Will world's largest health insurance scheme benefit the poor?

32-Why-you-1 India is among the few countries in the world that have the highest share of out-of-pocket expenditure in total health financing | File

FM announces big health insurance scheme that will benefit about 50 crore people

In his budget speech earlier on Thursday, Finance Minister Arun Jaitley announced the government's flagship health protection scheme, that will cover 10 crore poor and vulnerable families, and stands to benefit approximately 50 crore people. The National Health Protection Scheme, it is being said, will be the world's largest scheme of its kind. 

The need for affordable healthcare in India can hardly be overstated—India is among the few countries in the world that have the highest share of out-of-pocket expenditure (OOPE) in total health financing.  

Experts such as Dr Anup Karan of Indian Institute of Public Health, Delhi say that out-of-pocket payment for health makes up for 70 per cent of the total health financing in India. "This means that an overwhelming part of the financial burden is borne by households themselves," he told THE WEEK. The government contributes just about 27-28 per cent of the total, and the rest 2-3 per cent is contributed by other agencies such as private insurance, charity organisations, CSR, etc, he said. 

But is insurance a good way to make healthcare affordable? Perhaps not, if one were to go by the success (or the lack of it) of the Rashtriya Swasthya Bima Yojana, the government's insurance scheme for in-patient care for the poor, that was launched in 2008. Several studies have suggested that the scheme, managed by public and private insurance companies, has failed to reduce the financial burden for the beneficiaries.  

One such study, 'Extending health insurance to the poor in India: An impact evaluation of Rashtriya Swasthya Bima Yojana on out of pocket spending for healthcare', was published in the Journal of Social Medicine in May last year. Authors of the study found that the scheme had not provided "any significant financial protection for poor households", based on NSSO data from 1999-2000 to 2011-12. 

The authors, including Dr Karan, Dr Winnie Yip, Department of Global Health and Population, Harvard University, and Dr Ajay Mahal, Nossal Institute for Global Health, University of Melbourne, also identified several reasons for the scheme's inability to benefit the poor.  

First, they say that those who enrolled may have been persuaded by providers to utilise in-patient services not covered by the scheme, or that members may have been "denied" the services by empanelled hospitals. The paper cites studies suggesting that hospitals tend to deny care to RSBY patients due to issues such as "delayed reimbursements".  

The coverage limit that the scheme provides—Rs 30,000—is low and that may have led to people not benefitting from it. "The survey data indicate that out of all households incurring inpatient OOP, approximately nine per cent in 2012 reported annual OOP of more than Rs 30,000, with average annual expenditure being in the range of Rs 75,000–80,000," the paper says.  

The authors also cite evidence suggesting that "health service providers ask families to purchase expensive drugs and diagnostics from elsewhere", thereby affecting their expenditure. Finally, they argue that in-patient out-of-pocket expenditure makes up for only a small proportion of the total expenditure (about 20 per cent) that households incur.  

Health insurance schemes, public health experts say, also tend to benefit private hospitals largely. In the list of empanelled hospitals under RSBY, more than 50 per cent lie in the private sector—of the 10,700 hospitals, more than 6,000 are in the private sector. In a study done by the state government, it was found that only four private hospitals were getting the major share of insurance money. 

However, Dr N. Devadasan, Co-founder and director, Institute of Public Health, Bengaluru, said that the government's move was a positive one in light of the fact that around 60 million Indians were pushed into poverty each year because of catastrophic medical expenses. "My concern, however, lies in the ways in which the government going to monitor the scheme. Unless there are robust mechanisms to do so, the danger is that the scheme will benefit hospitals and insurance companies," he said.

The problem with RSBY, he said, was precisely that. So while it worked well in a state such as Kerala, in Karnataka (until 2016) the scheme did not work because the labour department could not monitor it. As a result, insurance companies only ended up paying about 25-30 per cent in claims, out of the total money that they earned through the insurance premium. Information about empanelled hospitals was also not given out, and many ended up going to the wrong hospitals and paying up for it. "In Karnataka, RSBY is now managed by a trust, who has the necessary expertise to monitor it. Now, things are improving. It is not essential to involve only a private insurance company," he said. 

Also, it must be noted that in the budget of 2016-17, Arun Jaitley had announced a "new health protection scheme" that would provide a cover of upto Rs 1 lakh per family, with an additional upto Rs 30,000 for senior citizens of Rs 60 and above. The proposal for that scheme is still pending with the cabinet.

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