Health Insurance Policy - India

HEALTH INSURANCE POLICY GROUP 6, BC2 PRESENTATION TISS, MUMBAI

INTRODUCTION 

India currently spends about 6% of its GDP on health care.

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Out of this more than 70% is “Out of pocket expense.”

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Despite such high share of individual expenditure, provision of health care not satisfactory.

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More than 40% of hospitalized Indians have to borrow or sell assets to meet hospitalization costs.

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Around 25% of hospitalized Indians fall below poverty line in a single year as a result of hospitalization expenses, causing a rise of 2% in proportion of poor population.

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Therefore, urgent need for alternative mechanism for meeting health care needs of poor in India.

Table 1: Estimate of total health expenditure in India (1990-91)

PUBLIC SECTOR

Sub Total

5,779

68.8

21.5

1.3

Sub Total

21,042

250.5

78.5

4.7

TOTAL

26, 821

319.3

100.0

6.0

PRIVATE SECTOR

Centre Municipalities External aid State Out-of-pocket Private employers ESIS contributions Other sources

Break up of GDP spending     

Total GDP spent on health care Private sector spending Out of pocket expenditure’ Contributed by private employers & NGO Public sector spending

- 6% - 4.7% - 4.5% - 0.2% - 1.3%

COMPARISON OF HEALTH CARE FINANCING WITH SOME OTHER COUNTRIES Govt.

Private Enterprises

Individual/Household

Per capita healthcare expenditure (in US$)

INDIA

21%

7%

72%

23

USA

44.1%

39.3%

16.6%

4187

UK

36.9%

0

3.1%

1303

UGANDA

35.1%

16.7%

48.2%

14

- Source: World Health Report, WHO Geneva, 2000

Health Insurance 

Definition

 

Individuals or families pay when they are healthy and able to pay and when affected by illness, health insurance fund used to finance their health care needs.

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Some important values of Health Insurance are:   

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Some risks that are peculiar to health insurance:   

TYPES OF HEALTH INSURANCE

1.

Social Health Insurance:

2. Community Health Insurance:

3. Private Health Insurance:

HISTORY OF HEALTH INSURANCE IN INDIA 

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

Present state of health insurance in India

Residence

% covered by scheme

ESIS

CGHS

Community Health

Other employee based

Medical Reimbursement

Privately Purchased

OBJECTIVES 

To improve the equity, efficiency and quality of health care distribution and services.

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To develop an alternative mechanism for healthcare funding to cater the need.

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To bring more people under the purview of health insurance under different schemes so that health care is accessible to all irrespective of their paying capacity.

CGHS

ESIS

CENTRAL GOVERNMENT HEALTH INSURANCE SCHEME

Central Government Health Insurance Scheme  The Central Govt. Health Scheme was initially started in New Delhi in 1954.  Provides comprehensive health care to the CGHS beneficiaries in India.

FEATURES 

CGHS covers Central Government employee (existing/retired), autonomous, semiautonomous and semi-government organizations. It also covers Members of Parliament, governors and accredited journalists .

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Contributions range from Rs.15 to Rs.150 per month for card holder.

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The number of cardholders currently is about 10 lacs with the total number of beneficiaries being around 43 lacs.

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Re-imbursement facility is available.

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CMO/In-charges can directly refer the beneficiaries for services which are not available under government settings. Cities of Operation: Allahabad, Ahmedabad, Bangalore, Bhubhaneshwar, Bhopal, Chandigarh, Chennai, Delhi, Dehradun, Guwahati, Hyderabad, Jaipur, Jabalpur, Kanpur, Kolkata, Lucknow, Meerut, Mumbai, Nagpur, Patna, Pune, Ranchi, Shillong, Trivandrum and Jammu.

DISADVANTAGES 

Criticised for quality and accessibility.

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Access to specialist consultants done usually without any referrals.

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Long waiting periods.

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Significant out of pocket costs of treatment.

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Inadequate supplies of medicines and equipment.

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Inadequate staff and conditions that are often unhygienic.

NEW MODIFICATIONS 

The long standing demand from Central Govt. pensioners residing in non CGHS areas for medical services at par with those available to Central Govt Employee; The Govt. of India proposes a new scheme called Central Government Employees & Pensioners Health Insurance Scheme (CGEPHIS).

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This scheme offers choice to select the best available health facilities of the Central Government employee (existing/ retired) in their close proximity. In addition to the coverage offered under a standard medical insurance policy, the following is also be covered under CGEPHIS:  Pre-existing diseases  Maternity benefit  Day-care coverage for all diseases  New-born babies  Pre and Post hospitalization cover of 30 days and 60 days respectively  Domiciliary Hospitalization

RECOMMENDATIONS 

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The option of Deductibles (Amount equal to their grade pay in cases of hospitalized illness) to be introduced for the permanent employees earning as per PB 3 (Basic pay Rs. 15600-39100 with grade pay Rs. 6400). All contractual employees working under any self-regulatory bodies formed under directives of central govt. are to be covered under CGHS/CGEPHIS. All Contractors/Tender alliances will have to sign a contract that they will direct all their (permanent/contractual) employees. A special fund to be created (20% by NRHM, 10% by the concerned state Govt. and 70% by Voluntary organizations/NGOs/Groups expressing interests, of which not more than 70% may be obtained by an extra amount of cess of no not more than 0.0005% on every transaction that takes place in equity market and mutual fund ) for floating a new health scheme like CGEPHIS in centre for all permanent regular, temporary regular and contractual workers employed under the 8 Empowered Action Group States, 8 North Eastern States, Himachal Pradesh and Jammu & Kashmir.

Features Covers  Power using non-seasonal factories and employing ten or more persons.  Non-power using non-seasonal factories and establishments employing twenty or more persons.  The existing wage-limit for coverage under the Act, is Rs.10,000/- per month (with effect from 1-10-2006). 

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Covers about 84 lakhs insured persons and about 354 lakhs beneficiaries.

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The employers and employees contribute 4.75 percent and 1.75 percent respectively of their wages.

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Country’s largest medical infrastructural facility under one umbrella.

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The most affordable system with the lowest contribution rate for multiple health insurance benefits.

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Only health insurance scheme that offers full medical care to workers and their dependants without any ceiling on individual expenditure.

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Offers a special package of full medical care to retired/disabled insured persons for self and spouse for a nominal contribution of Rs. 120/- per annum.

Area of operation: All the states except Nagaland, Manipur, Tripura, Sikkim, Arunachal Pradesh and Mizoram. COVERAGE (As on 31st March 2006) No. of Insured Person family units

91,48,605

No. of Employees

84,00,526

Total No. of Beneficiaries

3,54,96,589

The section 46 of the Act envisages following six social security benefits :(a) Medical Benefit (b) Sickness Benefit(SB) > Extended sickness Benefit(ESB) > Enhanced Sickness Benefit (c) Maternity Benefit(MB) (d) Disablement Benefit > Temporary disablement benefit(TDB) > Permanent disablement benefit(PDB) (e) Dependants’ Benefit(DB) (f) Funeral Expenses An interesting feature of the ESI Scheme is that the contributions are related to the paying capacity as a fixed percentage of the workers wages. Cash Benefits are disbursed by the Corporation through its Local Offices LOs/ Mini Local Offices (MLOs)/Sub Local Offices SLOs)/pay offices, subject to certain contributory conditions. In addition, the scheme also provides some other need based benefits to insured workers. These includes : (i) Rehabilitation allowance (ii) Vocational Rehabilitation (iii) Unemployment Allowance (Under Rajiv Gandhi Shramik Kalyan Yojana)

Recommendations 

Improve services provided by hospitals.

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Ensure the drugs availability.

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Reduce the waiting time period in hospitals.

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Training to improve motivation of ESIS personnel.

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Workshop to improve awareness of ESIS procedures among employers.

PRIVATE HEALTH INSURANCE  Started in 1999 as Mediclaim  Ensure the user for access to health care when they need it.

Scenario 

In 2001, there were 7.8 million persons covered under Mediclaim. The subscribers are usually the middle and upper class, especially as there is a tax benefit in subscribing to Mediclaim.

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The standard Mediclaim policy covers only hospital care and domiciliary hospitalisation benefits. Most medical conditions are reimbursed though there are important exclusions. These include – pre-existing diseases, pregnancy and child birth, HIV-AIDS, etc. Traditionally only reimbursement insurance is provided, though the companies have tried a third payment system with TPAs. Hospitals with more than 15 beds and registered with a local authority can be identified as providers.

Components         

Government Health providers Distributor/agents to distribute the products Insurance products TPA’s Insurance Company Regulators and regulations Employers Community

Major Providers ICICI Prudential Life- 22.1%  Bajaj Allianz- 13.8%  SBI Life- 9.8%  Reliance Life- 8%  Max New York- 8% 

Strengths of the Mediclaim policy 

The only voluntary health insurance policy in the country currently, with about 8 million subscribers.

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Provides protection against catastrophic health expenditure.

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Easily available in most insurance companies.

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Is being modified to make it customer friendly.

Drawbacks of Mediclaim 

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Most of the insurance companies are wary about selling health insurance as they do not have the data, the expertise and the power to regulate the providers. Problems of reimbursement ranging from long delays to partial reimbursements. There are also reported fraud and manipulation by clients and providers. The monitoring systems are weak. The benefit package needs to be modified to suit the needs of the customers. Exclusions go against the health system logic of covering risks. Lastly, the reimbursement method of payment is highly unpopular among the customers. The experiment with TPAs appears to have been unsuccessful and the reasons for this needs to be studied

IRDA Insurance Regulatory and Development Authority Set up by the Parliament through IRDA act 1999

Mission: To protect the interests of the policy holders, to regulate, to promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.

Suggested Recommendations  

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Flexible premiums schemes. Diseases like Tuberculosis should be considered as exception so as to cover OPD basis reimbursement of the treatment cost for special cases. Limit exclusions for pre-existing conditions. For eg. STDs, AIDS. Exclusions for pre existing conditions can be made valid for not more than 1 year. Formulating innovative schemes for inclusion of maternity hospitalization. It will help to facilitate institutional deliveries and hence reducing IMR and MMR.

Contd…Suggested Recommendations 

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Inclusion of reimbursement plans for Homoeopathic IPD level treatment in exceptional cases. Create public awareness about benefits of insurance. Discourage insurance for selective diseases to broaden the coverage. Encourage health insurance for specially vulnerable population.

COMMUNITY HEALTH INSURANCE SCHEME A not-for-profit insurance scheme that is primarily aimed at the informal sector (BPL and unorganized) and formed on the basis of collective pooling of health risk, and in which the members participate in its management.

Current scenario 

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Population Included 

Tribal population

ACCORD, Karuna Trust, RAHA

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Dalits

Navsarjan Trust

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Farmers

MGIMS, Yeshasvini, Buldhana, VHS

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Women of SHG

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Self employed Women

BAIF, DHAN SEWA

Target population ranges from a few thousands to 25 lakhs Premium ranges from Rs.60 to Rs. 100 Unit of enrollment - individual/family

AIMS 

To provide accessible and affordable health care to community.

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To provide Quality Health care services to community.

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To legalize the current CBHI scheme.

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To create awareness in community about CBHI.

Guidelines 

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Need identification 

People are unable to afford healthcare.

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High Medical costs cause indebtedness and poverty

Identification of suitable organizations to Manage and Administer 

Credible

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Trustworthy

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Registered

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Familiar to local community

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Able to manage the accounts and funds

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Have ability to market the product

Contd…Guidelines 

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Target Community identification  Self Help Group  Cooperative society members  Shop keepers associations  Drivers Association Identifying the Providers  Be according to the community needs  Should be acceptable and reliable  Registered hospitals  Should ready provide Cashless or credit based service

Contd…Guidelines 

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Identifying the insurer  Registered.  Ready to provide cashless service.  Ready to serve community needs – minimal exclusion of disease.  Less documentation. Benefit package Definition  Designed as per the requirement of community.  Coverage of OPD and IPD service considered.  Minimal exclusion of disease.

Contd…Guidelines 

Fixing and collecting the Premium Constructed according to socio-economic status of purchaser. Premium can be collected either in cash or in kind e.g. grains. Collection of premium within specified time period in a year. 

RISK MANAGEMENT 

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Adverse Selection 

Enroll large number of participant.

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Mandatory enrollment for group and family.

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Waiting period.

Moral Hazards 

Preauthorization by panel doctor.

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Comprehensive referral system.

Preventing Fraud 

Set committee to monitor functioning.

Committee member must include NGO member, provider member, insurer member and community member. 

 Design Model for CHI Insurance Company

Provider Model Eg: ACCORD, RAHA

Eg: DHAN, Yeshasvini

Premium

Premium

Mutual Model

Provider

Care

Community

Provider

Reimbursement Reimbursement

Premium

Insurer (NGO)

Community

Linked Model

Eg: BAIF, Buldhana, Karuna Trust, SEWA

Any one of above three models can be implemented in efficient manner as per community need and strength and weakness of implementing organizations.

RECOMMENDATIONS 

Provide subsidy or start up cost of fixed nature.

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To provide subsidy for recurring Administrative expenses.

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Subsidize premium for poor member.

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Financing cost of generating health awareness among public.

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Strengthening supply of health care service.

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Providing legal status to CBHI.

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Link CBHI to promote certain desirable behavior e.g. In AP Arogya Raksha scheme links family planning with health insurance. To reduce public subsidization of services for those who have ample ability to pay. E.g. Apollo Hospital gets public loan, expensive tertiary level public hospitals get subsidized. Relaxation in IRDA norms for CBHI.

OTHER ASPECTS 

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Empowerment: Community should be involved in designing, managing and monitoring the scheme. Employment opportunity for local community members. Scaling up of the scheme.

Lessons from Public Health Insurance systems world over 

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Universal coverage is possible only through a mandate that every individual purchase a basic insurance plan. Harbouring a private sector as a necessary parallel financing and provision system thus complimenting the services provided by public health insurance. Centralised risk pooling between various providers for equalising risk. Single Comprehensive health benefit package covering most necessary services including alternative health care services. Regulations to fix the rates for all possible medical expenses .

Contd…Lessons from Public Health Insurance systems world over 

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Personal insurance than employment based insurance. Right to emergency treatment for all citizens and prompt reimbursement of expenses. Reliance on Information technology- reduces processing time, eases periodic monitoring and saves administrative costs. Ensure quality of care and respect patient freedom. Strengthening the gatekeepers and their role- Fortifying primary care and paramedical personnel and initiatives through them.

Presented by: Dr. Irvind Jote Kaur Dr. Nikhil N. Yadav Dr. Srinivas P. Kodiyath Mr. Anuj Anthony Ekka Dr. Parag Balu Chaudhari Dr. Sujay Bishnu Mr. Lalhmangaih Hauzel Dr. Rajesh Kamath Dr. Vinay Preet Kaur Dr. Lord Wasim Reza Dr. Sandeep A. Chavan

THANK YOU FOR YOUR KIND ATTENTION!