be limited to a specific benefit category (such

as prescription drugs) or can apply to all coverage provided during a specific

benefit year.


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y Capitation: An amount paid by an insurer to a health care provider, forwhich the provider agrees to treat all members of the insurer.

y In-Network Provider: A health care provider on a list of providerspreselected by the insurer. The insurer will offer discounted coinsurance or

co-payments, or additional benefits, to a plan member to see an in-network

provider. Generally, providers in network are providers who have a contract

with the insurer to accept rates further discounted from the "usual and

customary" charges the insurer pays to out-of-network providers.

y Prior Authorization: A certification or authorization that an insurer providesprior to medical service occurring. Obtaining an authorization means that the

insurer is obligated to pay for the service, assuming it matches what was

authorized. Many smaller, routine services do not require authorization.

y Explanation of Benefits: A document that may be sent by an insurer to apatient explaining what was covered for a medical service, and how payment

amount and patient responsibility amount were determined.

Prescription drug plans are a form of insurance offered through some employer

benefit plans where the patient pays a copayment and the prescription drug

insurance part or all of the balance for drugs covered in the formulary of the plan.

Such plans are routinely part of national health insurance programs.


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Insurance In Pakistan

Pakistan which is officially called the Islamic Republic of Pakistan is located in

South Asia, in the heart of the ancient Indus Valley, bordering Afghanistan, Iran,

India, and China.

Due to the intense and ongoing fighting, between the various Islamic militant

groups and the government, Pakistan is considered unstable and a dangerous place.

Terrorism is alive and insurgent activities such as: suicide bombings, shooting in

the middle of public streets, political assassinations, hostage taking, and

countrywide sectarian violence between Sunni and Shia Muslims have been takingplace within this country. It is therefore important to put in place a medical health

insurance plan for oneself and ones family in case of an emergency.

Status of health insurance industry in Pakistan

In Pakistan, health insurance business has historically been conducted as a non-

core line of business by most of the major insurance companies. Allianz EFU was

the first, and so far, the only specialized Health Insurance company in Pakistan.

As a whole, the Health Insurance Industry in Pakistan is still in its infancy stages.

The insurance awareness levels in Pakistan have been very low, in general. Health

insurance is an even newer concept.

The overall penetration of health insurance in Pakistan is merely around 0.5% of

the total population which is very low. This seems particularly low if one takes into

account the poor general level of healthcare facilities available to the population

and the absence of any meaningful government funded health insurance programs.

As medical consumerismgrows, the prevention & wellness should already be a

high priority for everyone.The increase in awareness would bring more quality


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consciousness. Secondly, medical advancement would introduce newer diagnostic

and curative procedures which may result in higher treatment cost. The average

consumer would therefore look for alternate ways to acquire more cost effective

yet good quality healthcare.

Private health insurance schemes provide a straight-forward vehicle of managing

uncertain & high medical bills through small regular savings. It is highly likely that

enhanced awareness coupled with higher cost may lead to more people opting for

private health insurance.

Economy of Pakistan

Pakistan, a developing country, had an estimated GDP of $449.3 billion in 2009.

The economy of Pakistan is the 27th largest economy in the world in terms of

purchasing power, and the 45th largest in absolute dollar terms. Pakistan has a

semi-industrialized economy, which mainly encompasses textiles, processing,

agriculture and other industries. Growth poles of Pakistan's economy are situated

along the Indus River. Pakistan has suffered from decades of internal political

disputes and low levels of foreign investment. Between 2001- and 2007, however,

poverty levels decreased by 10%, as Islamabad steadily raised development

spending. Between 2004 and 2007, GDP growth in the 5-8% range was spurred by

gains in the industrial and service sectors despite severe electricity shortfalls.

Growth slowed in 2008 and unemployment began to rise. Inflation remains the top

concern among the public, jumping from 7.7% in 2007 to 20.8% in 2008, and

leveling off at 14.2% in 2009. In addition, the Pakistani rupee has depreciated

since 2007 as a result of political and economic instability. The government agreed

to an International Monetary Fund Standby Arrangement in November 2008 inresponse to a balance of payments crisis, but during 2009 its current account has

strengthened and foreign exchange reserves have stabilized, largely because of

lower oil prices and record remittances from workers abroad. Textiles account for

most of Pakistan's export earnings, but its failure to expand a viable export base for

other manufactures have left the country vulnerable to shifts in world demand.


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Other long-term challenges include expanding investment in education, healthcare,

and electricity production, and reducing dependence on foreign donors.

Public Health Care SystemPakistan has a centralized health care system. The Government takes responsibility

to provide free medical treatment to all citizens in need for health care services.

The governmental institutions involved in the health policy process include theFederal Ministry of Health and several planning and approval institutions. The

Federal Ministry of Health consists of one division and eighteen departments.

These departments are situated in different cities but work under the supervision of

the Health Division in Islamabad. The Federal Ministry of Health is responsible for

health legislation, quality of health care, health planning and coordination of health

related activities. The Ministry is also responsible for educational standards in the

field of medicine as well as nursing, dental, pharmaceutical, and paramedical

professions. In addition, the Ministry takes care of the provision of educationalfacilities for backward areas and admissions in all the state-owned medical

colleges. The Ministry is also involved in the collection of health statistics.

Although the Federal Ministry of health is formally responsible for all these

interventions, the realization of these tasks is strongly dependent upon other

governmental bodies such as the Planning and Development Division (P&D

Division), the National Economic Council (NEC), the Executive Committee

of the National Economic Council (ECNEC), the Economic Coordination

Committee of the Cabinet (ECC), and Provincial Developmental Working Party

(PDWP).


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Levels of Health Care:

Delivery of health care in the Pakistani system is basically a referral system fromthe villages to the cities. The public sector comprises more than 10,000 health

facilities including dispensaries (pharmacies), Basic Health Units (BHUs) and

Rural Health Centers (RHCs) in the villages, Tehsil Headquarters (THQ) hospitals

which function as secondary health care facilities, and District Headquarters

(DHQ) hospitals that serve the role of tertiary care units. At present a BHU covers

around 10,000 people whereas the larger Rural Health Centers (RHCs) cover

around 30,000 to 45,000 people. In Pakistan, Primary Health Care (PHC) centers

comprise both BHUs and RHCs. The Tehsil Headquarters Hospitals cover thepopulation at the sub-district level, where as the District Headquarters Hospitals

serve the entire district. Currently there are 22 tertiary care facilities in Pakistan, all

of which are mostly teaching institutions located in the major cities.

Primary Health Care Centers:

Including Maternal and Child Health Centers (MCHC), Basic Health Units (BHUs)

and Rural Health Centers (RHCs). There is at least one PHC center present in each

of the Union Councils, which serves between 10,000 to 25,000 people. MCHCs

and BHUs are supposed to operate from 8am to 3pm, Monday through Saturday,

while RHCs are supposed to provide 24-hour services. That being said, most of

these facilities are typically only operational for 3-5 hours each day. There are

1,084 MCHCs in Pakistan which are managed by Lady Health Visitors (LHVs)

and provide basic ante-natal care, normal delivery, post-natal and family planningservices, as well as treatment of minor ailments to women and children. There are

5,798 BHUs and Secondary Health Centers (SHCs) in Pakistan, which are

generally staffed by 10 health care workers consisting of a male doctor, a LHV, a

male medical technician and/or a medication dispenser (pharmacist), a midwife

(dai) of variable training, a sanitary inspector, a vaccinator, and 2-3 support staff


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(guard, sweeper, gardener, etc.). They are required to offer first level curative,

maternal and child health, family planning, and preventive care services. Pakistan

has 581 RHCs that provide more extensive outpatient services as well as some

inpatient services, though these services are usually limited to short termobservation and treatment of patients who are not expected to require transfer to a

higher-level facility. They serve a population of about 50,000 to 100,000 people,

with about 30 staff including two male medical officers, a female medical officer, a

dental surgeon and a number of paramedics. They typically have 10 to 20 beds, x-

ray equipment, a laboratory and minor surgery facilities. These facilities do not

include delivery and emergency obstetric services however.

ReferralLevel Care Facilities:

There are a total of 947 Tehsil Headquarters (THQ sub district units) and District

Headquarters (DHQ) Hospitals that are located at respective levels and offer first

line referral services. Tehsil Headquarters Hospitals (THQH) serve approximately

100,000 to 300,000 people. They typically have 40 - 60 beds and support services

including x-ray, laboratory and surgery facilities. The staff consists of at least threespecialists: an obstetrician/gynecologist, a pediatrician, and a general surgeon.

District Headquarters Hospitals (DHQH) serve a catchment population of about 1

to 2 million people and typically have about 100-150 beds. These facilities

typically utilize a minimum of eight specialists, including an obstetrician and

anesthetist, although do not provide comprehensive emergency obstetric care.

Tertiary Care Facilities:

There are 22 tertiary care facilities in Pakistan. They also provide sub-specialty

care. These hospitals mainly provide curative services and to a limited extent some


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preventive services. The majority of the communities have access to a primary care

facility within a radius of 5 km. While access to government health facilities is

generally good, the utilization levels are low. Several surveys have consistently

shown that about 80% of clients seek care from the private sector and only 20%

visit the government managed facilities for ambulatory care, which is indicative of

considerable under-utilized capacity within the system.

Pakistan Health Insurance SystemAlthough Pakistan Health Insurance system is not as much developed; Government

of Pakistan with the help of USAID and foreign banks is working a lot in order to

promote it.

Health Policy of the Government Vision:

The vision of the National Health Policy is to improve the health and quality of life

of all Pakistanis, particularly women and children, through access to essential

health services.

Goal:

The goal of the national health policy is to remove barriers to access to affordable,

essential health services for every Pakistani.


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Policy Objectives:

To achieve the above stated goal of removal of barriers to essential health services,

the Government of Pakistan adopts the following six Policy Objectives to reform

and strengthen critical aspects of its health systems to enable it to:

1. Provide and deliver a basic package of quality essential health care services

2. Develop and manage competent and committed health care providers

3. Generate reliable health information to manage and evaluate health services

4. Adopt appropriate health technology to deliver quality services

5. Finance the costs of providing basic health care to all Pakistanis

6. Reform the health administration to make it accountable to the public

The Ministry of Health recognizes that provinces have varied needs and

expectations regarding health and that each Department of Health is fully capable

of identifying as well as delivering appropriate health care to their populations. It is

in this spirit that the federal ministry will support and facilitate the provinces in

implementation of their strategies by providing relevant financial and technical

resources to ensure that the essential health service package is accessible to all

citizens. The national health policy has been formulated with the primary objective

of resonating with the expectations of Provinces. It is designed to contribute toadvancing and strengthening the provincial health strategies.


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Private Health Care SystemThe private sector in Pakistan is varied with no defined structure and weakregulation exists in this sector.

Health Infrastructure:

The private sector health infrastructure is not well organized. There is a wide range

of disparity in health care provision in the private ranging from Hi-Tech hospitals

with all the necessary provisions to general stores providing unauthorized

healthcare services.

Private hospitals:

There are few regular hospitals in the private sector, which are fully equipped with

necessary supplies & equipment, transportation and skilled staff, and can be

compared to any teaching hospital of the public sector. Such hospitals are generally

privately owned businesses. The running costs are offset by the monthly income

generated as they charge a fee for service. Deemed business, there is no central

depository of information regarding these hospitals. Being under private

ownership, financial and business records are not available to the public. The

anecdotal information about the conditions of these hospitals leads to the

conclusions that the majority of the hospitals in the private sector are under staffed,

lack drugs and supplies, adequate patient transportation, qualified staff and modern

equipment. Under such conditions, the services provided by private sector

hospitals should not be relied upon, yet about 80% of the population is seeking

services from the private sector. This is mostly due to the fact that the public is

unaware of the quality and standard of the services which they are being provided.


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Problems of Heath Insurance Market

in Pakistan

1.With a population of 149 million growing by 1.9% per year, Pakistan is ranked138 of 173 countries covered by the United Nations Development Programme

(UNDP) human development index. It falls under "low human development."

2.Average growth of gross domestic product (GDP) was 4.6% in the 1990s,against 6.5% in the 1980s. Over the last four years, economic growth has increased

robustly, from 5.1% in FY2003 to 6.4% in FY2004, and jumping to 8.3% in

FY2005.4 However, growth has not always led to poverty reduction. Periods of

high economic growth have witnessed declines in poverty, as in the 1980s, but also

increases, as in the 1960s. Periods of low economic growth have seen poverty

sharply increase, as in the 1990s, but also fall, as in the 1970s.5 Poverty was

around 32% in 2001 (latest figure available).

3.Even though there is much need for it, social protection is limited in all fiveareas identified by the ADB social protection strategy. To help the poor, however,

the federal and provincial governments, nongovernment organizations (NGOs),

and the private sector are:

i. improving governance in public sector institutions,ii. creating jobs and income-generating opportunities,

iii. strengthening social safety net systems,iv. improving access to basic services.


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4.Total expenditure on social protection represents around 2% of GDP, of which90% is on social insurance and health care for selected groups, 5.3% of the poor

receive some form of social protection, and around 10.0% of total social

expenditure goes to the poor.

5.Formal social security systems are restricted to civil servants, the army, thepolice, as well as some formal sector enterprises (with five or more employees).

These schemes cover less than 3% of the total employed labor force. There are

hardly any informal, traditional, community-based insurance arrangements (for

example micro-insurance). There is also a gender and rural-urban bias in social

protection schemes.

6.One major pillar of any social protection network is access to free or affordablehealth care. Major health incidents, especially those of catastrophic dimensions,

may aggravate households poverty or even bankrupt families. "The development

of the private health sector is also constrained by the low level of development of

the health insurance industry. The lack of access to health insurance poses a major

problem for the financing of care for catastrophic episodes of illness and injuries."6Risk pooling, for example through health insurance, may prevent households from

falling into poverty, and those who are already poor will have the chance to get

access to better health services. Health insurance thus greatly helps reduce and

prevent poverty. Even when health insurance does not pay for services, it can

negotiate prices for health care and thus make the costs of services more

transparent. At several levels, health insurance became an issue in Pakistan. The

federal Ministry of Health is discussing how else to extend coverage of health

insurance. The government of Punjab has installed a task force to look into thefeasibility of providing health insurance for more people. Interest in the subject is

thus increasing.


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7.In general, public health expenditure is very low in Pakistan (3.5% of the publicbudget is spent on health, and public health expenditure is 0.7% of GDP). National

public expenditure on health is $4 per capita, while total expenditure on health is

$18 per capita. This shows the high share of private health care spending, includingby households, which accounts for 75.6% of health care expenditure.7 Social

health insurance covers only 5% of the population but represents about 40% of

federal and provincial governments spending on health.

8.The health care financing system consists of three alternative protectionschemes, where health insurance still represents a small segment. The public has

access to the public system financed by the federal and provincial governments.Public health care facilities comprise basic health units, rural health centers, and

public hospitals. Although public health care is supposed to be free, problems

encountered are:

i. frequent unofficial charges,ii. lack of drugs and supplies (which have to be bought outside by the patients),

andiii. absenteeism of staff.

9.Employees in the formal sector are covered by the social security healthinsurance system (Employees Social Security Institution). The formal sector

includes employees of private companies with a minimum number of employees

(the number differs by province, from 5 to 10) and their families. These social

security institutions operate health facilities at the province level. With manyfacilities in rented buildings and the better ones in newly built facilities owned by

the social security institutions, the quality of the facilities varies but is better than

in the public sector.


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10.Private insurance companies also offer health insurance. Despite the high cost,private insurance companies have filled a market segment purchasing and

providing quality health care mainly as an employee benefit for private companies,

because federal and provincial governments health services are so poor. Group

health insurance is offered by seven insurance companies, and individual health

insurance by one insurance company (Allianz EFU). Because of the high expense,

large companies self-insure or provide their own medical facilities for employees.

11.The poor receive some assistance mainly financed by two autonomousinstitutionsthe Zakat fund8 ($133 million disbursed in 2003) and Bait-Ul-

Maal9 ($38 million disbursed in 2003). The Zakat fund supports hospitals, which,

in turn, help the eligible poor. Bait-Ul-Maal reimburses claims to those who have

applied for assistance and are found to be eligible. Both funds, however, can only

serve a small portion of the 50 million poor.

12.Those who do not avail themselves of health insurance or of the two funds,and do not want to use public providers because of their low quality, have to buy

health care from private providers (doctors, dentists, clinics, hospitals, and

pharmacies) or from the many traditional healers and quacks, especially in the rural

areas. Even the poor frequently use private providers, which explains the high

share of health expenditure from private households.


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The comparison is done between four

Asian countries to show the differences

between their health systems. The

countries are:

PakistanIndiaChinaBangladesh


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The World HealthOrganization's ranking of the

world's health systems.

88 Bangladesh112 India122 Pakistan144 China


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Country

Doctors Per

1000 Pop

China 2

Pakistan 0.6

India 0.4

The following table is compiled from the data in the World Health Organization Statistical

Information System.

Total Expenditure on Health as % of GDP 2000-2005

India 4.3 4.6 4.8 4.8 4.9 5

Pakistan 2.5 2.3 2.3 2.2 2.2 2.1

Bangladesh 3.1 3.2 3.1 3.1 3.1 2.8

China 4.6 4.6 4.8 4.8 4.7 4.7

Ministry of Pakistan states that health expenditure of period 2007-08 was 3.791 billion Pakistanirupees while that spent on development was 14.272 billion.


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PAKISTANInfant mortality rate: total:63.26 deaths/1,000 live birthsmale: 66.52 deaths/1,000 live birthsfemale: 59.85 deaths/1,000 live births

Year Infant mortality rate RankPercent ChangeDate of Information

2003 76.53 33 2003 est.

2004 72.44 36 -5.34 % 2004 est.2005 72.44 37 0.00 % 2005 est.

2006 70.45 37 -2.75 % 2006 est.

2007 68.84 33 -2.29 % 2007 est.

2008 66.94 32 -2.76 % 2008 est.

2009 65.14 32 -2.69 % 2009 est.

2010 65.32 27 0.28 % 2010 est.

2011 63.26 25 -3.15 % 2011 est.

This entry gives the number of deaths of infants under one year old in a given year per 1,000 live births in the sameyear; included is the total death rate, and deaths by sex, male andfemale.

Source: CIA World Factbook - Unless otherwise noted, information in this page is accurate as of March 11, 2010

Theaverageage in pakistan is 65.5 years

Social Policy Development Centre (SPDC), 2004, demonstrates that out of every

1,000 children who survive infancy, 123 die before reaching the age of five. Alarge proportion of those who surviving suffers from malnutrition, leading toimpaired immunity and higher vulnerability to infections.


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Malnutrition is big problem in Pakistan. Human Conditions Report (2003) clearlypoints out that about 40 percent children under 5 year of age are malnutrited.About 50 percent of deaths of children under 5 years old childrenare due to malnutrition.


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Personnel:

According to official data, there are 127,859 doctors and 12,804 health facilities in the country tocater for over 170 million people

Personnel

Doctors (2009) 139,555

Dentists (2009) 9,822

Nurses (2009) 69,313

Midwives (2009) 26,225

Health visitors (2009) 10,731

Registered vets (2009)4,800


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Physicians are registered. The traditional medicine has been acceoted and

integrated into the national health system in pakistan.


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In general, public health expenditure is very low in Pakistan (3.5% of the publicbudget is spent on health, and public health expenditure is 0.7% of GDP). Nationalpublic expenditure on health is $4 per capita, while total expenditure on health is$18 per capita. This shows the high share of private health care spending, including

by households, which accounts for 75.6% of health care expenditure.7 Socialhealth insurance covers only 5% of the population but represents about 40% offederal and provincial governments spending on health. The health care financingsystem consists of three alternative protection schemes, where health insurance stillrepresents a small segment. The public has access to the public system financed bythe federal and provincial governments. Public health care facilities comprise basichealth units, rural health centers, and public hospitals. Although public health

care is supposed to be free, problems encountered are (i) frequent unofficialcharges, (ii) lack of drugs and supplies (which have to be bought outside by the

patients), and (iii) absenteeism of staff.

Health Insurance and Employees Social Security ThirdParty health insurance israre in Pakistan covering only a few upper-income people. But the EmployeeSocial Security Institution (ESSI) system is a direct provider scheme that isemployer-financed and has about one million registered members. The samesystem can be strengthened and extended to all industrial units and business


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enterprises. The medical coverage provided in the public health sector hasremained inadequate for the population in general and the government employeesin particular. Although the governments health expenditure on providing services

of various kinds including treatment abroad is quite substantial, the healthestablishments in the country have always remained grossly inadequate in cateringthe medical needs of the government employees.

According to the Economic Survey of Pakistan (2007 - 2008), the governmentspent 0.57% of GDP on health sector in order to make its population healthier.Health expenditures in absolute terms have more than the doubled percentageduring the last few years; from Rs. 25 billion in 2001 - 2002 to Rs. 60 billion in

2007 -2008. However, health expenditure as a percentage of GDP does not presenta reasonable representation as it has remained stagnant

INDIAWith one of the fastest growing economies in the world, clocked at a growth

rate of 8.3% in 2010, India is fast on its way to becoming a large and globally

important consumer economy. The Indian middle class, estimated to be 50 million

people. If current trends continue, Indian per capita purchasing power parity will

significantly increase from 4.7 to 6.1 percent of the world share by 2015. In 2006,

22 percent of Indians lived under the poverty line. India aims to eradicate poverty

by 2020.

The standard of living in India shows large disparity. For example, rural areas of

India exist with very basic (or even non-existent) medical facilities, while cities

boast of world class medical establishments. Similarly, the very latest machinerymay be used in some construction projects, but many construction workers work

without mechanization in most projects.

In 2010, the per capita PPP-adjusted GDP for India was US$3,290.


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India has a universal health care system run by the local (state or territorial)

governments. Government hospitals provide treatment at taxpayer expense. Most

essential drugs are offered free of charge in these hospitals. However, the fact thatthe government sector is understaffed underfinanced and that these hospitalsmaintain very poor standards of hygiene forces many people to visit privatemedical practitioners.

The charges for basic in-hospital treatment and investigations are much lesscompared to the private sector but the private sector is also very cheap. It is also

possible for poor people to go to a private doctor's clinic run out of the doctor'shome and get treatment for a very small fee. The cost for these subsidies comes

from annual allocations from the central and state governments. For example, anoutpatient card at AIIMS (one of the best hospitals in India) costs a one-time fee of10 rupees (around 20 cents U.S.) and thereafter outpatient medical advice is free.In-hospital treatment costs depend on financial condition of the patient andfacilities utilized, but are usually much less than the private sector. For instance, a

patient is waived treatment costs if their income is below the poverty line. Anotherpatient may seek an air-conditioned room for an additional fee.

Primary health care is provided by city and district hospitals and rural primary

health centres (PHCs). These hospitals provide treatment free of cost. Primary

care is focused on immunization, prevention of malnutrition, pregnancy, childbirth, postnatal care, and treatment of common illnesses. Patients who receivespecialized care or have complicated illnesses are referred to secondary (oftenlocated in district and taluk headquarters) and tertiary care hospitals (located indistrict and state headquarters or those that are teaching hospitals).

Now organizations like Hindustan Latex Family Planning Promotional Trust andother private organizations have started creating hospitals and clinics in India,which also provide free or subsidized health care and subsidized insurance plans.

The government-run healthcare suffers from a lack of hygiene and India's rulingclass avoided the government hospitals and went to Western countries fortreatment. With the advent of privatized healthcare, this situation has changed


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Insurance in india:

Insurance is a subject listed in the concurrent list (where both centre and states canlegislate) in India. The insurance sector has gone through a number of phases andchanges. Since 1999, when the government opened up the insurance sector byallowing private companies to solicit insurance and also allowing foreign directinvestment of up to 26%, the insurance sector has been a booming market.However, the largest life-insurance company in India is still owned by thegovernment.

In India, insurance has a deep-rooted history. Insurance in various forms has been

mentioned in the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra)and Kautilya (Arthashastra). The fundamental basis of the historical reference toinsurance in these ancient Indian texts is the same i.e. pooling of resources thatcould be re-distributed in times of calamities such as fire, floods, epidemics andfamine. The early references to Insurance in these texts has reference to marinetrade loans and carriers' contracts.

Insurance in its current form has its history dating back until 1818, when OrientalLife Insurance Company was started by Anita Bhavsar in Kolkata to cater to the

needs of European community. The pre-independence era in India saw

discrimination between the lives of foreigners (English) and Indians with higherpremiums being charged for the latter. In 1870, Bombay Mutual Life AssuranceSociety became the first Indian insurer.

Industry structure:

Currently, a US$41 billion industry, India is the world's fifth largest life insurancemarket and growing at a rapid pace of 32-34% annually as perLife InsuranceCouncilstudies.

Currently, in India only two million people (0.2 % of the total population of 1

billion) are covered under Mediclaim, whereas in developed nations like USA


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about 75 % of the total population are covered under some insurance scheme. Withmore and more private companies in the sector, the situation may change soon.

Future of Indian insurancemarket:

India is the fifth largest insurance market in Asia. In 2004, Indian insurancepremium size increased by 17.2% to $21 billion. Similar to other Asian markets,life insurance contribution in the total insurance business is significantly high in

India, increasing marginally to 79.62% in 2004 from 79.55% 2003.

Liberalization of the insurance market, increasing competition, the introduction ofinnovative products and rising income, have all led to the phenomenal growth intotal insurance premiums. In India, both domestic and foreign private players areallowed to operate insurance businesses. Public players, which had a monopoly inthe insurance business, have started facing stiff competition from privatecompanies.

Non-life insurance held 20.37% of the total business in 2004. The poor growth in

non-life insurance business is mainly due to the low awareness level and the tariffstructure. A premium tariff still widely applies to non-life insurance, restricting itsgrowth.

2004, India accounted for around 6.61% of Asias GDP, and was worlds secondmost populous country. However, insurance penetration in India is only 2.82%which works out 2.45% in life and 0.62% in non-life business. Despite its vast

population, rural poverty and a lack of insurance awareness have prevented theproliferation of insurance products in the past. However, with the opening up of themarket, the scenario is set to change. Improvements on the supply side will help

boost penetration.


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Comparison Data:

India's economy has grown more rapidly than Pakistan's in the last ten years.

However, both nations have accepted and implemented significant economic

reforms that have opened up their economies and brought about rapid growth,

more than doubling the size of each economy in the last ten years.

1. Per capita income: The most recent and detailed real per capitaincome data was calculated and reported by Asian Development Bank

based on a detailed study of a list of around 800 household andnonhousehold products in 2005 and early 2006 to compare real

purchasing power for ADB's trans-national income comparisonprogram (ICP). The ABD ICP concluded that Pakistan had the

highest per capita incomeat HK$ 13,528 (US $1,745) among the

largest nations in South Asia. ADB reported Indias per capitaas

HK $12,090 (US $1,560). Nominal per capita GDP estimates forPakistan range from US $1000 to US $1022, while the range for

India is from US $ 1017 to US $ 1100.

2. According to the 2009 UN Human and Income Poverty Report, thepeople living under $1.25 a day in India is 41.6 percent, about twiceas much as Pakistan's 22.6 percent. The most recent estimates byUNDP in Pakistan for 2007-2008 indicate poverty level at 17.2%.


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3. India ranks 66th on the 2008 Global Hunger Index of 88 countrieswhile Pakistan is slightly better at 61 and Bangladesh slightly worse

at 70.

India's literacy rate of 61% is well ahead of Pakistan's 50% rate.

One out of every three illiterate adults in the world is an Indian,according to UNESCO. Pakistan stands fourth in the world in terms ofilliterate adult population, after India, China and Bangladesh.

Poverty:

Population living under $1.25 a day - India: 41.6% Pakistan: 22.6%Source: UNDP

Nutrition:

Underweight Children Under Five (in percent) Pakistan 38% India46% Source: UNICEF

Health:

Life expectancy at birth (years), 2007 India: 63.4 Pakistan: 66.2

Source: HDR2009

Education:

Youth (1524 years) literacy rate, 2000 to 2007, male Pakistan: 80%India 87% Source: UNICEF

Youth (1524 years) literacy rate, 2000 to 2007, female Pakistan 60%India 77% Source: UNICEF

Economics:

GDP per capita (US$), 2008 Pak:$1000-1022 India $1017-1100


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CHINAPerformance of the Chinese insurancemarket:

After Japan and South Korea, China is the third largest insurance market in Asia.

In 2004, Chinas insurance market grew 10.63% to $52 billion (Figure 7.24) .Between 2000 and 2004, Chinas insurance market has experienced a period ofstrong performance. Life insurance in 2004 contributed more than 67.86% of totalinsurance, up from 60% in 2003.

The growth of non-life insurance was even more pronounced than life insurance in2004, up more than 21% compared with 7% for life insurance.

Liberalization of the insurance industry and rising income levels has boosted theinsurance market in China. Life insurance products as a safer investment avenue

have been very attractive to the customers. However, due to high acquisition costsand negative interest rate spreads in guaranteed return products, profit margins ofthe insurers are decreasing.

The Chinese insurance market will become increasingly liberalized and open forforeign participants in the next five years. Many more non-life and life companieswill be licensed to operate in China, and geographic and market restrictions will belargely eliminated. With penetration at a meager 3.26% in 2004, that is 1.05 % fornon-life and 2.21% for life insurance products, and an economy steaming ahead atan annual real GDP growth rate of over 9.5%, China is poised to emerge as a major

insurance market in the region.

Insurance industry in China:

The Chinese insurance industry has experienced rapid expansion over the pastdecade, with annual life-insurance premiums growing from 10 billion U.S. dollars

in 1999 to 46 billion U.S. dollars in 2006.


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In addition to steadily increasing demand, two major supply-side trends haveencouraged the development of the industry: (1) under the World TradeOrganization (WTO) framework, the Chinese government lowered entry barriers toforeign insurers, allowing them to establish joint-venture insurance firms in China;

and (2) domestic insurers strengthened themselves through IPOs and other marketdevelopments. (For example, China Life Insurance has become the second largest

insurance company in the world in terms of market capitalization.)

As of 2007, China had 100 insurance companies, 59 of which are domestic-fundedand the rest 41 are foreign-funded. And five Chinese insurance companiesincluding the People's Insurance Company of China, China Life Insurance, PingAn Insurance Company of China, China Insurance International Holdings Co., Ltd.(CIIH) and China Pacific Insurance have listed at home and abroad.

China Life Insurance had about a 50% share of the life insurance market; Ping AnLife Insurance and Ping An Property Insurance share 16% and 12% ofcorresponding insurance markets, respectively ranking 2nd and 3rd.

In Jan-May 2007, the increased insurance assets reached RMB 450 billion, withoutcalculation the value-added of substantive financial assets. At present, the grossassets of China Life Insurance have outnumbered RMB 1 trillion. And the totalcapital of the whole insurance industry has exceeded RMB 200 billion, 5.6 times

that of 2002.

During the first three quarters of 2009 China's insurance companies had generatedprofits 36.9 billion RMB of which the seven largest insurers accounted for 90% ofthese profits.

China Insurance Industry Report, 2007:

At present, China has 100 insurance companies all together, 59 of which are

domestic-funded and the rest 41 are foreign-funded. And five Chinese insurancecompanies including the People's Insurance Company of China, China LifeInsurance, Ping An Insurance Company of China, China Insurance InternationalHoldings Co., Ltd. (CIIH) and the Min An Insurance (China) Co., Ltd. have listedat home and abroad. As the most thoroughly opened industry in China's finance


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field, the insurance industry is having more and more furious competition.

The market shares of China Life Insurance and Ping An Insurance Company ofChina not only keep stable, but also present a continuous rising momentum. China

Life Insurance covers about 50% of the whole life insurance market; Ping An LifeInsurance and Ping An Property Insurance share 16% and 12% of corresponding

insurance markets, respectively ranking 2nd and 3rd.

In Jan-May 2007, the increased insurance assets reached RMB 450 billion, withoutcalculation the value-added of substantive financial assets. At present, the grossassets of China Life Insurance have outnumbered RMB 1 trillion. And the totalcapital of the whole insurance industry has exceeded RMB 200 billion, 5.6 timesthat of 2002.

BANGLADESHThe standard of living in Bangladesh is extremely low, Bangladesh may not be

able to provide foreign nationals in the country with the services that they need. Inregards to healthcare, the treatment standards are typically very poor, and many

medical facilities will not be able to offer patients anything other than immediateemergency care.

Feeling comfortable in the knowledge that if something was to happen to a familymember their medical costs will be taken care of, is important to us all. Our expertconsultants can advise on the most suitable level of coverage for families,

individuals, groups, travelers, and teachers expatriate health insurance.

Expatriate Health Insurance Bangladesh:

In addition to the lack of basic medical facilities throughout the country, there is amajor concern in Bangladesh regarding communicable diseases. Due to thecountry's location and the prevalence of severe floods during the monsoon season,


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there are yearly outbreaks of a number of major diseases, including typhoid,dengue fever, malaria, and others. This is a serious problem and accounts for manydeaths annually. The problem of flooding has also been linked to the high infantmortality rates throughout the country and despite the high level of fertility

throughout Bangladesh, approximately 125 infants will die per every 1000 births.

Despite any progress made, however, the provision of healthcare in the country isstill in a state that is much lower than expected. Most hospitals and clinics will not

be able to provide any care outside of emergency treatment. In addition to thismany Bangladeshi medical facilities will require a cash payment prior to treatment,and in some cases this has been requested even where an individual has healthinsurance. In serious situations patients are typically evacuated from the country toa nearby center of medical excellence, typically to India or Thailand. Theseevacuations can be expensive, and without adequate insurance coverage can placea burden on an individual's financial situation.

Due to the inadequate nature of the country's healthcare services it is advised thatany foreign nationals in the country ensure that they take measures to preventsickness and disease. Avoid swimming in public waterways and the ocean, as thesemay be contaminated by human waste. Always ensure that you are drinking waterfrom a clean source. This comes in addition to carrying some form of anti-diarrheamedication at all times. In the event that you suffer from diarrhea for more than 72hours, you should consult a medical authority.

Many developing countries, including Bangladesh, are affected by a DoubleBurden of disease and scare of resources (WHO 95).In Bangladesh about 64% of the health expenditure come from the out of pocketof the house hold 33% is provided by the government sector and the remainingcomes from the NGOs services.


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A comparison between Bangladesh and china

health care system

Bangladesh Lifeexpectancyat birth:

Lifeexpectancyat birth: total population:69.75 years

male: 67.93 yearsfemale: 71.65 years (2011 est.)

Year Lifeexpectancyat birth Rank Percent ChangeDate of Information

2003 61.33 169 2003 est.

2004 62.08 169 1.22 % 2004 est.2005 62.08 169 0.00 % 2005 est.

2006 62.46 169 0.61 % 2006 est.

2007 62.84 166 0.61 % 2007 est.

2008 63.21 167 0.59 % 2008 est.

2009 60.25 181 -4.68 % 2009 est.

2010 69.44 148 15.25 % 2010 est.

2011 69.75 148 0.45 % 2011 est.


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ChinaLifeexpectancyat birth:

Lifeexpectancyat birth: total population:74.68 yearsmale: 72.68 yearsfemale: 76.94 years (2011 est.)

Year Lifeexpectancyat birth Rank Percent ChangeDate of Information

2003 72.22 95 2003 est.

2004 72.27 104 0.07 % 2004 est.

2005 72.27 106 0.00 % 2005 est.

2006 72.58 106 0.43 % 2006 est.

2007 72.88 102 0.41 % 2007 est.

2008 73.18 103 0.41 % 2008 est.

2009 73.47 104 0.40 % 2009 est.

2010 74.51 93 1.42 % 2010 est.2011 74.68 95 0.23 % 2011 est.

Definition: This entry contains the average number of years to be lived by a groupof people born in the same year, if mortality at each age remains constant in thefuture. The entry includes total population as well as the male andfemalecomponents. Life expectancy at birth is also a measure of overall quality of life ina country and summarizes the mortality at all ages. It can also be thought of as

indicating the potential return on investment in human capital and is necessary forthe calculation of various actuarial measures.


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Bangladesh Infant mortality rate:

Infant mortality rate: total: 50.73 deaths/1,000 livebirthsmale: 53.23 deaths/1,000 livebirthsfemale: 48.13 deaths/1,000 livebirths (2011 est.)

Year Infant mortality rate Rank Percent ChangeDate of Information

2003 66.08 52 2003 est.

2004 62.6 49 -5.27 % 2004 est.

2005 62.6 46 0.00 % 2005 est.

2006 60.83 47 -2.83 % 2006 est.

2007 59.12 44 -2.81 % 2007 est.

2008 57.45 43 -2.82 % 2008 est.

2009 59.02 39 2.73 % 2009 est.

2010 52.54 48 -10.98 % 2010 est.

2011 50.73 47 -3.44 % 2011 est.


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China Infant mortality rate:

Infant mortality rate: total: 16.06 deaths/1,000 live births

male: 15.61 deaths/1,000 live birthsfemale: 16.57 deaths/1,000 live births (2011 est.)

Year Infant mortality rate Rank Percent ChangeDate of Information

2003 25.26 105 2003 est.2004 24.18 101 -4.28 % 2004 est.

2005 24.18 101 0.00 % 2005 est.

2006 23.12 102 -4.38 % 2006 est.

2007 22.12 102 -4.33 % 2007 est.

2008 21.16 105 -4.34 % 2008 est.

2009 20.25 104 -4.30 % 2009 est.

2010 16.51 113 -18.47 % 2010 est.

2011 16.06 112 -2.73 % 2011 est.

Definition: This entry gives the number of deaths of infants under one year old ina given year per 1,000 live births in the same year; included is the total death rate,and deaths by sex, male andfemale. This rate is often used as an indicator of thelevel of health in a country.


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China: Physicians

Description:

Number of physicians per 1,000 people. Physicians are defined as graduates of anyfacility or school of medicine who are working in the country in any medical field(practice, teaching, research). World Bank (WHO).

Year: 1970 1980 1990 2000 2002

Physicians(Number of physicians per 1,000 people): 0.86 1.18 1.55 1.64 1.642473

Bangladesh: Physicians

Year: 1970 1980 1990

Physicians (Number of physicians per 1,000 people) 0.1187 0.1205 0.1767


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Proportion of GDP spent on health care:

China:

With its massive 1.3 billion populations, China's health care expenditures areminiscule compared to Western nations. China spent less than 5 percent of its GDPon health care in 2005.

Bangladesh:

Total health care expenditure as percentage of GDP is 3.10.public share of totalhealth expenditure as percentage of GDP is .87.private share of total healthexpenditure as percentage of GDP is 2.23.

Public health-care in China:

China is undertaking reform of its health-care system. The New Rural Co-operative Medical Care System (NRCMCS) is a 2005 initiative to overhaul thehealthcare system, particularly intended to make it more affordable for the rural

poor. Under the NRCMCS, the annual cost of medical coverage is 50 Yuan (US$7)per person. Of that, 20 Yuan is paid in by the central government, 20 Yuan by theprovincial government and a contribution of 10 Yuan is made by the patient. As ofSeptember 2007, around 80% of the rural population of China had signed up(about 685 million people). The system is tiered, depending on the location. If

patients go to a small hospital or clinic in their local town, the system will cover


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roughly 70-80% of their bill . If the patient visits a county clinic, the percentage ofthe cost being covered falls to about 60% . If the patient requires a specialist in amodern city hospital, the plan would cover about 30% of the bill.

Public health-care in Bangladesh:

Bangladesh has made significant progress in recent times in many of its socialdevelopment indicators particularly in health. This country has made importantgains in providing primary health care since the Alma Ata Declaration in 1978. Allhealth indicators show steady gains and the health status of the population has

improved. Infant, maternal and under-five mortality rates have all decreased overthe last decades, with a marked increase in life expectancy at birth. It has achieveda credible record of sustaining 90% plus vaccine coverage in routine EPI alongwith NIDs (national immunizations days) since 1995. But some of this progress isuneven and there still exists inequalities between different groups and geographicalregions. A major constraint identified towards reaching the MDGs and othernational health goals is the issue of shortages in the health workforce and theuneven skill mix.

Like most transitional societies, a wide range of therapeutic choices are availablein Bangladesh, ranging from self care to traditional and western medicine. The

public sector is largely used for in-patient and preventive care while the privatesector is used mainly for outpatient curative care. Primary Health Care (PHC) has

been chosen by the Government of Bangladesh as the strategy to achieve the goals

of Health for all which is now being implemented as Revitalized Primary HealthCare.


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Recommandations

Pakistan is the 6th

largest state of the world having a huge flux of population living

in rural and urban areas. The Federal Government of Pakistan after taking her due

share from NFC award promise to fulfill the four major objectives i.e security,

education, health and sanitation. Unfortunately, only 1.5% of entire budget is

allocated to health and sanitation which is insufficient. (So sufficient budget should

be located to health sector to counter this problem.)

Secondly, the sanitary conditions are deplorable and the stagnant water absorbs

150 feet in the soil mixing up with clean water, which is spreading severe diseases.

Owing to this poor sanitary condition W.H.O projected the idea of oral polio

vaccination. (Steps should be taken to improve sanitataion conditions.)

Additionally, the number of doctors is less to tackle the problems of health. In

Punjab only 1400 doctors qualify every year where as statistics show that every

year 70, 000 babies born in Punjab.(Steps should be taken to remove such

discrepancies.)

The infrastructure is undeveloped. The basic health units in rural areas are not

equipped enough to better the falling health of rural populace. If there are well

equipped hospitals, the availability of doctors is not ensured. Glaringly, the quacks

are performing in every nook and corner of the country without any fear of

accountability. The medicine companies are indulging in minting money with the

help of dishonest doctor, consequently killing many people. Less attention is given

to sterilize the tools and transfer of blood without disease. Because of the religious

myths and cultural barriers less attention is given to female health which results inthe increment of MMR and TMR.(There must be strong check and balance as far

as doctors and nurses are concerned. For females, awareness should be created

through media and female health workers.)


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Focusing on the golden rule of Health is wealth, the government of Pakistan

should take appropriate measures for the betterment of health facilities in Pakistan.

There should be strong policies with accurate implementation. The awareness

programmes should be managed to let the people know about the problems and

remedies. Their should be a strong determination for cleaning the surroundings ofthe rural as well as urban populace. From domestic to international level, a

healthy society can fight against the evils of society and let the people free from

the clothes of ignorance.


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Conclusion

The insurance awareness levels in Pakistan have been very low, in general. Health

insurance is an even newer concept.The overall penetration of health insurance inPakistan is merely around 0.5% of the total population which is very low. Thisseems particularly low if one takes into account the poor general level ofhealthcare facilities available to the population and the absence of any meaningful

government funded health insurance programs.

It is true that health insurance has relatively lower profit margins compared tomany other forms of insurance. In Pakistan, however, Health Insurance industryfaces additional challenges in the form of lack of credible data on healthexpenditure, lack of effective record keeping of patients medical histories,inadequate regulatory framework for medical service providers and a general lackof awareness about health insurance schemes dynamics.

The problem is exacerbated when the industry gives way to regressive practiceslike unreasonable price wars which in the long run affect the growth of the industryadversely.

However, companies with better knowledge of market dynamics, better risk

management capabilities and prudent business practices should be able to manage

this very potent line of business profitably


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Problems of Health Insurance Market in Pakistan

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