A new alphabet soup of schemes that is spicing up the government’s menu signals a sharp shift in the way health care will be dispensed to the mass of India’s 1.15 billion population.
Slowly but indisputably, the government is changing its role from being a provider of health facilities — a task it discharges poorly — to being a health facilitator. It is increasingly opting for health insurance schemes, paying in part, or whole, the premium for disadvantaged citizens while the risk is underwritten by private insurers.
Some of the schemes cover specific occupations, such as the textile ministry’s Health Insurance Scheme for Weavers (HISHW). The Rajiv Gandhi Shilpi Swasthiya Bima Yojana (RGSSBY) for artisans is run by the Development Commissioner for Handicrafts.
There is also the flagship Rashtriya Swasthya Bima Yojana (RSBY), which is being tried out in select districts of three states by the Ministry of Labour and Employment for families below the poverty line (BPL), and Niramaya from the Ministry of Social Justice & Empowerment for BPL persons with specified disabilities, among other schemes.
State governments, too, have launched a clutch of schemes to cover the poorer segments, the largest by Andhra Pradesh, which has insured its entire BPL population with an impressive technology-led intervention that ensures the poor get a range of benefits, from expensive cochlear implants and heart surgery to medical treatment for specified diseases.
“There is a growing preference for health insurance because governments see merit in it,” says Sanjay Pande, head of ICICI Lombard’s Financial Inclusion Solutions Group. “It’s about more efficient management, better risk-profiling and ensuring timeliness of payments.” ICICI Lombard has bagged the largest number of government schemes, not all of which have done well.
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The shift towards insurance, say sector watchers, is an indication that the government intends to keep just a nominal presence in tertiary and, perhaps, secondary care, leaving it to the private sector to meet the spiralling needs — and costs — of health care in the country.
For the insurance industry, it’s a welcome trend because it would finally usher in the boom times. Currently, health insurance accounts for business of just around Rs 4,000 crore in a general insurance basket worth Rs 30,000 crore, but the potential is huge. Only 14 per cent of the population is covered by health insurance, of which 12 per cent is under government and institutional cover.
But insurance is unlikely to correct the appalling deficit in India’s health spending, which is among the lowest in the world at just 1.1 per cent of GDP. Of this, more than 70 per cent of the expenditure is out of pocket payments by households, a cause for pushing many families into poverty and destitution, according to a World Bank study.
The only cause for cheer is the attention that the government is finally paying to primary health care. In 2005, it launched the National Rural Health Mission with a budget of Rs 6,700 crore to upgrade village and district health centres, recruit doctors, nurses and paramedical staff and train over 600,000 community health workers. This year’s budget is slightly over Rs 12,000 crore.
However, higher spending by itself will not be enough to tackle the challenges in a country where 2.1 million children under five years – that’s a fifth of the world’s total – died in 2006, according to a just-released report of Unicef.
Peter Berman, the World Bank’s lead economist on health, nutrition and population, told a health conference in Thiruvananthapuram earlier this year that pumping more money into the health sector would not improve services or be effective unless states came up with innovative strategies to meet the health needs of the people. This is simply because increased health allocations from the Centre are used to meet recurring expenditure on salaries and maintenance.
States are, indeed, coming up with innovations, but in most cases the initiatives rely on private companies to underwrite the risk. Possibly the only exception to this is Karnataka’s Yeshasvini Cooperative Farmers Health Scheme insurance, which does not have an insurance tie-up and relies on a third party administrator or TPA.
The brainchild of Devi Shetty, the well-known cardiac surgeon from Bangalore who launched it five years ago, Yeshasvini has been the inspiration for several such schemes across the country. However, not all these schemes have fared well, with a host of problems bedevilling their implementation. In Assam, Rajasthan, Punjab and Jammu & Kashmir, private insurance has burnt its fingers owing to faulty risk profiling, while governments have failed to realise their objectives largely because of poor monitoring.
The only state to have come up with a truly innovative response is Andhra Pradesh with its trail-blazing Rajiv Aarogyasri— a hybrid model that brings together private insurance, government and the medical community in a health care initiative that provides the most comprehensive benefits to the maximum number of people. The scheme has in just 15 months covered the BPL population at extremely competitive rates and every other state is now trying to replicate it.
“The future of health care is not going to be an extension of the past,” predicts Dr Shetty. “India will dissociate the health care expenses from the taxpayers' money by becoming a health insurance provider rather than a provider of health care.”
The private sector, too, is latching on to the idea. Last month, Tata Steel asked Dr Shetty to start a health insurance scheme for the 1.5 million people living in Jamshedpur, the first time an entire city will be covered by a single scheme.
But huge problems lie ahead – for government, insurance companies and the beneficiaries.