Health Insurance

India has been able to make some significant increase in access to health care services in the last few decades. Initiatives such as National Rural Health Mission (NRHM), launched in 2005 which was further expanded through the National Urban Health Mission (NUHM) in 2013 had radically contributed to this. However, a vast portion of the population still struggles to get quality health care services and a huge chunk still remains largely dependent on private health care sector for treatment. While every year more than 7% of the population slides below poverty line due to an illness, many of the households also refrain from accessing health care services essentially because they cannot afford to bear the expenditure on treatment. The latest NSSO data clearly shows that there has been an increase in overall out of pocket spending on health care in last 10 years, despite the fact that access to health care has certainly increased. Out of pocket spending on health in the country at 60% is one of the highest in the world and the country’s spending on health care is still abysmally low at just about 1.2% of its GDP. To limit out of pocket expenditure (OoPE) on health care has thus become a major challenge for the country. Some states have taken significant initiatives to curb this expenditure by initiating free medicines and free diagnostics schemes and making similar other provisions. Tamil Nadu, Rajasthan and Kerala are often seen as successful models on this front. The schemes have been able to bring about significant relief to the patients seeking care from public health facilities by reducing OoPE on medicines and diagnostics, which constitutes about 70% of the overall OoPE on health care. Apart from that, states are also increasingly adopting health insurance model as a means to reduce OoPE and ensure Universal Health Coverage (UHC). However, how successful these models are and how effective they have been in reducing OoPE, has lately been an issue of great debate among public health experts and policy makers.

One of the nationwide health insurance schemes brought about by the central government was Rashtriya Swasthya Bima Yojana (RSBY) which was initiated under the Department of Labour initially but was later shifted to the Department of Health and Family Welfare. The scheme launched in the year 2008 originally only covered the BPL households, but was later expanded to cover selected unorganized sector workers. Apart from RSBY, several states initiated state specific health insurance schemes as well (such as Rajiv Arogyasri in Andhra Pradesh, Chief Minister's Comprehensive Health Insurance Scheme in Tamil Nadu, Rajiv Gandhi Jeevandayee Arogya Yojana of Maharashtra, Yeshasvini of Karnataka, Bhamashah Swasthya Bima Yojana of Rajasthan etc) most of them promising a wider range of health packages to the beneficiaries in comparison to the RSBY. These health insurance schemes started by the governments of different states shared certain features in common such as that of being exclusive in nature by targeting specific population groups as beneficiaries, focusing only on tertiary care treatment and heavily depending on private health care providers for service delivery.

The coverage through social health insurance was around 2% of the population in 2002 has now increased to about 15.2% in 2014. With the launch of National Health Protection Scheme, the coverage is going to further increase.

Penetration of Health Insurance in Different States of India

States % population covered under insurance % out patients treated in private facilities % in-patients treated in private facilities Per capita health spending*
Assam 2.6 43.1 12.6 823.30
Himachal Pradesh 9.3 57.8 22.9 1830.64
Uttaranchal 0.3 59.3 39.6 1230.42
Chhattisgarh 39.3 80.4 46.6 740.18
Gujarat 14.2 84.9 73.8 811.05
Rajasthan 22.6 66.3 36.4 737.46
Haryana 6.9 90.9 66.5 847.99
Jharkhand 3.8 85.1 45.7 428.15
Andhra Pradesh 62.8 87.4 73.8 1022.11
Karnataka 10.5 80.2 67.8 791.17
Madhya Pradesh 1.7 75.7 38.3 527.88
Maharashtra 7.2 83.8 74.1 674.49
Tamilnadu 21.8 68.7 61.1 849.17
Punjab 5.6 82.7 65.5 999.98
Bihar 6.2 91.5 44.6 348.45
Uttar Pradesh 4.2 87.5 59.3 488.46
Orissa 20.7 40.9 19.9 517.57
West Bengal 16.8 84.4 29.6 607.19
Kerala 39.5 69.0 66.1 1070.80
India 15.20 74.5 56.6 724.84

*Does not include central government expenditure
Source: India - Social Consumption: Health, NSS 71st Round : Jan - June 2014

A recent report by Brookings India provides interesting comparisons of health care expenditure related findings from the last two National Sample Surveys (2004 and 2014). The report has also drawn some analysis on the impact of health insurance schemes on OoPE. According to the report, while private health insurance in the country is largely limited to the richer urban households, the public insurance coverage is evenly distributed across all quintile groups. The report confirms that while there has been an increase in use of services associated with insurance, and in particular a significant increase in hospitalization, yet they have been ineffective in lowering health expenditures. The report emphasises that while people suffering from ailments are more likely to be treated if they are covered by insurance, but this does not ensure that they will not be forced to shell out money out of their pockets for add on services not covered under the package.

Health insurance schemes being executed by the central and the state governments have also been under the scanner of some public health experts and civil society groups for promoting irrational treatment practices and unnecessary hospitalisation with the motive of making more profits. Some public health experts have been trying to draw attention to this fact by establishing linkages between abrupt rise in hysterectomies, caesarean sections and other procedures with the introduction of health insurance schemes. There have also been concerns raised around inadequate mechanisms of monitoring of health facilities empanelled under the schemes, which leaves ample of scope for the service providers to exploit patients. Some of these schemes have also been criticised for having complex eligibility criteria making it an extremely cumbersome process for one to avail the benefits. Usually the patients are required to prove their eligibility by presenting documents and photo identities and only then the treatment is initiated. This often leads to delay in treatment. There are also evidences of exclusion of a large number of eligible patients who fail to prove their eligibility for the sheer reason of perhaps forgetting to carry their credentials in a hurry or just because they recently lost one of those documents and haven’t got it remade. Keeping documents safe is often a problem for households which live under poor and deprived settings. The challenges with health insurance in the country were also clearly highlighted by the High Level Expert Group (HLEG) constituted by the Planning Commission in the year 2010. The HLEG suggested focussing on strengthening primary health care system and revamping public health care facilities rather than depending on health insurance schemes.

All of this leads to a series of questions around public health insurance schemes in the country, answers to which need to be explored further through continuous deliberation and research. Some of the crucial questions which need to be answered are:

  • can health insurance be a preferred model for ensuring Universal Health Coverage (UHC) and eliminating out of pocket expenditure (OoPE) on health ?
  • is health insurance a financially viable option for the central and the state governments ?
  • are there other substitutes to health insurance schemes which can promise better outcomes at relatively lower or equal investments?
  • what constitutes a robust model of health insurance ? What are the “must have” features which cannot be compromised on?
  • how should the success of a health insurance scheme be assessed ? What are the essential outcomes expected and what are the deal breakers?
  • to what extent should the private providers be engaged in implementing a health insurance scheme ?
  • how to ensure that patient rights are not violated and that patients are not exploited ? How to create a robust monitoring system ?

To deliberate around the above questions, Prayas along with Jan Swasthya Abhiyan (JSA) organised a National Consultation on “Health Insurance as a Means for Universal Health Care: Understanding the Pros and Cons“ on 27th March 2017 at The Theme Hotel in Jaipur (Rajasthan). The consultation tried to dissect deeper into the above mentioned dimensions of health insurance through productive dialogue. The event had participation from about 60 eminent experts on health and health insurance, policy makers and government representatives, members of civil society organisations and academicians from different parts of India including states such as Karnataka, Chhattisgarh, Kerala, Maharashtra, Andhra Pradesh, Gujarat, Delhi and of course Rajasthan.