THE HEALING TOUCH :
Universalizing access to primary
Lavanya Choudhary, Raghu Seth
Pallavi Jain, Vikram Singh and
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
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.
Proportionate expenditure on healthcare (PWC report 2011-12)
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.
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.
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
Gets operated under
scheme for free
Admission for non-
Patient pays 30%
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.
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.
* PPP is done above,
add another different
one - Raghu
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.
checks and fixes rates
Letter of rejection
Letter of approval
SELF FINANCED INSURANCE SCHEME PLAN
CONSTRAINTS STRATERGIES OUTCOMES STRATERGIES PRINCIPLES
COVER AND LOW
Mobilization and reach
through cooperatives, UIDs
Networking hospitals and
privatization, tax incentives
and subsided schemes
Market driven model,
offers greater choice to
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
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.
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.
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.
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
Lesser decline in
use of assets.
Lesser sale and
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..
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