Health Insurance

HEALTH INSURANCE

IN INDIA

R AHUL M UNSHI | 05PH2010

With a 60% growth in the financial year 2007-08 and a market share of Rs. 5100 crores, health insurance is touted as the fastest growing segment in non-life insurance sector in India in the recent years. Zooming out the view to gain a broader vista we find juxtaposed the World Bank report stating that there is only a dismal 10% penetration of health insurance among the Indian population and 24% of all hospitalized people are impoverished to below poverty line, each year. Overall, Indian health sector is still characterized by near absence of significant risk protection against major healthcare related expenditure ensuring that that large proportion of people, especially those in the bottom four income quintiles borrow money or sell assets towards meeting this end. In India, health care is financed through general tax revenue, community financing, out of pocket payment and social and private health insurance schemes. According to National Health Accounts published by NCMH, India spends around 4.9% GDP on health making the per capita total expenditure on health US$ 23, of which the per capita Government expenditure on health is US$ 4. Hence, it is seen that the total health expenditure is around 5% of GDP, with breakdown of public expenditure (0.9%); private expenditure (4.0%). The private expenditure can be further classified as out-of-pocket (OOP) expenditure (3.6%) and employees/community financing (0.4%). It is thus evident that public health investment has been comparatively low. Nevertheless, governments at the centre as well as many states have started large scale health insurance programmes to protect their vulnerable groups from health related financial crisis.

GOVERNMENT

RUN SCHEMES

Government has set up funds in the form of social insurance with explicit benefits in return for payment. It is usually compulsory for certain groups in the population and the premiums are determined by income (and hence ability to pay) rather than related to health risk. The benefit packages are standardized and contributions are earmarked for spending on health services. The government-run schemes include the Central Government Health Scheme (CGHS) and the Employees State Insurance Scheme (ESIS). Whereas the prominent state efforts include Rajiv Gandhi Aarogyasri Scheme in Andhra Pradesh, and the centrally sponsored Rashtriya Swastha Bima Yojna. Such schemes have contributed to the increase in penetration of health insurance in the country.

CENTRAL GOVERNMENT HEALTH SCHEME (CGHS) 1

It aims at providing comprehensive medical care to the employees of Central Government, certain autonomous and semi-government organizations, MPs, judges, freedom fighters and journalists and has been in place since 1954. The benefits offered include all outpatient facilities and preventive and developmental care in dispensaries as well as inpatient facilities in government hospitals and approved private hospitals. The scheme also covers non allopathic system of medicine. At present there are 432,000 beneficiaries spread across 22 cities. This scheme is mainly funded through Central Government funds, with monthly premiums ranging from Rs 15 to Rs 150 based on salary scales. The CGHS has been criticized from the point of view of quality and accessibility. Subscribers have complained of high out-of-pocket expenses due to slow reimbursement and incomplete coverage for private health care.

EMPLOYEE

AND

STATE INSURANCE SCHEME (ESIS)

This scheme provides protection to employees against loss of wages due to inability to work due to sickness, maternity, disability and death due to employment injury. It offers medical and cash benefits, preventive and developmental care and health education. Also included is free medical care of the employees and their family members. The number of beneficiaries is over 33 million spread over 620 ESI centres across states. Under the ESIS, there were 125 hospitals, 42 annexes and 1 450 dispensaries with over 23 000 beds facilities. The scheme is managed and financed by the Employees State Insurance Corporation (a public undertaking) through the state governments, with total expenditure of Rs 3300 million or Rs 400 per capita insured person. The monthly wage limit for enrolment in the ESIS is Rs. 6 500, with a prepayment contribution in the form of a payroll tax of 1.75% by employees, 4.75% of employees' wages to be paid by the employers, and 12.5% of the total expenses are borne by the state governments. Unsatisfactory nature of ESIS services, low quality drugs, long waiting periods, impudent behaviour of personnel, lack of interest or low interest on part of employees and low awareness of ESI procedures have attracted much criticism.

OTHER GOVERNMENT INITIATIVES Apart from running schemes the Government has also brought under statutory provisions, social security benefits for disadvantaged groups and has undertaken initiatives to ensure fairer and equitable access to public healthcare systems especially by the underprivileged sections of the society. The National Health Policy 2002 aims to evolve a policy structure to address these. It also seeks to increase the aggregate public health investment through increased contribution from the Central as well as state governments and encourages the setting up of private insurance instruments for increasing the scope of coverage of the secondary and tertiary sector under private health insurance packages. A comprehensive increase in expenditure on health amounting to 2% of GDP by 2010 with central grants constituting ¼ of total public health spending is on the cards.

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Steps towards implementation of alternative system of healthcare financing in the form of health insurance to facilitate availability of essential need based affordable healthcare services to all income groups have been evolved with an aim towards the protection of the needy population. In the 2002-2003 budget, an insurance scheme targeted towards the poor called Janraskha was introduced. With a premium of Re 1 a day, it ensured indoor treatment up to Rs 3000 per year at selected and designated hospitals and outpatient treatment up to Rs 2 000 per year at designated clinics, including civil hospitals, medical colleges, private trust hospitals and other NGO-run institution. Another initiative of community-based health insurance, taken in the 2003-04 budget aimed to enable easy access of less advantaged citizens to good health services, and to offer health protection to them. This policy covers people between the ages of three months to 65 years. Under this scheme, a premium equivalent to Re 1 per day (or Rs 365 per year) for an individual, Rs 1.50 per day for a family of five (or Rs 548 per year), and Rs 2 per day for a family of seven (or Rs 730 per year), would entitle them to get reimbursement of medical expenses up to Rs 30000 towards hospitalization, a cover for death due to accident for Rs 25000 and compensation due to loss of earning at the rate of Rs 50 per day up to a maximum of 15 days. The government would contribute Rs 100 per year towards the annual premium, so as to ensure the affordability of the scheme to families living below the poverty line. The government also offers assistance by way of Illness Assistance Funds, like National Illness Assistance Fund (NIAF) was set up in 1997, which have been set up by the Ministry of Health and Family Welfare at the national level and in a few states.

INSURANCE REGULATORY

AND

DEVELOPMENT AUTHORITY (IRDA)

The IRDA has taken many proactive steps in its developmental agenda for health insurance. The authority had set up National Health Insurance working Group in 2003 under which the stake holders of health insurance industry would work together and suggest reforms. A subgroup for electronic standardized data acquisition was formed. This system has now been functional for over 3 years with a health data repository at the Tariff Advisory Committee (TAC), wherein considerable data on insured persons and claims has been collected and analyzed. Steps have also been initiated to further streamline the process of data collection and analysis. Initiatives towards registration of stand alone health insurance companies have already seen the entry of M/s Star Health and Allied Insurance Co. Ltd. and M/s Apollo DKV Insurance Co. Ltd. Newer and innovative products of the likes of Hospital Cash and Hospitalization/ Critical Illness benefit products are being designed and made available to supplement the indemnity products that have dominated the market so far. Recent addition to the steadily growing pool of innovations include specific for senior citizens, for particular diseases like Diabetes, for lower socio-economic groups, products providing outpatient coverage, and those covering preexisting diseases, none of which was available until recently. IRDA is closely working with the Union Ministry of Health and Family Welfare and the World Health Organization in their work on Standard Treatment Guidelines and Health Insurance Training. Co-ordination is on with FICCI in their joint group of insurers and hospitals in 3

developing standards of care, and to take further steps towards sustainability of health insurance.

PRIVATE –FOR PROFIT SCHEMES In private insurance, buyers voluntarily pay premium to an insurance company that pools people with similar risks and insures them for health expenses. Premiums are based on an assessment of the risk status of the consumers and the level of benefits provided. In the public sector, the General Insurance Corporation (GIC) and its four subsidiary companies (National Insurance Corporation, New India Assurance Company, Oriental Insurance Company and United Insurance Company) and the Life Insurance Corporation (LIC) of India provide voluntary insurance schemes. The Life Insurance Corporation offers Ashadeep Plan II and Jeevan Asha Plan II. The General Insurance Corporation offers Personal Accident policy, Jan Arogya policy, Raj Rajeshwari policy, Mediclaim policy, Overseas Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy and Dreaded Disease policy etc. Of these Mediclaim is the main product of GIC. The insurance sector was opened to private and foreign participation in the year 1999 with the passing of IRDA bill. The Bill also facilitated the establishment of an authority to protect the interests of the insurance holders by regulating, promoting and ensuring orderly growth of the insurance industry. The bill allows foreign promoters to hold paid up capital of up to 26 percent in an Indian company and requires them to have a capital of Rs 100 crore along with a business plan to begin its operations. Few companies and their health insurance schemes are listed below.

NGOS / COMMUNITY-BASED HEALTH INSURANCE Community based financing schemes are generally based on three principals community cooperation and local self reliance and are typically targeted towards poorer population in the community who primarily influence the contribution level and collecting mechanisms as well as the content of the benefit package, and allocating the schemes. The premium is pre-paid and usually flat rate. Such schemes are generally run by trust hospitals or nongovernmental organizations (NGOs). The benefits offered are mainly in terms of preventive care, though ambulatory and in-patient care is also covered. Such schemes tend to be financed through patient collection, government grants and donations. Increasingly in India, CBHI schemes are negotiating with

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the for-profit insurers for the purchase of custom designed group insurance policies. A few larger non –profit SBHI schemes and their base are listed below.

NAME

LOCATION

MEMBERS

TYPE

Self Employed

Gujarat (Ahmedabad)

40,000

Integrated Insurance Scheme, Health Insurance, Life Insurance (with LIC), Accident (with NIA), Asset Insurance, Maternity Benefit

Kerala (Thiruvanantha puram)

1,00,000 families

Craft & Gear Fund (loan basis),

Voluntary Health Services Medical Aid Plan

Tamil Nadu

1,60, 000

Health Insurance

Students Health Home

West Bengal

5,50,500

Health Insurance

Society for Promotion of Area Resources Centre

Mumbai

1,200 couples

Health Insurance Accident Housing (with OIC)

Madhya Pradesh (Raigarh District)

75,000

Health Insurance

Mumbai

1,50, 000

Health Insurance

Women’s Association (SEWA) Trivandrum District Fishermen’s Federation (TDFF)

OF

INSURANCE

Contingency Fund(death, accidents, loss of work)

(SPARC) Raigarh Ambikapur Health Association(RAHA) Medical Insurance Scheme Mathadi Hospital Trust

Studies show that CBHI schemes are highly unorganized and suffer from poor design and management. Often there is a problem with adverse selection because of a large number of high-risk members, since premiums are not based on assessment of individual risk status. These have also reportedly failed to include the poorest-of-the-poor, have low membership and often require extensive third party financial support. Also, there are issues relating to the sustainability and replication of such schemes.

CONCLUSION Being a low income country and due to the presence of large sections of illiterate masses there continues to be lack to penetration of health insurance in to the masses. Currently, there is no mechanism or infrastructure for collecting mandatory premium among the large unorganized sector. Even in terms of the existing schemes, there is insufficient and inadequate information about the various schemes. Data streamlining is also rudimentary.

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There is an urgent need to document global and Indian experiences in social health insurance. Given the heterogeneity of different regions in India and the regional specifications, one would need to undertake pilot projects specific to each target population under an insurance scheme. Health policy-makers and health systems research institutions, in collaboration with economic policy study institutes, need to map the prevailing disease burden at various geographical regions to develop standard treatment guidelines and estimate the cost of such health services. Benefit packages can then be designed and the premium to be levied and subsidies to be given determined for each region. Skill-building for the personnel involved, and capacity-building of all the stakeholders involved, would be a critical component for ensuring the success of any health insurance programme. Apart from developing equitable accessibility to affordable quality health care through reforms in public health delivery system, the government can promote health insurance by playing a regulatory role as well as developing a fund pool with the community and working at a mandatory grassroots level though the local governing units and NGOs. It should be the endeavour of all associated with healthcare to ensure both equity and efficiency in the development and regulation of health insurance and to promote a just and humane environment in the landscape of health insurance.

REFERENCES 1. www.searo.who.int/linkfiles/social_health_insurance_an2.pdf 2. Yojana, October 2009 3. http://www.ilo.org/gimi/concertation/resource.do? page=/concertation/publications/carte/autrespublications/Monographies_323711566 1_4821.PDF

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