More a private sector primer than health-care pathway

Context: NITI Aayog recently published a road map document entitled “Health Insurance for India’s Missing Middle”.

Key points from “Health Insurance for India’s Missing Middle” report by NITI Aayog

• Extending health insurance to the ‘missing middle’(between the poor and the affluent): Through voluntary, contributory health insurance dispensed mainly by private commercial health insurers.
• Government subsidies will be reserved for the very poor within the ‘missing middle’ and only at a later stage of development of voluntary contributory insurance.
• Insurance will be dispensed largely by competitive commercial insurers: For hospitalisation insurance, the report proposes 
  • A model similar to the Arogya Sanjeevani scheme, with lower projected premiums of around Rs 4,000-Rs 6,000 per family per annum (for a sum insured of Rs 5 lakh for a family of five). 
  • There would be a standard benefit package for all, and the insured sum will be between Rs 5,00,000 and Rs 10,00,000. 
• Report acknowledges out-of-pocket OPD expenses comprise the largest share of expenditure on health care, and have a greater role in impoverishment of families.

Hindrance in pathway to universal health coverage (UHC) for India

• Excessive reliance on private sources for financing health care: UHC is elusive with few or no fiscal implications for the Government but current health policy is relying predominantly on private sources of financing health care. 
• Gargantuan informal sector where contributory health insurance can replete with problems.
• Policy defects: Further policy action like road map document entitled “Health Insurance for India’s Missing Middle” is vulnerable to  every vice that characterises conventional private insurance.
  • Report proposes a model similar to the Arogya Sanjeevani scheme that is a little different from commercial private insurance, except for somewhat lower premiums.
• Little penetration of free-of-cost government health insurance: for the poor in the country, despite a nearly two decade-long legacy.
• Absence of suitable government subsidies or regulation: Low premiums proposed on “Health Insurance for India’s Missing Middle “are achieved by reducing administrative costs of insurers without any accountability on part of government.
• Adverse selection of target groups while implementing health insurance scheme.
• Issues with out-patient department (OPD) care insurance coverage: which includes doctor consultations, diagnostics, medicines, etc.
  • OPD insurance is envisaged on a subscription basis, which means that insured families would need to pay nearly the entire insured sum in advance to obtain the benefits.
  • Heavy out-of-pocket expenditure on OPD care.
  • Individuals indifferent to most OPD insurance scheme, as it restrict choice of health-care providers.

Way forward

• Implementation of contributory social health insurance models: With significant levels of government subsidy to schemes; not-for-profit mode of operation; and some important guarantees for health.
• Proper checks and balances to regulate private insurers and a competitive model of insurance like Switzerland where 
  • Benefits are etched in legislation; basic insurance is mandatory and not-for-profit; cream-skimming and risk-discrimination are prohibited. 
• Policy action: Increasing public health spending to 2.5% of GDP by 2025 as envisaged in National Health Policy 2017.
  • Enrolment in groups to counter adverse selection in health insurance. 
  • Affordability of hospital insurance, and thereby, a possible willingness to pay for insurance.
• Integrated and coordinated pathway of care: Through low-powered physician payment modes.

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