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  1. 1. THE HEALING TOUCH : Universalizing access to primary healthcare Hindu College Lavanya Choudhary, Raghu Seth Pallavi Jain, Vikram Singh and Suham Gupta
  2. 2. THE CURRENT SCENARIO : India spends only 1.04% of its GDP on health as compared to 7.2% expenditure of other BRIC countries, 75% of healthcare caters to only 27% of the population, and 70% of all health expenditure is paid out of pocket . Health insurances are basic and not widely available, Allocation of inadequate funds, faulty or no implementation of insurance schemes, and poor utilization of resources are causes for this pitiable situation.  POOR INSURANCE SCHEMES – Government spends Rs.307 crore on -27 different insurance schemes being run currently, but due to poor design and management, less than 10% of population of people living BPL are covered, demand for healthcare by poor and those of informal sector has been unmet.  ACCESS TO HEALTHCARE – No private or government healthcare is available in sufficient numbers in remote rural areas, transport cost is an expensive proposition.  COST OF HEALTHCARE - Healthcare costs are primary reasons for rural indebtness and poverty, out of pocket costs on hospital care raises 2% of proportion of population in poverty (Peters et all-2002). Commercial insurance companies have no interest in providing funds. * graph Proportionate expenditure on healthcare (PWC report 2011-12)
  3. 3. SOLUTION :Providing a MARKET DRIVEN MODEL FOR SOCIAL WELFARE – SELF FINANCED INSURANCE SCHEMES, with government aid, to improve reach, efficiency and most importantly empower the people with money and security. 1. MOBILIZING RURAL SUBSCRIBERS Most present insurance schemes are restrictive in scope, cover only a certain BPL section in certain geographies. 70% of the informal labour force is ignored. There are 3 steps involved – to increase insurance cover - Communicating to the poor Collecting premiums and Issuing identity cards for participants. Use of UIDs and approaching Cooperative societies for expanding reach is recommended. 2. SELF FINANCED SCHEMES Availability of health insurance cover to a large population paying a low premium. Most informal sector can be covered by this plan, while BPL families get full government subsidization in schemes. Study shows how low income groups in Guajrat pay low premium Rs 90 per annum for insurance cover (Gumber and Kulkani report 2002) Given the low premium amount, the success of any scheme would depend on maximizing number of participants, so a target of 1,00,00,000 is necessary to launch scheme. 3. HEALTH CARE INFRASTRUCTURE AND PPPs Considering the inefficient network of government hospitals, active private participation is needed, as number of patients with insurance cover, increase, hospitals will come up, matching demand with supply. Encouragement in the form of tax reductions and subsidies are also given as incentives. 4. ADMINISTRATION The government of India's regulatory authority IRDA mandates that insurance schemes must have third party administrator TPAs, to ensure checks and balances and improve implementation. E.g. FHPL (family health plan limited)a division of Apollo hospital is the largest such agency in the country, that regulates working of scheme programs. This can be readily encouraged and even financed through this model. 4 STEPS PLAN
  4. 4. MOBILIZING RURAL SUBSCRIBER The first step in solving the restricted scope problem is to identify the target population. This includes the rural poor, informal sector labour force. We use existing institutions and programs which connects the target population.  Co-operative societies is one such institution. The Co-operative movement encompasses developmental sectors like Textiles, Sericulture,Fisheries,Sugar, Horticulture and Agriculture Credit, etc. The co-operative secretaries shall discuss and convince members to sign up for the scheme. They shall also collect annual premium from the members.  Government UID programs for beneficiary, the beneficiary is poor, illiterate and migrant hence the scheme had to be cashless, paperless and portable. Insurance companies have a business interest in issuing as many smart cards as possible as the amount paid to them is a multiple of the cards issued. The inbuilt security and verification system ensures that the card cannot be issued to the wrong person. Thus, by targeting existing organizations that connect a diverse rural population of farmers, peasants, etc. the scheme will be able to mobilize the large numbers needed for the success of a self funded health insurance scheme 1 *edit chartStart Beneficiary approaches Co- operative society/org for enrolment in scheme Beneficiary gets UID to claim medical insurance cover Free OPD consultation Admission for surgery Gets operated under scheme for free Beneficiary leaves hospital Admission for non- surgery Patient pays 30%
  5. 5. PREMIUM- The annual premium shall be fixed at Rs 90 per person. Government can subsidize scheme (the poor will pay Rs 60 and the government shall pay Rs 30) Higher value of govt subsidies for people living BPL.(Gumber and Kulkani report 2002) Rs 90 was fixed on two assumptions, it would cost 10,000 for one life saving operation and that 1-2% of population would require major operations. Given the low premium rates, the success of any scheme would depend on maximizing number of participants, so a target of 1,00,00,000 is necessary to launch scheme. COVERAGE - Each person is entitled to a maximum coverage of Rs 200,000 per year. (Mediclaim policy by CIG gives 15,000 with a premium Rs 175-330. SEWA offers coverage of maximum 1200) Given the fact that poor people could not pay for hospitalization for both major and minor illnesses, it is decided that all charges associated with any surgical procedure would be covered. In addition to coverage for surgical procedures, the scheme also covers outpatient consulting at the network of hospitals. This primarily includes doctor’s fees, diagnostics and X-rays till only 70% of the cost. SELF FINANCED INSURANCE SCHEMES Premium rural households were willing to pay – Rs 90 per annum Reach – 1.6 million (basic is 1 million) Revenue – 90*16,00,000= 14,40,00,000 Fixed cost – payment to private Third party administrator TPA - 4% of subscription of scheme = 59,00,000 Variable cost – Cost of surgeries and cover charges of out patient consulting Assume 15,000 surgeries are performed valued at 11.94 crores (extra beyond basic expenditure is subsidized by government) Total Cost -11.94 crore +59,000 Profit= Revenue- Cost 14.4 crore – 11,94,59,000 = 1.86 crores *Figures have been assumed on the basis of the Yeshaswini Model(Karnataka)– which is the largest self financed health insurance program in the world, and being operated in India presently. 2
  6. 6. CREATING HEALTHCARE INFRASTRUCTURE Bridging the gap between the demand for healthcare and the existing supply will necessitate huge investments.  Expenditure – Indian Medical Association has demanded an increase in the 2013-14 Union Budget allocation on Healthcare from a mere present 1% to 4% of GDP. This capital can be invested in creation of basic infrastructure, subsidize and incentivise private sector involvement, start PPPs and help self financed insurance scheme plans.  Private sector - incentive to augment government spending: Come up with a clearly defined policy related to incentives, tax rebates. Incentivize the participation of for-profit or not-for-profit organizations, while the Government will act as the facilitator a monitor the quality standards on an ongoing basis. The govt. shall initially include 25-30 hospitals in its network. As and when the number of patients will grow, more hospitals will come forward (supply will increase) given the low capacity utilization rates, to meet the high demand created by insurance. 3 Private health care provider State department of health New healthcare facility/service * PPP is done above, add another different one - Raghu
  7. 7. EFFICIENT ADMINISTRATION The scheme shall be administered by a central trust which is to be a well established private firm. (Apollo runs FHPL- family health plan limited, is paid for work to deliver efficient results) The government of India’s Insurance Development Regulatory Authority (IRDA) mandates that insurance schemes must have a Third Party Administrator (TPA) who will handle the schemes and the claims process, but will not be a part of the organization providing medical services, eliminating beaurecratic procedures and ensuring efficiency. When a doctor at a network hospital determines that a patient requires surgery, that doctor shall request TPA to authorize the surgery. In order for TPA to do this, the hospital must send the TPA an form, along with a copy of the ID card and insurance of the patient. TPA’s resident doctor makes a decision to authorize the operation at the prescribed fee. This is communicated to the hospital. Once the authorization is issued, the network hospital can proceed with the surgery and then submit the claim to TPA. This process is fairly simple and involves no administrative hassle for both the patient and the hospital, thus ensuring smooth and easy functioning. 4 Start Receive authorisation from hospital TPA checks UID and society referral letter Medical officer checks and fixes rates Letter of rejection Letter of approval NOT ELIGIBLE ELIGIBLE
  8. 8. SELF FINANCED INSURANCE SCHEME PLAN CONSTRAINTS STRATERGIES OUTCOMES STRATERGIES PRINCIPLES Dispersed rural farmers and informal labour Inadequate health infrastructure Weak administration Self Sustainable Choice EFFICIENT ADMINISTRATION AND SUSTAINABLE BENEFITS LARGE POPULATION COVER AND LOW PREMIUM Mobilization and reach through cooperatives, UIDs Networking hospitals and privatization, tax incentives Third party administrators Self Financed Insurance schemes and subsided schemes for BPL Market driven model, offers greater choice to beneficiaries
  9. 9. LIMITED COVERAGE - Drawback of the scheme is that it does not cover the poor farmers for all health related issues but only for outpatient care and all expenses connected with surgery . The things that are not covered (diagnostic tests, and medicines) can be a burden on poor families. CHOICE - A very important challenge is the fact that all of the subscribers may not exercise free choice in joining the scheme, thus limiting the scope and extent of reach. This is a self- financed health insurance scheme which owes its long term success only to the fact that individuals freely chose to join. This will not be as big a problem in future years as knowledge of the scheme will spread in rural areas through word of mouth from existing patients and through the network of district hospitals. Given that surgeries are generally required in life threatening situations, the scheme provides a degree of health security for this population that was impossible before, also since the insurance fund makes a profit in its operation, this surplus can be used to expand coverage.
  10. 10. The SELF FINANCED INSURANCE scheme which we propose, will solve the problem of financing, and this would expand the scope of benefits offered the scheme. Insurance cover brings financial security to the poor, and reduces the burden of financial expenditure on healthcare. The scheme is efficient because we are proposing a private third party administration which would enhance the quality and efficiency of health care delivery. Eliminating all middlemen and bureaucratic proceedings would simplify the system. Access Cost Quality IMPACT : ACCESSIBILITY - QUALITY AND QUANTITY - COST AND FINANCING - It is very much sustainable; what can work for a country like us is the law of large numbers. What the scheme does is to really empower the poor. They are free to access healthcare in any of these hospitals anywhere in the country with a smart card enabling the portability of entitlements. The biggest lesson perhaps is in terms of thinking out of the box, of evolving a MARKET DRIVEN MODEL FOR SOCIAL WELFARE. Markets as such may not work for the poor but market mechanisms can be used to bring about efficient delivery of services to the poor, and save the country `20,000 crore per annum, or more.
  11. 11.  Yeshaswini model – International The Yeshaswini Model of Health Insurance was introduced in rural Karnataka in 2003. The scheme covered about 1.6 million rural farmers in its first year of operation for a monthly premium of Rs.5 or Rs.60 per annum for all types of treatments through a network of private hospitals. It was deemed as a success covering 2.2 million people. It is today the world’s largest health insurance scheme for the poor. The success of this Market driven self financed insurance scheme idea thus, across the world stands as a testimony to its value and need. SUCCESS : Better healthcare and treatment outcomes Increased consumption Lesser decline in income and more productive use of assets. Lesser sale and mortgaging of assets Insurance  Vimo SEWA - Gujarat Is an integrated insurance program aiming to provide social protection for SEWA members at low premium, through an insurance organization in which they themselves are users.  RSBY – National Has been launched by the Government of India to provide health insurance coverage for Below Poverty Line (BPL) families .The RSBY covers 26 million families, providing health insurance to 100 million poor people. Nearly 3 million people have used these services. The scheme shows why technology and markets should be used to bring transparency and efficiency in delivering public services..
  12. 12. APPENDIX 1. Committee on Public Undertakings (2005-06), Health Insurance- A Horizontal Study, New Delhi, Ministry of Finance. 2. Sarosh Kuruvilla, Mingwei Liu,Priti Jacob, 2005, The Karnataka Yeshaswini Health Insurance Scheme For Rural Farmers & Peasants : Towards Comprehensive health coverage for Karnataka, Ithaca 3. ILO Subregional Office for South Asia, (2005-06), India: State Government Sponsored Community Health Insurance Scheme (Andhra Pradesh), Social Security Extension Initiatives in South Asia 4. ILO Subregional Office for South Asia, (2005-06), India: State Government Sponsored Community Health Insurance Scheme (Karnataka), Social Security Extension Initiatives in South Asia 5. Sonal Vij, February 2009, PPP: Hit or Miss, Indian Express 6. Dr.N.Devadasan, 2007, Community Health Insurance in India -An Overview, Institute of Public Health, Bangalore