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Health Insurance

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  • this very good work and please can you send me a copy please:
    safulgu@gmail.com
    thank you in advance
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    • 1. R. Sidharth Health Insurance in IndiaHealth Insurance in India –– devising an appropriate modeldevising an appropriate model
    • 2. Agenda Healthcare and health insurance in IndiaHealthcare and health insurance in India Macroeconomic trends and indicesMacroeconomic trends and indices Current schemes and coverageCurrent schemes and coverage Global experience and the objectives of health insurance reformGlobal experience and the objectives of health insurance reform Devising an appropriate model for IndiaDevising an appropriate model for India Segmenting the marketSegmenting the market Framework for reformFramework for reform Managing the reform processManaging the reform process
    • 3. Health care spend in India is considerably lower than that in other countries . . . Access to health careAccess to health care service providers andservice providers and availability ofavailability of physicians is one partphysicians is one part of the issueof the issue Financing for healthFinancing for health care is the othercare is the other aspect of the issueaspect of the issue 20042004 USUS UKUK MexicoMexico BrazilBrazil ChinaChina IndiaIndia Life expectancyLife expectancy (avg. # of years)(avg. # of years) 77.477.4 78.378.3 72.672.6 71.471.4 72.572.5 64.064.0 # of Physicians# of Physicians per 1,000 peopleper 1,000 people 2.72.7 1.91.9 1.71.7 1.21.2 1.71.7 0.40.4 HealthcareHealthcare spendspend (USD per(USD per capita)capita) 5,3655,365 3,0363,036 336336 236236 6262 3232 HealthcareHealthcare spendspend (% of(% of GDP)GDP) 13.213.2 8.48.4 5.55.5 7.57.5 5.05.0 5.35.3 Source: Economist Intelligence Unit. KPMG. 2004.
    • 4. The World Health Organization has defined possible approach to financing of health expenditure . . . Tax-based and out-Tax-based and out- of-pocket expensesof-pocket expenses are direct expenseare direct expense related outlaysrelated outlays Health insuranceHealth insurance involves a fund poolinvolves a fund pool for future health carefor future health care External fundExternal fund sources rely onsources rely on donations, grantsdonations, grants Total healthTotal health expenditureexpenditure PublicPublic PrivatePrivate SocialSocial securitysecurity ExternallyExternally fundedfunded Tax-fundedTax-funded PrivatePrivate health ins.health ins. ExternallyExternally sourcedsourced Out-of-Out-of- pocketpocket Using central / stateUsing central / state revenues for healthrevenues for health Compulsory premiumCompulsory premium contributions to healthcontributions to health Channeling loans,Channeling loans, grants etc. to healthcaregrants etc. to healthcare Payments to health carePayments to health care providers for servicesproviders for services Premium contributionsPremium contributions towards health supporttowards health support Channeling donationsChanneling donations etc. to healthcareetc. to healthcare
    • 5. The proportion of insurance in health care financing in India is extremely low . . . Public spending inPublic spending in health care is veryhealth care is very low at 17% andlow at 17% and the Nationalthe National Health Policy hasHealth Policy has recognized thisrecognized this More than 86% ofMore than 86% of healthcarehealthcare financing isfinancing is throughthrough unplanned for,unplanned for, non-contributorynon-contributory spendingspending 0% 100% Source of finance Means of finance 86% from out-of- pocket expenses 83% from private sector spending Health care financing in India 2002, % Source: WHO. CII-McKinsey. 2003.
    • 6. The key issue related to financing of health care in India revolves around the lack of adequate insurance . . . Limited coverageLimited coverage Only around 10% of the population is covered through healthOnly around 10% of the population is covered through health financing schemesfinancing schemes Geographic spread in terms of health care facilities and financingGeographic spread in terms of health care facilities and financing awareness is limitedawareness is limited Selection criteria by suppliers often restricts the poor (and moreSelection criteria by suppliers often restricts the poor (and more likely to be ill) from affordable pre-payment schemeslikely to be ill) from affordable pre-payment schemes Moral hazard and Adverse selectionMoral hazard and Adverse selection Claims ratios for Mediclaim and Jan Arogya policies have been inClaims ratios for Mediclaim and Jan Arogya policies have been in the range of 120 – 130%the range of 120 – 130% System leakagesSystem leakages Provider malpractices leading to over-charging or pre-selection /Provider malpractices leading to over-charging or pre-selection / selective recommendationselective recommendation Lack of universal schemesLack of universal schemes Limitations in terms of coverage of illnesses as well as treatmentLimitations in terms of coverage of illnesses as well as treatment optionsoptions Alternative therapies often not considered / included underAlternative therapies often not considered / included under insuranceinsurance The extent ofThe extent of coverage as well ascoverage as well as the type of coveragethe type of coverage are the key issuesare the key issues related to insurancerelated to insurance penetrationpenetration Some companiesSome companies have put-off plans forhave put-off plans for India due to potentialIndia due to potential leakages in theleakages in the systemsystem
    • 7. The experience of different countries suggests that private insurance has an important role to play in overall health care . . . Source of health insurance in countries with targeted, non-Source of health insurance in countries with targeted, non- universal access to health care coverageuniversal access to health care coverage e.g. Netherlands restricts public health coverage to an incomee.g. Netherlands restricts public health coverage to an income thresholdthreshold Private health insurance has enhanced access to timely hospitalPrivate health insurance has enhanced access to timely hospital carecare e.g. In UK, waiting time reduction and private health insurancee.g. In UK, waiting time reduction and private health insurance coverage have led to a virtuous cyclecoverage have led to a virtuous cycle Private health insurance has increased service capacity and supplyPrivate health insurance has increased service capacity and supply by injecting financial resources up frontby injecting financial resources up front e.g. In the US, private health insurance has financed hospitals in termse.g. In the US, private health insurance has financed hospitals in terms of doctors and facilities through the HMO set-upof doctors and facilities through the HMO set-up Private health insurance increases choice (provider, benefits, cost-Private health insurance increases choice (provider, benefits, cost- sharing) for the individualsharing) for the individual e.g. In Australia, private health insurance offer the option of access toe.g. In Australia, private health insurance offer the option of access to spare capacity and elective care in non-public institutionsspare capacity and elective care in non-public institutions Private healthPrivate health insurance has led toinsurance has led to expansion of healthexpansion of health coverage andcoverage and expenditure in otherexpenditure in other countriescountries However, regulationHowever, regulation as well as the role ofas well as the role of public healthpublic health expenditure cannotexpenditure cannot be ignoredbe ignored
    • 8. Health insurance typically helps a patient manage health care costs beyond a threshold amount through pooling . . . As a contingent claimAs a contingent claim instrument, healthinstrument, health insurance is aninsurance is an efficient way to helpefficient way to help individuals prepareindividuals prepare for health carefor health care Insurer payment (from premium pool) Individual payment Deductible Co-insured Health care expenditure (INR) Patient expenditure (INR) Stop-loss level
    • 9. As a result, most countries have adopted a mix of public and private role for health care funding . . . PHE*PHE* (% of total)(% of total) PHE*PHE* covercover (%)(%) Nature of PHE* coverNature of PHE* cover PHI**PHI** (% of total)(% of total) PHI**PHI** covercover (%)(%) AustraliaAustralia 68.968.9 100100 All permanent residents asAll permanent residents as enrolled under MediCare (tax-enrolled under MediCare (tax- financed)financed) 7.37.3 44.944.9 40.340.3 FranceFrance 75.875.8 99.999.9 Social security systemsSocial security systems covering all residentscovering all residents 12.712.7 86.086.0 GreeceGreece 56.156.1 100100 All population (financedAll population (financed through tax and healththrough tax and health insurance contributions)insurance contributions) N.A.N.A. 10.010.0 MexicoMexico 47.947.9 5050 Formal worker section andFormal worker section and government employeesgovernment employees Voluntary system for othersVoluntary system for others 2.52.5 2.82.8 PortugalPortugal 68.568.5 100100 All permanent residents asAll permanent residents as enrolled under NHS (tax-enrolled under NHS (tax- financed)financed) 1.51.5 14.814.8 UKUK 80.980.9 100100 All permanent residents asAll permanent residents as enrolled under NHS (tax-enrolled under NHS (tax- financed)financed) 3.33.3 10.010.0 USUS 44.244.2 24.724.7 Above 65 or disabledAbove 65 or disabled (MediCare), poor (Medicaid)(MediCare), poor (Medicaid) and poor children (SCHIP)and poor children (SCHIP) 35.135.1 71.971.9 * PHE: Public health expenditure ** PHI: Private health insurance Source: OECD. KPMG. 2004.
    • 10. The approach to health financing / insurance also varies across different segments of the population covered . . . The right approach toThe right approach to insurance for specificinsurance for specific segments may varysegments may vary across countriesacross countries The insuranceThe insurance approach must beapproach must be designed arounddesigned around differences indifferences in segments of thesegments of the population –population – including mindsetsincluding mindsets Approach to health insurance forApproach to health insurance for different segments of thedifferent segments of the populationpopulation Health insuranceHealth insurance coveragecoverage (% of population)(% of population) 19701970 20002000 KoreaKorea Formal sector: Social insuranceFormal sector: Social insurance Informal sector: Social insuranceInformal sector: Social insurance Poor / non-working: SocialPoor / non-working: Social insuranceinsurance 13%13% 96%96% BrazilBrazil Formal sector: Private insuranceFormal sector: Private insurance Informal sector: Government coverInformal sector: Government cover Poor / non-working: GovernmentPoor / non-working: Government covercover 40%40% 94%94% ThailandThailand Formal sector: Social insuranceFormal sector: Social insurance Informal sector: Community schemeInformal sector: Community scheme Poor / non-working: N.A.Poor / non-working: N.A. 2%2% 60%60%Source: CII-McKinsey. IDFC. 2003.
    • 11. Global experience provides some key learning on health insurance policy design . . . Balancing risk-spreading and incentives offeredBalancing risk-spreading and incentives offered Balancing the need to encourage health insurance against moralBalancing the need to encourage health insurance against moral hazard (individuals choose more care) and principal-agenthazard (individuals choose more care) and principal-agent problems (providers supply more care)problems (providers supply more care) Integration of insurance and health care provisionIntegration of insurance and health care provision Managing doctor loyalties with patient and insurer under managedManaging doctor loyalties with patient and insurer under managed carecare Approach to competition and portabilityApproach to competition and portability Balancing the need for consumer choice against adverse selectionBalancing the need for consumer choice against adverse selection (sick preferring more generous plans)(sick preferring more generous plans) Focus on health as against financing of health careFocus on health as against financing of health care The over-riding objective should be to improve health rather thanThe over-riding objective should be to improve health rather than the financing of health care servicesthe financing of health care services Various economicVarious economic studies havestudies have suggested some keysuggested some key learning aroundlearning around health insurancehealth insurance policy designpolicy design
    • 12. There are some key considerations related to formulation of appropriate approach to health insurance in India . . . Differential approach by segments of populationDifferential approach by segments of population Formal sector (government and non-government workers)Formal sector (government and non-government workers) Self-employed segmentSelf-employed segment Poor / Unemployed segmentPoor / Unemployed segment Scope and structure of health insurance coverScope and structure of health insurance cover Product and segment coverageProduct and segment coverage Portability across service providersPortability across service providers Cap on premium amountsCap on premium amounts Risk-adjusted approachRisk-adjusted approach Nature of fiscal incentivesNature of fiscal incentives Subsidies and tax incentives for health insurance as against healthSubsidies and tax incentives for health insurance as against health carecare The approach toThe approach to health insurancehealth insurance in India must takein India must take into accountinto account specificspecific considerationsconsiderations
    • 13. As a result, the traditional model for health insurance needs to change . . . The traditional modelThe traditional model has focused onhas focused on insurers orinsurers or intermediariesintermediaries working with theworking with the employed segmentemployed segment only as the front-endonly as the front-end IndividualIndividual InsurerInsurer ProviderProvider Government /Government / EmployerEmployer Fixed feesFixed fees ServiceService chargescharges VoluntaryVoluntary premiumspremiums MandatoryMandatory premiumpremium MandatoryMandatory premiumpremium Costs up toCosts up to deductibledeductible Could be allied toCould be allied to insurer or be ainsurer or be a governmentgovernment approvedapproved providerprovider IntermediariesIntermediaries TPAs etc.TPAs etc. Financial flows Service flows
    • 14. . . . to one that allows the flexibility to serve different segments of the population, in an efficient manner . . . Health insuranceHealth insurance providers may needproviders may need to align themselvesto align themselves to overall health careto overall health care including financing,including financing, preventive healthpreventive health care and healthcare and health outreach in order tooutreach in order to grow coveragegrow coverage Regulations andRegulations and policy must bepolicy must be designed todesigned to encourage thisencourage this Self-employedSelf-employed populationpopulation SalariedSalaried populationpopulation Unemployed /Unemployed / PoorPoor Government /Government / EmployersEmployers GovernmentGovernment PrivatePrivate hospitalshospitals PublicPublic hospitalshospitals ClinicsClinics ChemistsChemists Insurers / TPAs / NGOs:Insurers / TPAs / NGOs: Processing activities and claims settlementProcessing activities and claims settlement Insurers / TPAs / NGOs:Insurers / TPAs / NGOs: Enrolments and actuarial assessmentEnrolments and actuarial assessment Health care Health insurance Insurers / TPAs / NGOs:Insurers / TPAs / NGOs: Community health facilities / health educationCommunity health facilities / health education EmployerEmployer supportedsupported health insurancehealth insurance GovernmentGovernment sponsoredsponsored health insurancehealth insurance VoluntarilyVoluntarily funded healthfunded health insuranceinsurance CommunityCommunity health schemeshealth schemes
    • 15. Community-based initiatives have been particularly cost- efficient in reaching out to the poor / unemployed segments . . . TypicalTypical administrative costsadministrative costs associated withassociated with health insurance arehealth insurance are around 20% ofaround 20% of premium but couldpremium but could fall to 5 – 6% underfall to 5 – 6% under CBHIsCBHIs CBHIs must howeverCBHIs must however be designed to targetbe designed to target specific segmentsspecific segments Role in Community-based health initiative (CBHI)Role in Community-based health initiative (CBHI) HealthHealth intermediaryintermediary HealthHealth managermanager HealthHealth providerprovider Example ofExample of some CBHIs /some CBHIs / NGOsNGOs SEWA /SEWA / ACCORDACCORD TribhuvandasTribhuvandas FoundationFoundation Sewagram /Sewagram / VHSVHS Nature ofNature of health riskhealth risk coveredcovered Inpatient, non-Inpatient, non- health relatedhealth related InpatientInpatient Inpatient,Inpatient, OutpatientOutpatient Access toAccess to benefitsbenefits After certainAfter certain periodperiod At time ofAt time of dischargedischarge At time ofAt time of utilizationutilization AdministrativeAdministrative costscosts ModerateModerate LowLow LowLow Nature of poolNature of pool formationformation Occupation /Occupation / geography-geography- basedbased Occupation /Occupation / geography-geography- basedbased Geography-Geography- basedbased Source: ICRIER. KPMG. 2003.
    • 16. As insurers get more aligned to overall health services, there may be a shift to a ‘virtual’ managed care system . . . The nature ofThe nature of insurance policy ininsurance policy in place drives the roleplace drives the role of key stakeholdersof key stakeholders attached to theattached to the industryindustry IndemnityIndemnity Managed CareManaged Care PPOPPO IPA /IPA / NetworkNetwork HMOHMO Group /Group / Staff HMOStaff HMO Choice ofChoice of providersproviders PatientPatient PatientPatient Gate-Gate- keeper (inkeeper (in network)network) Gate-Gate- keeper (inkeeper (in network)network) Payment ofPayment of providersproviders Fee-for-Fee-for- serviceservice (FFS)(FFS) DiscounteDiscounte d FFSd FFS CapitationCapitation SalarySalary Cost-sharingCost-sharing ModerateModerate Low withinLow within network;network; high outhigh out Low withinLow within network;network; high outhigh out Low withinLow within network;network; high outhigh out Role of insurerRole of insurer Pay billsPay bills Pay billsPay bills FormForm networknetwork Pay billsPay bills FormForm networknetwork MonitorMonitor utilizationutilization ProvideProvide carecare Source: Harvard University. World Bank. 2002.Note: PPO – Preferred Provider Organization HMO – Health Management Organization
    • 17. Managing the reform process would require several infrastructural and market changes to be effected… Appropriate market segmentation, awarenessAppropriate market segmentation, awareness initiatives, product innovation, and incentivesinitiatives, product innovation, and incentives Easing of entry norms for specialist healthEasing of entry norms for specialist health insurance companiesinsurance companies Provider rating and credentiallingProvider rating and credentialling Centralised database for health insuranceCentralised database for health insurance experience statisticsexperience statistics Efficient back-office support for underwriting andEfficient back-office support for underwriting and claims processingclaims processing An appropriate healthAn appropriate health infrastructure is aninfrastructure is an essential pre-essential pre- requisite to healthrequisite to health insurance reforminsurance reform
    • 18. Contact detailsContact details R. SidharthR. Sidharth sidz4u@ymail.comsidz4u@ymail.com