A brief news report in a leading daily says that the government is contemplating introducing in the new Five-Year Plan beginning next year a health insurance scheme for all. People will pay for it depending on their income, with the government paying for those below the poverty line. The big thing is that it will cover not just hospitalisation expenses but also OPD treatment at listed (presume approved) hospitals.
An opinion cannot be formed on the basis of such a sketchy report but there is enough in it to pose a few questions. First, isn’t there supposed to be a public, that is publicly funded, health-care system under which anybody can walk into such a facility, be it a district hospital or a primary health centre (PHC), and get treated? To beef it up where it is the weakest, the National Rural Health Mission has been launched. For a long time, the poor villager will have no choice but to go to the PHC. In terms of funding and delivery, the two systems (existing and proposed) will be similar as far as treatment for poor people (those below the poverty line) is concerned. Those at the top of the income heap already go in for fully privately funded health insurance to cover hospitalisation. They are unlikely to go in for the new system which will really be looking at the income groups in the middle.
Significant, those in the middle will pay premium according to their income. So, this will be a system in which the government subsidy will taper off as individual incomes rise. The second question is, don’t we have something called the income tax which is payable depending on what you earn and is progressive? Will it be simpler and save a lot of paperwork for the government to pay a single premium for all, which is equal to the entire cost of the scheme, and introduce a health insurance surcharge on the income tax payable?
I presume a universal health insurance scheme of the type being contemplated will cover pre-existing illnesses. It is not clear, but I also presume this scheme will have defined benefits, that is you can get care only up to a certain value, more only if you opt to pay a higher premium. The third question is, assuming there is a modest cost of care ceiling for the poor who pay no premium, what happens when an individual exceeds it? Does she then take herself out of the approved hospital (maybe private) and shift into a full-fledged government hospital where free health care is provided under the traditional government-supported system without a ceiling? If she is already in a government hospital approved for the universal insurance scheme, will it mean shifting from one ward (paying) to another (free)?
The whole point is, there is no substitute for the broad European system under which a strong public health-care system, paid for out of the taxes people pay, lives alongside private health cover which can be bought only by the well off who are unwilling to wait in the queue for an appointment with a consultant or for non-emergency hospitalisation. It is futile to think that to get over the inadequacy of the public health-care system in India, you need to adopt the American system under which the can is carried mainly by a health insurance system. The mess the American system is in and the additional costs imposed by the existence of health insurance companies should indicate which way the solution lies.
The system should save the amount a health insurance company spends on calculating premiums and selecting those who do not qualify (pre-existing illness). But we do need a way out of the current Indian situation where provision of public health care is either nonexistent (governments simply don’t have enough money) or of appalling quality (courtesy the nature of management and the work culture of the staff). An intermediate position (between the European and American) is to have, along with the public health system, private hospitals, built with private investment, treating patients under a national health insurance scheme (funded by a lumpsum premium paid by the government to cover costs) and getting reimbursed. The key institutional layer that can make this work is strong third party administrators who use extensive treatment protocols and indicative costs to keep track of spending.
It is important to note that this will be an additionality. The backbone of the system must, repeat must, be a well run and funded old-fashioned public health system that offers competition to privately provided health care and thereby keeps costs down. It is not that it cannot be done. The quality of the public health system in Kerala and Tamil Nadu is far different from the rest of the country, with Andhra Pradesh and Karnataka falling in between. In Kerala, the cost of private health care is kept low because of competition from public health care.
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One way of dividing responsibility is to keep primary health care, both in the countryside and urban slums, in the hands of the public health system, with secondary health care in urban and semi-urban cares being provided in good part by the new national health insurance system. The tertiary (research and referral) health-care responsibility has also to be largely borne by the public health system. With adequate government funding, these should become strong centres of research for dedicated academics (several AIIMSs around the country). This can be a practical hybrid to try out.