Health Insurance for India’s Missing Middle

Syllabus: General Studies Paper 2

Context:

Recently, NITI Aayog has released a comprehensive report titled Health Insurance for India’s Missing Middle. The report aims for a credible pathway to universal health coverage (UHC) for India.

• Covering the left out a segment of the population, commonly termed the ‘missing middle’ sandwiched between the poor and the affluent, has been discussed by the Government recently. 

Key points of the report

• At least 30 per cent of the population called the ‘missing middle’ – are devoid of any financial protection for health.
  • The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) launched in September 2018, and State Government extension schemes, provide comprehensive hospitalization cover to the bottom 50% of the population. 
    • PMJAY offers a sum insured of Rs. 5 lakh per family for secondary care as well as tertiary care. For the beneficiaries, this is a free scheme.
  • Around 20% of the population are covered through social health insurance and private voluntary health insurance. 
  • The remaining 30% of the population is devoid of health insurance; the actual uncovered population is higher due to existing coverage gaps in PMJAY and overlap between schemes.”
• The report proposes voluntary, contributory health insurance dispensed mainly by private commercial health insurers as the prime instrument for extending health insurance to the ‘missing middle. 
• The Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme should be extended to cover a section of people without health insurance.
• Government subsidies will be reserved for the very poor within the ‘missing middle’ and only at a later stage of the development of voluntary contributory insurance. 
• The report has recommended three models for increasing the health insurance coverage in the country. 
• The first model focuses on increasing consumer awareness of health insurance, while the second model is about “developing a modified, standardized health insurance product” like ‘Aarogya Sanjeevani’.
  • The “Aarogya Sanjeevani Insurance Policy” guidelines were basically launched to cover the hospitalisation expenses of the COVID-19 patients. The policy is not brought by GoI rather instructed by GoI. 
  • It is a standardised health insurance product launched by the Insurance Regulatory Development Authority of India (IRDAI) in April 2020.
• The third model expands government-subsidized health insurance through the PMJAY scheme to a wider set of beneficiaries. 
  • This model can be utilized for segments of the missing middle which remain uncovered, due to limited ability to pay for the voluntary contributory models outlined above. 
• A combination of the three models phased in at different times can ensure coverage for the missing middle population.
• In the medium-term, once the supply-side and utilization of PMJAY and ESIC is strengthened, their infrastructure can be leveraged to allow voluntary contributions to a PMJAY plus product.
• Sharing government databases such as National Food Security Act (NFSA), Pradhan Mantri Suraksha Bima Yojana, or the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) for agricultural households with private insurers after taking consent from these households.
• The report proposes an OPD insurance with an insured sum of ₹5,000 per family per annum, and again uses average per capita OPD spending to justify the ability to pay.
  • The out-patient department (OPD) care insurance coverage includes doctor consultations, diagnostics, medicines, etc. 
  • The report acknowledges that OPD expenses comprise the largest share of out-of-pocket expenditure on health care. They have a greater role in the impoverishment of families due to healthcare expenses. 

Concerns with the report

A high-level expert group on UHC had expressed reservations about such a health insurance model as the instrument of UHC and advocated a largely tax-financed health system with private sector participation.

• In-patient care: For hospitalisation insurance, the report proposes a model similar to the Arogya Sanjeevani scheme with lower projected premiums of around ₹4,000-₹6,000 per family per annum (for a sum insured of ₹5 lakh for a family of five). 
  • This model is similar to commercial private insurance, except for lower premiums. 
  • These low premiums are achieved by reducing administrative costs of insurers through an array of measures, including private use of government infrastructure.
  • Low premiums are not achieved on account of government subsidies or regulation. 
  • This model is vulnerable to the profit-making greed of conventional private insurance.
  • It is important to remember that even free-of-cost government health insurance for the poor has little penetration in the country. The possible destiny of contributory private health insurance for the Middle class is not well.
• The NITI report ignores the fundamental concepts like significant levels of government subsidy to schemes; not-for-profit mode of operation; and some important guarantees for health. 
• Lacking checks and balances: In Switzerland which has predominantly private insurers and a competitive model of insurance, certain important checks and balances exist: 
  • benefits are mentioned in legislation; 
  • basic insurance is mandatory and not-for-profit; 
  • cream-skimming and risk-discrimination are prohibited. 
  • Such checks and balances have not been discussed in the NITI report.
• Out-patient care: The 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. 
  • Clearly, this route is unlikely to result in any significant reduction of out-of-pocket expenditure on OPD care, which beats the whole purpose of providing insurance. 
• The wrong path towards UHC:  Universal health coverage means that all people have access to the health services they need, when and where they need them, without financial hardship.
  • No country has ever achieved UHC by relying predominantly on private sources of financing health care. 
  • Evidence shows that in developing countries such as India, with a big informal sector, contributory health insurance is filled with problems. 
  • Rather than plot a pathway for UHC in India, the report is more about expanding the footprints and penetration of the private health insurance sector.
  • The report looks to attain the UHC with few or no fiscal implications for the Government, which is an absurd idea in the aftermath of COVID-19. 

The National Health Policy 2017 envisaged increasing public health spending to 2.5% of GDP by 2025. Let us not contradict ourselves so early and at this crucial juncture of an unprecedented pandemic.

The Hindu Link: https://www.thehindu.com/opinion/op-ed/more-a-private-sector-primer-than-health-care-pathway/article37549726.ece