India’s healthcare ecosystem has evolved since the time of independence and is currently at a very critical juncture. There have been strides taken to address the idea of affordable and quality healthcare through various flagship programmes such as Ayushman Bharat PM-JAY. However, areas such as accessibility, absence of human power, accountability and the lack of awareness among the general population continues to hinder the progress of the overall health insurance ecosystem.
India suffers from the twin challenge of high prevalence of communicable disease and risk of premature deaths from Non-Communicable Diseases (NCDs). The overall healthcare spend in India is 4.2% of GDP (2018), lowest amongst the BRICS counties, while the global health care expenditure average amounts to approximately 10.2%. This is further exacerbated as the Government healthcare expenditure has largely been stagnant during the last 10 years (1.2% of GDP in 2018). This has resulted in high Out Of Pocket (OOP) spend on healthcare (65%). There is an urgent need to make quality healthcare accessible to all Indians along with sustainability for healthcare providers. Ayushman Bharat PM-JAY covers approximately 50 crore people (India’s poorest 4 0 %). States cover an additional 13-15 crore people under the own schemes. The Central Government schemes such as ESIC, ECHS, CGHS covers close to 15-18 crore people. Finally, around 12 crore people are covered through private insurance. This covers a totally of 90-94 crore people in the country. However, there is still a significant portion of the population that lacks health insurance.
Low health insurance penetration and the current COVID pandemic will increase the numbers of Indians falling into poverty on account of health expense. A large population does not have adequate health insurance coverage with only 3-5% of the population having retail insurance coverage. The healthcare expenditure is rising fast due to adoption of modern treatment practices.
To help improve coverage, the IRDAI recently issued new guidelines for medical insurance companies. There have been five key areas that have been addressed under these new guidelines. Coverage for telemedicine has now been included as a result of its rise in popularity during the post COVID world. It is imperative that medical cost associated to telemedicine be included under health plans offered by insures.
Other significant areas under the new guidelines issued include insurance providers can not reject a claim of a policy holder who has a paid a premium for 8 consecutive years unless fraud can be proven. Insurance providers must either settle or reject a claim within 30 days from the date of its receipt and if any delay arises if the insurance provider fails to decide on a claim within 30 days, it will be required to pay interest at a rate of 2% above the applicable bank rate.
Going forward all plans on achieving universalized health insurance for the entire population with a focus on secondary and tertiary care should hinge on four main pillars. The following approach could help healthcare providers utilize idle capacities in a sustainable manner.
• Segmented population with complementary public-private participation
• Affordable Product
• Scalability
• Standardization
An opportunity exists to increase participation and drive penetration through the combination of data science and behavioural science. ‘Nudge’ is a concept in behavioural economics that proposes positive reinforcement and indirect suggestions as ways to influence the behaviour and decision making of groups and individuals.
This approach to universalize health insurance coverage for all income segments needs to be driven by deploying nudge principles. Through the provision of incentives through 80D tax rebate and penalties for uninsured populations in this segment while making it mandatory to avail government services and benefits.
In the ongoing challenge of reforming health systems in order to achieve Universal Health Coverage, the funding and intricacies of the health systems financing is crucial. The increase in OOP expenditure along with the increasing costs of medical coverage requires greater health insurance coverage and penetration for the entire nation. It is imperative that we act immediately and ensure health coverage for all.
The article written by Mr Krishnan Ramachandran, Chairman, CII Taskforce on Health November 2020 issue of CII Economy Matters. Click here to read the full issue.