Dr. Padma Bhatia Assistant Professor Department Of Community Medicine G.M.C., Bhopal. M.P.

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.

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.

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 30-152/1000, 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.

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

8. 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

9. 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 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. As a contingent claim instrument, health insurance is an efficient way to help individuals prepare for health care Health insurance typically helps a patient manage health care costs beyond a threshold amount through pooling Patient expenditure (INR) 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(1959-1961) 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. 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 care in India revolves around the lack of adequate insurance . . .

19. 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 / includedunder insurance The key issue related to financing of health care in India revolves around the lack of adequate insurance …contd

20. 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 suggests that private insurance has an important role to play in overall health care

21. 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 The experience of different countries suggests that private insurance has an important role to play in overall health care

22. 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 learning on health insurance policy design

23. 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 Global experience provides some key learning on health insurance policy design . . .contd

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

25. As a result, the traditional model for health insurance needs to change... • Fixed fees • Service charges • Voluntary premiums Insurer/ • Mandatory premium Inter-mediaries • Mandatory premium Government / Employer • TPAs etc. • Costs up to deductible 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

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. 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 Managing the reform process would require several infrastructural and market changes to be effected

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.