Social Health Insurance

HEALTH INSURANCE IN INDIA: CURRENT SCENARIO
Introduction
The health care system in India is characterised by multiple systems of
medicine, mixed ownership patterns and different kinds of delivery structures.
Public sector ownership is divided between central and state governments,
municipal and Panchayat local governments. Public health facilities include
teaching hospitals, secondary level hospitals, first-level referral hospitals (CHCs
or rural hospitals), dispensaries; primary health centres (PHCs), sub-centres,
and health posts. Also included are public facilities for selected occupational
groups like organized work force (ESI), defence, government employees
(CGHS), railways, post and telegraph and mines among others. The private
sector (for profit and not for profit) is the dominant sector with 50 per cent of
people seeking indoor care and around 60 to 70 per cent of those seeking
ambulatory care (or outpatient care) from private health facilities. While India
has made significant gains in terms of health indicators - demographic,
infrastructural and epidemiological (See Tables 1 and 2), it continues to
grapple with newer challenges. Not only have communicable diseases
persisted over time but some of them like malaria have also developed
insecticide-resistant vectors while others like tuberculosis are becoming
increasingly drug resistant. HIV / AIDS has of late assumed extremely virulent
proportions. The 1990s have also seen an increase in mortality on account of
non-communicable diseases arising as a result of lifestyle changes. The
country is now in the midst of a dual disease burden of communicable and
noncommunicable diseases. This is coupled with spiralling health costs, high
financial burden on the poor and erosion in their incomes. Around 24% of all
people hospitalized in India in a single year fall below the poverty line due to
hospitalization (World Bank, 2002). An analysis of financing of hospitalization
shows that large proportion of people; especially those in the bottom fourincome
quintiles borrow money or sell assets to pay for hospitalization (World
Bank, 2002)
This situation exists in a scenario where health care is financed through
general tax revenue, community financing, out of pocket payment and social
and private health insurance schemes. India spends about 4.9% of GDP on
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health (WHR, 2002). The per capita total expenditure on health in India is
US$ 23, of which the per capita Government expenditure on health is US$ 4.
Hence, it is seen that the total health expenditure is around 5% of GDP, with
breakdown of public expenditure (0.9%); private expenditure (4.0%). The
private expenditure can be further classified as out-of-pocket (OOP)
expenditure (3.6%) and employees/community financing (0.4%). It is thus
evident that public health investment has been comparatively low. In fact as a
percentage of GDP it has declined from 1.3% in 1990 to 0.9% as at present.
Furthermore, the central budgetary allocation for health (as a percentage of
the total Central budget) has been stagnant at 1.3% while in the states it has
declined from 7.0% to 5.5%.
Table 1. Socioeconomic indicators
Land area 2% of world area
Burden of disease (%) 21% of global disease burden
Population 16% of world population
Urban : Rural 28:72
Literacy rate (%) 65.38
Sanitation (%) Rural – 9.0; Urban – 49.3
Safe drinking water supply (%) Rural – 98; Urban – 90.2
Poverty (%) Below poverty line – 26
Rural – 27.09; Urban – 23.62
Poverty line (Rs.) Rural – 327.56; Urban – 454.11
Table 2. Achievements: 1951-2000
1951 1981 2000
Demographic changes
Life expectancy 36.7 54 64.6 (RGI)
Crude birth rate 40.8 33.9 (SRS) 26.1 (99 SRS)
Crude death rate 25 12.5 (SRS) 8.7 (99 SRS)
Infant mortality rate 146 110 70 (99 SRS)
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1951 1981 2000
Epidemiology
Malaria (cases in million) 75 2.7 2.2
Leprosy cases per 10,000
population
38.1 57.3 3.74
Small pox (no of cases) >44,887 Eradicated
Guinea worm (no. of cases) >39,792 Eradicated
Polio 29709 265
Infrastructure
SC/PHC/CHC 725 57,363 1,63,181
(99-RHS)
Dispensaries & hospitals (all) 9209 23,555 43,322
(95–96-CBHI)
Beds (Pvt & Public) 117,198 569,495 8,70,161
(95-96-CBHI)
Doctors (Allopathy) 61,800 2,68,700 5,03,900
(98-99-MCI)
Nursing personnel 18,054 1,43,887 7,37,000
(99-INC)
In light of the fiscal crisis facing the government at both central and state
levels, in the form of shrinking public health budgets, escalating health care
costs coupled with demand for health-care services, and lack of easy access of
people from the low-income group to quality health care, health insurance is
emerging as an alternative mechanism for financing of health care.
Health Insurance
Health insurance in a narrow sense would be ‘an individual or group
purchasing health care coverage in advance by paying a fee called premium.’
In its broader sense, it would be any arrangement that helps to defer, delay,
reduce or altogether avoid payment for health care incurred by individuals
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and households. Given the appropriateness of this definition in the Indian
context, this is the definition, we would adopt. The health insurance market in
India is very limited covering about 10% of the total population. The existing
schemes can be categorized as:
(1) Voluntary health insurance schemes or private-for-profit schemes;
(2) Employer-based schemes;
(3) Insurance offered by NGOs / community based health insurance, and
(4) Mandatory health insurance schemes or government run schemes
(namely ESIS, CGHS).
Voluntary health insurance schemes or private-for-profit schemes
In private insurance, buyers are willing to pay premium to an insurance
company that pools people with similar risks and insures them for health
expenses. The key distinction is that the premiums are set at a level, which
provides a profit to third party and provider institutions. Premiums are based
on an assessment of the risk status of the consumer (or of the group of
employees) and the level of benefits provided, rather than as a proportion of
the consumer’s income.
In the public sector, the General Insurance Corporation (GIC) and its
four subsidiary companies (National Insurance Corporation, New India
Assurance Company, Oriental Insurance Company and United Insurance
Company) and the Life Insurance Corporation (LIC) of India provide voluntary
insurance schemes. The Life Insurance Corporation offers Ashadeep Plan II
and Jeevan Asha Plan II. The General Insurance Corporation offers Personal
Accident policy, Jan Arogya policy, Raj Rajeshwari policy, Mediclaim policy,
Overseas Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy
and Dreaded Disease policy (Srivastava 1999 as quoted in Bhat R & Malvankar
D, 2000)
Of the various schemes offered, Mediclaim is the main product of the
GIC. The Medical Insurance Scheme or Mediclaim was introduced in
November 1986 and it covers individuals and groups with persons aged 5 –
80 yrs. Children (3 months – 5 yrs) are covered with their parents. This
scheme provides for reimbursement of medical expenses (now offers cashless
scheme) by an individual towards hospitalization and domiciliary
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hospitalization as per the sum insured. There are exclusions and pre-existing
disease clauses. Premiums are calculated based on age and the sum insured,
which in turn varies from Rs 15 000 to Rs 5 00 000. In 1995/96 about half a
million Mediclaim policies were issued with about 1.8 million beneficiaries
(Krause Patrick 2000). The coverage for the year 2000-01 was around 7.2
million.
Another scheme, namely the Jan Arogya Bima policy specifically targets
the poor population groups. It also covers reimbursement of hospitalization
costs up to Rs 5 000 annually for an individual premium of Rs 100 a year. The
same exclusion mechanisms apply for this scheme as those under the
Mediclaim policy. A family discount of 30% is granted, but there is no group
discount or agent commission. However, like the Mediclaim, this policy too
has had only limited success. The Jan Arogya Bima Scheme had only covered
400 000 individuals by 1997.
The year 1999 marked the beginning of a new era for health insurance
in the Indian context. With the passing of the Insurance Regulatory
Development Authority Bill (IRDA) the insurance sector was opened to private
and foreign participation, thereby paving the way for the entry of private
health insurance companies. The Bill also facilitated the establishment of an
authority to protect the interests of the insurance holders by regulating,
promoting and ensuring orderly growth of the insurance industry. The bill
allows foreign promoters to hold paid up capital of up to 26 percent in an
Indian company and requires them to have a capital of Rs 100 crore along
with a business plan to begin its operations.Currently, a few companies such
as Bajaj Alliance, ICICI, Royal Sundaram, and Cholamandalam among others
are offering health insurance schemes. The nature of schemes offered by
these companies is described briefly.
Ø Bajaj Allianz: Bajaj Alliance offers three health insurance schemes
namely, Health Guard, Critical Illness Policy and Hospital Cash Daily
Allowance Policy.
- The Health Guard scheme is available to those aged 5 to 75 years
(not allowing entry for those over 55 years of age), with the sum
assured ranging from Rs 100 0000 to 500 000. It offers cashless
benefit and medical reimbursement for hospitalization expenses (preand
post-hospitalization) at various hospitals across India (subject to
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exclusions and conditions). In case the member opts for hospitals
besides the empanelled ones, the expenses incurred by him are
reimbursed within 14 working days from submission of all the
documents. While pre-existing diseases are excluded at the time of
taking the policy, they are covered from the 5th year onwards if the
policy is continuously renewed for four years and the same has been
declared while taking the policy for the first time. Other discounts
and benefits like tax exemption, health check-up at end of four
claims free year, etc. can be availed of by the insured.
- The Critical Illness policy pays benefits in case the insured is
diagnosed as suffering from any of the listed critical events and
survives for minimum of 30 days from the date of diagnosis. The
illnesses covered include: first heart attack; Coronary artery disease
requiring surgery: stroke; cancer; kidney failure; major organ
transplantation; multiple sclerosis; surgery on aorta; primary
pulmonary arterial hypertension, and paralysis. While exclusion
clauses apply, premium rates are competitive and high-sum insurance
can be opted for by the insured.
- The Hospital Cash Daily Allowance Policy provides cash benefit for
each and every completed day of hospitalization, due to sickness or
accident. The amount payable per day is dependant on the selected
scheme. Dependant spouse and children (aged 3 months – 21years)
can also be covered under the Policy. The benefits payable to the
dependants are linked to that of insured. The Policy pays for a
maximum single hospitalization period of 30 days and an overall
hospitalization period of 30/60 completed days per policy period per
person regardless of the number of confinements to hospital/nursing
home per policy period.
Ø ICICI Lombard: ICICI Lombard offers Group Health Insurance Policy.
This policy is available to those aged 5 – 80 years, (with children being
covered with their parents) and is given to corporate bodies, institutions,
and associations. The sum insured is minimum Rs 15 000/- and a
maximum of Rs 500 000/-. The premium chargeable depends upon the
age of the person and the sum insured selected. A slab wise group
discount is admissible if the group size exceeds 100. The policy covers
reimbursement of hospitalization expenses incurred for diseases
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contracted or injuries sustained in India. Medical expenses up to 30 days
for Pre-hospitalization and up to 60 days for post-hospitalization are also
admissible. Exclusion clauses apply. Moreover, favourable claims
experience is recognized by discount and conversely, unfavourable
claims experience attracts loading on renewal premium. On payment of
additional premium, the policy can be extended to cover maternity
benefits, pre-existing diseases, and reimbursement of cost of health
check-up after four consecutive claims-free years.
Ø Royal Sundaram Group: The Shakthi Health Shield policy offered by
the Royal Sundaram group can be availed by members of the women’s
group, their spouses and dependent children. No age limits apply. The
premium for adults aged up to 45 years is Rs 125 per year, for those
aged more than 45 years is Rs 175 per year. Children are covered at
Rs 65 per year. Under this policy, hospital benefits up to Rs 7 000 per
annum can be availed, with a limit per claim of Rs 5 000. Other benefits
include maternity benefit of Rs 3 000 subject to waiting period of nine
months after first enrolment and for first two children only. Exclusion
clauses apply (Ranson K & Jowett M, 2003)
Ø Cholamandalam General Insurance: The benefits offered (in
association with the Paramount Health Care, a re-insurer) in case of an
illness or accident resulting in hospitalization, are cash-free
hospitalization in more than 1 400 hospitals across India, reimbursement
of the expenses during pre- hospitalization (60 days prior to
hospitalization) and post- hospitalization (90 days after discharge) stages
of treatment. Over 130 minor surgeries that require less than 24 hours
hospitalization under day care procedure are also covered. Extra health
covers like general health and eye examination, local ambulance service,
hospital daily allowance, and 24 hours assistance can be availed of.
Exclusion clauses apply. Employer-based schemes
Employers in both the public and private sector offers employer-based
insurance schemes through their own employer-managed facilities by way of
lump sum payments, reimbursement of employee’s health expenditure for
outpatient care and hospitalization, fixed medical allowance, monthly or
annual irrespective of actual expenses, or covering them under the group
health insurance policy. The railways, defence and security forces, plantations
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sector and mining sector provide medical services and / or benefits to its own
employees. The population coverage under these schemes is minimal, about
30-50 million people.
Insurance offered by NGOs / community-based health insurance
Community-based funds refer to schemes where members prepay a set
amount each year for specified services. The premia are usually flat rate (not
income-related) and therefore not progressive. Making profit is not the
purpose of these funds, but rather improving access to services. Often there is
a problem with adverse selection because of a large number of high-risk
members, since premiums are not based on assessment of individual risk
status. Exemptions may be adopted as a means of assisting the poor, but this
will also have adverse effect on the ability of the insurance fund to meet the
cost of benefits.
Community-based schemes are typically targeted at poorer populations
living in communities, in which they are involved in defining contribution
level and collecting mechanisms, defining the content of the benefit package,
and / or allocating the schemes, financial resources (International Labour
Office Universities Programme 2002 as quoted in Ranson K & Acharya A,
2003). Such schemes are generally run by trust hospitals or nongovernmental
organizations (NGOs). The benefits offered are mainly in terms of preventive
care, though ambulatory and in-patient care is also covered. Such schemes
tend to be financed through patient collection, government grants and
donations. Increasingly in India, CBHI schemes are negotiating with the forprofit
insurers for the purchase of custom designed group insurance policies.
However, the coverage of such schemes is low, covering about 30-50 million
(Bhat, 1999). A review by Bennett, Cresse et al. (as quoted in Ranson K &
Acharya A, 2003) indicates that many community-based insurance schemes
suffer from poor design and management, fail to include the poorest-of-thepoor,
have low membership and require extensive financial support. Other
issues relate to sustainability and replication of such schemes.
Table 3 provides an overview of some non-profit social insurance
schemes. Some of the schemes are described below (Ranson K & Jowett M,
2003).
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Table 3. Non-profit social insurance schemes in India
Name Location Members Type of insurance
1. ACCORD/ ASHWINI
Health Insurance
Scheme
Tamil Nadu
(Gudalur)
7 356 (1997) Health Insurance
(with NIA)
2. Aga Khan Health
Services3
Gujarat (Sidhpur) 40 000 (1997) Health insurance
3. Apollo Hospital
Association (AHA)
Tamil Nadu
(Madras)
10 000 (1995) Health Insurance
(with GIC)
4. ASSEFA (Association
of Sarva Sewa Farms)
Tamil Nadu
(Madurai)
N.N. Cattle Insurance
Health Insurance
5. Cooperative
Development
Federation (CDF)
Andhra Pradesh
(Hyderabad)
26 000 Death Relief Fund
(Life Insurance)
6. Goalpara
Cooperative Health
Society
West Bengal
(Shantiniketan)
1 247 (1997) Health Insurance
7. Kottar Social Service
Society (KSSS)
Tamil Nadu
(Kanyakumari)
34 000 Health Insurance
8. Mallur Health
Cooperative
Karnataka 7 000 Health Insurance
9. Mathadi Hospital
Trust
Maharashtra
(Bombay/Mumbai)
150 000 Health Insurance
10. Medinova Health
Card Scheme
West Bengal
(Calcutta)
35 000 Health Insurance
11. Navsarajan Trust Gujarat 10 000 Health Insurance
(with NIA)
Accidental Insurance
(with LIC)
Nutrition
Legal Aid
Drugs
Fight Against Corruption
12. New Life Tamil Nadu N.N. Health Insurance
13. Organization for
Development of
People (ODP)
Tamil Nadu
(Mysore)
1 137 Health Insurance
Accidental Insurance
(with NIC)
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Name Location Members Type of insurance
14. Pragati Thrift and
Credit Society
– 410 Death Relief Fund
15. Raigarh Ambikapur
Health Association
(RAHA) Medical
Insurance Scheme
Madhya Pradesh
(Raigarh District)
75 000 Health Insurance
16. Saheed Shibsankar
Saba Samity (SSSS)
West Bengal
(Burdwan)
6 800 Health Insurance
17. Seba Cooperative
Health Society
West Bengal
(Calcutta)
3 000 families Health Insurance
(with GIC)
18. Self Employed
Women’s Association
(SEWA)
Gujarat
(Ahmedabad)
40,000 Integrated Insurance
Scheme
Health Insurance
Life Insurance
(with LIC)
Accident
(with NIA)
Asset Insurance
Maternity Benefit
19. Kasturba Hospital
Scheme, Sewagram
Maharashtra
(Wardha District)
19 457 (1997) Health Insurance
20. Social Work and
Research Centre
(SWRC) (defunct?)
Rajasthan (Ajmer) 20 000 Health Insurance
21. Society for
Promotion of Area
Resources Centre
(SPARC)
Maharashtra
(Bombay/Mumbai)
1 200 couples Health Insurance
Accident
Housing
(with OIC)
22. Students Health
Home
West Bengal
(Calcutta)
550 000 Health Insurance
23. Tribhuvandas
Foundation
Gujarat (Anand) 800 000 Health Insurance
24. Trivandrum District
Fishermen’s
Federation (TDFF)
Kerala
(Thiruvananthapuram)
Craft & Gear Fund
(loan basis)
Contingency Fund
(death, accidents, loss of
work)
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Name Location Members Type of insurance
25. Urmal Rural Health
and Research
Development Trust
(defunct?)
Rajasthan (Bikaner
& Jodhpur)
N.N. Health Insurance
26. Voluntary Health
Services Medical Aid
Plan
Tamil Nadu 160 000 Health Insurance
Source: Patrick Krause (2000), ‘Non-profit Insurance Schemes for the Unorganized Sector in India’, Social Policy
Division 42, Working Papers No. 22 e, GTZ
Some examples of community-based health insurance schemes are
discussed herein.
Ø Self-Employed Women’s Association (SEWA), Gujarat: This scheme
established in 1992, provides health, life and assets insurance to women
working in the informal sector and their families. The enrolment in the
year 2002 was 93 000. This scheme operates in collaboration with the
National Insurance Company (NIC). Under SEWA’s most popular policy,
a premium of Rs 85 per individual is paid by the woman for life, health
and assets insurance. At an additional payment of Rs 55, her husband
too can be covered. Rs 20 per member is then paid to the National
Insurance Company (NIC) which provides coverage to a maximum of Rs
2 000 per person per year for hospitalization. After being hospitalized at
a hospital of one’s choice (public or private), the insurance claim is
submitted to SEWA. The responsibility for enrolment of members, for
processing and approving of claims rests with SEWA. NIC in turn
receives premiums from SEWA annually and pays them a lumpsum on a
monthly basis for all claims reimbursed. (Ranson K & Acharya A, 2003).
Ø Another CBHI scheme located in Gujarat, is that run by the
Tribhuvandas Foundation (TF), Anand. This was established in 2001,
with the membership being restricted to members of the AMUL Dairy
Cooperatives. Since then, over 1 00 000 households have been enrolled
under this scheme, with the TF functioning as a third party insurer.
Ø The Mallur Milk Cooperative in Karnataka established a CBHI scheme
in 1973. It covers 7 000 people in three villages and outpatient and
inpatient health care are directly provided.
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Ø A similar scheme was established in 1972 at Sewagram, Wardha in
Maharashtra. This scheme covers about 14 390 people in 12 villages and
members are provided with outpatient and inpatient care directly by
Sewagram.
Ø The Action for Community Organization, Rehabilitation and
Development (ACCORD), Nilgiris, Tamil Nadu was established in 1991.
Around 13 000 Adivasis (tribals) are covered under a group policy
purchased from New India Assurance.
Ø Another scheme located in Tamil Nadu is Kadamalai Kalanjia Vattara
Sangam (KKVS), Madurai. This was established in 2000 and covers
members of women’s self-help groups and their families. Its enrolment
in 2002 was around 5 710, with the KKVS functioning as a third party
insurer.
Ø The Voluntary Health Services (VHS), Chennai, Tamil Nadu was
established in 1963. It offers sliding premium with free care to the
poorest. The benefits include discounted rates on both outpatient and
inpatient care, with the VHS functioning as both insurer and health care
provider. In 1995, its membership was 124 715. However, this scheme
suffers from low levels of cost recovery due to problems of adverse
selection.
Ø Raigarh Ambikapur Health Association (RAHA), Chhatisgarh was
established in 1972, and functions as a third party administrator. Its
membership in the year 1993 was 72 000.
Social Insurance or mandatory health insurance schemes or government
run schemes (namely the ESIS, CGHS)
Social insurance is an earmarked fund set up by government with explicit
benefits in return for payment. It is usually compulsory for certain groups in
the population and the premiums are determined by income (and hence
ability to pay) rather than related to health risk. The benefit packages are
standardized and contributions are earmarked for spending on health services
The government-run schemes include the Central Government Health
Scheme (CGHS) and the Employees State Insurance Scheme (ESIS). (See Table
4)
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Table 4. Public insurance schemes
ESIS (Employees State Insurance Scheme) CGHS (Central Government Health
Scheme)
Contribution Employees: 4.75% of wages. Employers:
1.75% of wages.
All contributions are deposited by the
employer.
State governments contribute a minimum
of 12.5 %on ESIS expenditures in their
respective States (Garg 1999b, p. 30).
See also section 59A (Govt. of India,
1999g, pp. 51-52)
Pay/pension Contribution
(Rs/month) (Rs/month)
<3,000 15 3001–6000 40 60001–10000 70 10001–15000 100 >15000 150
The bulk of resources (85%) come from
general revenues of the Central
Government (Garg 1999b, p. 34)
Reimbursement Does not allow reimbursement of
medical treatment outside of allotted
facilities. For example, the Employees
State Insurance Act 1948 states that
entitlement to medical benefits does not
entitle the insured to ‘claim
reimbursement for medical treatment.
except under regulations’ (Govt. of India,
1999g, p. 50) and ESI (General)
Regulations, (Govt. of India, 1999g, p.
156)
1. Reimbursement of consultation fee, for
up to four consultations in a total spell
of ten days (on referral)
2. Cost of medicines
3. Charges for a maximum of ten
injections. Reimbursement for
specified diseases or ailments
Entitlement Depending on ‘allotment’ as per the ESI
Act
1.Outpatient medical care at dispensaries
or panel clinics,
2. Consultation with specialist and supply
of special medicines and tests in
addition to outpatient care;
3. Hospitalization, specialists, drugs and
special diet.
4. Cash benefits: Periodical payments to
any insured person in case of sickness,
pregnancy, disablement or death
resulting from an employment injury.
1. First-level consultation and preventive
health care service through
dispensaries and hospitals under the
scheme
2. Consultation at a CGHS dispensary /
polyclinic or CGHS wing at a
recognized hospital.
3. Treatment from a specialist through
referral, emergency treatment in
private hospitals and outside India.
Eligibility Employees (and dependants) working in
establishments employing ten or more
persons (with power) or twenty or more
persons (without power) and earning less
than Rs. 6 500 per month. (Garg 1999a,
p.85)
Employees of the Central Government
(excepting railways, Armed Forces
pensioners and Delhi Administration),
pensioners, widows of Central
Government employees, Delhi Police
employees, Defence employees and
dependants residing in 24 specified
locations (See Govt. of India, various
publications)
Reproduced from Mahal A (2001), ‘Assessing Private Health Insurance in India: Potential Impacts and Regulatory
Issues’, Discussion Paper Series, No. 16, National Council of Applied Economic Research, New Delhi. p. 35
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Central Government Health Scheme (CGHS)
Since 1954, all employees of the Central Government (present and retired);
some autonomous and semi-government organizations, MPs, judges, freedom
fighters and journalists are covered under the Central Government Health
Scheme (CGHS). This scheme was designed to replace the cumbersome and
expensive system of reimbursements (GOI, 1994). It aims at providing
comprehensive medical care to the Central Government employees and the
benefits offered include all outpatient facilities, and preventive and promotive
care in dispensaries. Inpatient facilities in government hospitals and approved
private hospitals are also covered. This scheme is mainly funded through
Central Government funds, with premiums ranging from Rs 15 to Rs 150 per
month based on salary scales. The coverage of this scheme has grown
substantially with provision for the non-allopathic systems of medicine as well
as for allopathy. Beneficiaries at this moment are around 432 000, spread
across 22 cities.
The CGHS has been criticized from the point of view of quality and
accessibility. Subscribers have complained of high out-of-pocket expenses due
to slow reimbursement and incomplete coverage for private health care (as
only 80% of cost is reimbursed if referral is made to private facility when such
facilities are not available with the CGHS).
Employee and State Insurance Scheme (ESIS)
The enactment of the Employees State Insurance Act in 1948 led to
formulation of the Employees State Insurance Scheme. This scheme provides
protection to employees against loss of wages due to inability to work due to
sickness, maternity, disability and death due to employment injury. It offers
medical and cash benefits, preventive and promotive care and health
education. Medical care is also provided to employees and their family
members without fee for service. Originally, the ESIS scheme covered all
power-using non-seasonal factories employing 10 or more people. Later, it
was extended to cover employees working in all non-power using factories
with 20 or more persons. While persons working in mines and plantations, or
an organization offering health benefits as good as or better than ESIS, are
specifically excluded. Service establishments like shops, hotels, restaurants,
cinema houses, road transport and news papers printing are now covered.
The monthly wage limit for enrolment in the ESIS is Rs. 6 500, with a
prepayment contribution in the form of a payroll tax of 1.75% by employees,
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4.75% of employees' wages to be paid by the employers, and 12.5% of the
total expenses are borne by the state governments. The number of
beneficiaries is over 33 million spread over 620 ESI centres across states.
Under the ESIS, there were 125 hospitals, 42 annexes and 1 450 dispensaries
with over 23 000 beds facilities. The scheme is managed and financed by the
Employees State Insurance Corporation (a public undertaking) through the
state governments, with total expenditure of Rs 3 300 million or Rs 400/- per
capita insured person.
The ESIS programme has attracted considerable criticism. A report based on
patient surveys conducted in Gujarat (Shariff, 1994 as quoted in Ellis R et a,
2000) found that over half of those covered did not seek care from ESIS
facilities. Unsatisfactory nature of ESIS services, low quality drugs, long waiting
periods, impudent behaviour of personnel, lack of interest or low interest on
part of employees and low awareness of ESI procedures, were some of the
reasons cited.
Other Government Initiatives
Apart from the government-run schemes, social security benefits for the
disadvantaged groups can be availed of, under the provisions of the Maternity
Benefit (Amendment) Act 1995, Workmen’s Compensation (Amendment) Act
1984, Plantation Labour Act 1951, Mine Mines Labour Welfare Fund Act
1946, Beedi Workers Welfare Fund Act 1976 and Building and other
Construction Workers (Regulation of Employment and Conditions of Service)
Act, 1996.
The Government of India has also undertaken initiatives to address
issues relating to access to public health systems especially for the vulnerable
sections of the society. The National Health Policy 2002 acknowledges this
and aims to evolve a policy structure, which reduces such inequities and
allows the disadvantaged sections of the population a fairer access to public
health services. Ensuring more equitable access to health services across the
social and geographical expanse of the country is the main objective of the
policy. It also seeks to increase the aggregate public health investment through
increased contribution from the Central as well as state governments and
encourages the setting up of private insurance instruments for increasing the
scope of coverage of the secondary and tertiary sector under private health
insurance packages. The government envisages an increase in health
expenditure as a % of GDP from existing 0.9% to 2.0 % by 2010 and an
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increase in the share of central grants from the existing 15% to constitute at
least 25% of total public health spending by 2010. The State government
spending for health in turn would increase from 5.5% to 7% of the budget by
2005, to be further increased to 8% by 2010.
The National Population Policy (NPP) 2000, envisages the establishment
of a family welfare-linked health insurance plan. As per this plan, couples
living below the poverty line who undergo sterilization with not more than
two living children would be eligible for insurance. Under this scheme, the
couple along with their children would be covered for hospitalization not
exceeding Rs 5 000 and a personal accident insurance cover for the spouse
undergoing sterilization. The Institute of Health Systems (IHS), Hyderabad has
been entrusted the responsibility of operationalizing the mandate of the NPP
2000. The initial scheme proposed by the HIS was discussed at a workshop in
June 2003. The consensus at the meeting was that the scheme, needed
further improvement prior to its implementation even as a pilot project.
In keeping with the recommendations of the Tenth Five Year Plan and
the National Health Policy (NHP) 2002, the Department of Family Welfare is
also proposing to commission studies in eight states covering eight districts, to
generate district-specific data, which is essential for conceptualization of a
reasonable and financially viable insurance scheme.
The current plan – the Tenth Five Year Plan (2002-07) - also focuses on
exploring alternative systems of health care financing including health
insurance so that essential, need-based and affordable health care is available
to all. The urgent need to evolve, implement and evaluate an appropriate
scheme for health financing for different income groups is acknowledged. In
the past, the government has tried to ensure that the poor get access to
private health facilities through subsidy in the form of duty exemptions and
other such benefits. Social health insurance for families living below the
poverty line has been suggested as a mechanism for reducing the adverse
economic consequences of hospitalization and treatment for chronic ailments
requiring expensive and continuous care.
In the budget for the year 2002-2003, an insurance scheme called
Janraskha was introduced, with the aim of providing protection to the needy
population. With a premium of Re 1/- per day, it ensured indoor treatment
up to Rs 3 000 per year at selected and designated hospitals and outpatient
treatment up to Rs 2 000 per year at designated clinics, including civil
hospitals, medical colleges, private trust hospitals and other NGO-run
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institutions. A few states have started implementing this scheme under pilot
phase.
In the budget for the period 2003-2004, another initiative of
community-based health insurance has been announced. This scheme aims to
enable easy access of less advantaged citizens to good health services, and to
offer health protection to them. This policy covers people between the age of
three months to 65 years. Under this scheme, a premium equivalent to Re 1
per day (or Rs 365 per year) for an individual, Rs 1.50 per day for a family of
five (or Rs 548 per year), and Rs 2 per day for a family of seven (or Rs 730 per
year), would entitle them to get reimbursement of medical expenses up to
Rs 30 000 towards hospitalization, a cover for death due to accident for Rs 25
000 and compensation due to loss of earning at the rate of Rs 50 per day up
to a maximum of 15 days. The government would contribute Rs 100 per year
towards the annual premium, so as to ensure the affordability of the scheme
to families living below the poverty line. The implementation of this scheme
rests with the four public sector insurance companies.
The government also offers assistance by way of Illness Assistance Funds,
which have been set up by the Ministry of Health and Family Welfare at the
national level and in a few states. State Illness Assistance Funds exist in Andhra
Pradesh, Bihar, Goa, Gujarat, Himachal Pradesh, Jammu and Kashmir,
Karnataka, Kerala, Madhya Pradesh, Maharashtra, Mizoram, Rajasthan,
Sikkim, Tamil Nadu, Tripura, West Bengal, NCT of Delhi and UT of
Pondicherry. A National Illness Assistance Fund (NIAF) was set up in 1997,
with the scheme being reviewed in January 1998. Through this, three Central
Government hospitals and three national-level institutes have been sanctioned
Rs 10 00 000 each at a time from the NIAF to provide immediate financial
assistance to the extent of Rs 25 000 per case to poor patients living below
the poverty line and who are undergoing treatment in these hospitals /
institutions. Thereafter the scheme has been extended to few other institutes
across the country and provides Rs 25 000 – Rs 50 000 per case.
Health insurance initiatives by State Governments
In the recent past, various state governments have begun health insurance
initiatives. For instance, the Andhra Pradesh government is implementing the
Aarogya Raksha Scheme since 2000, with a view to increase the utilization of
permanent methods of family planning by covering the health risks of the
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acceptors. All people living below the poverty line and those who accept
permanent methods of family planning are eligible to be covered under this
scheme. The Government of Andhra Pradesh pays a premium of Rs 75 per
acceptor. The benefits to be availed of, include hospitalization costs up to Rs.
4000 per year for the acceptor and for his / her two children for a total period
of five years from date of the family planning operation. The coverage is for
common illnesses and accident insurance benefits are also offered. The
hospital bill is directly reimbursed by the Insurance Company, namely the
New India Assurance Company.
The Government of Goa along with the New India Assurance Company
in 1988 developed a medical reimbursement mechanism. This scheme can be
availed by all permanent residents of Goa with an income below Rs 50 000
per annum for hospitalization care, which is not available within the
government system. The non-availability of services requires certification from
the hospital Dean or Director Health Services. The overall limit is Rs 30 000
for the insured person for a period of one year.
A pilot project on health insurance was launched by the Government of
Karnataka and the UNDP in two blocks since October 2002. The aim of the
project was to develop and test a model of community health financing suited
for rural community, thereby increasing the access to medical care of the
poor. The beneficiaries include the entire population of these blocks. The
premium is Rs 30 per person per year, with the Government of Karnataka
subsidizing the premium of those below poverty line and those belonging to
Scheduled Castes/ Scheduled Tribes. This premium entitles them to
hospitalization coverage in the government hospitals up to a maximum of Rs 2
500 per year, including hospitalization for common illnesses, ambulance
charges, loss of wages at Rs. 50 per day as well as drug expenses at Rs 50 per
day. Reimbursements are made to an insurance fund which has been set up
by the NGO / PRI with the support of UNDP.
The Government of Kerala is planning to launch a pilot project of health
insurance for the 30% families living below the poverty line. The scheme
would be associated with a government insurance company. Currently,
negotiations are under way with the IRA to seek service tax exemption. The
proposed premium is Rs 250 plus 5% tax. The maximum benefit per family
would be Rs 20 000. The amount for the premium would be recovered from
the drug budget (Rs 100), the PRI (Rs 100) and from the beneficiary (Rs 62.50)
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while the benefits available would include cover for hospitalization, deliveries
involving surgical procedures (either to the mother or the newborn). Instead of
payment by the beneficiary, Smart Card facility would be offered. This
scheme would be applicable in 216 government hospitals.
Concerns, Challenges and the Way Ahead
The preceding sections of this paper present the health insurance scenario in
India. Given the situation, there are few issues of concern or barriers towards
implementing a social health insurance scheme in India. These are
enumerated below along with the possible way ahead.
India is a low-income country with 26% population living below the
poverty line, and 35% illiterate population with skewed health risks. Insurance
is limited to only a small proportion of people in the organized sector covering
less than 10% of the total population. Currently, there no mechanism or
infrastructure for collecting mandatory premium among the large informal
sector. Even in terms of the existing schemes, there is insufficient and
inadequate information about the various schemes. Data gaps also prevail.
Much of the focus of the existing schemes is on hospital expenses. There
continues to be lack of awareness among people about health insurance. In
spite of existing regulation in some States, the private sector continues to
operate in an almost unhindered manner. The growth of health insurance
increases the need for licensing and regulating private health providers and
developing specific criteria to decide upon appropriate services and fees.
Health insurance per se, suffers from problems like adverse selection, moral
hazard, cream-skimming and high administrative costs. This is coupled with
the fact that in the absence of any costing mechanisms, there is difficulty in
calculating the premium. There is also a need to evolve criteria to be used for
deciding upon target groups, who would avail of the SHI scheme/s and also to
address issues relating to whether indirect costs would be included in health
insurance. Health insurance can improve access to good quality health care
only if it is able to provide for health care institutions with adequate facilities
and skilled personnel at affordable cost.
Given this scenario, the challenge, then, for Indian policy-makers is to
find ways to improve upon the existing situation in the health sector and to
make equitable, affordable and quality health care accessible to the
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population, especially the poor and the vulnerable sections of the society. It is
in a way inevitable that the state reforms its public health delivery system and
explores other social security options like health insurance. Implementing
regulations would be one, but by no means the best mechanism to contain
provider behaviour and costs. This can only be done by developing
mechanisms where government and households can together pool their
funds. This could be one way of controlling provider behaviour.
There is an urgent need to document global and Indian experiences in
social health insurance. Different financing options would need to be
developed for different target groups. The wide differentials in the
demographic, epidemiological status and the delivery capacity of health
systems are a serious constraint to a nationally mandated health insurance
system. Given the heterogeneity of different regions in India and the regional
specifications, one would need to undertake pilot projects to gather more
information about the population to be targeted under an insurance scheme
and develop options for different population groups. Health policy-makers
and health systems research institutions, in collaboration with economic
policy study institutes, need to gather information about the prevailing disease
burden at various geographical regions; to develop standard treatment
guidelines, to undertake costing of health services for evolving benefit
packages to determine the premium to be levied and subsidies to be given;
and to map health care facilities available and the institutional mechanisms
which need to be in place, for implementing health insurance schemes. Skillbuilding
for the personnel involved, and capacity-building of all the
stakeholders involved, would be a critical component for ensuring the success
of any health insurance programme.
The success of any social insurance scheme would depend on its design,
the implementation and monitoring mechanisms which would be set in place
and it would also call for restructuring and reforming the health system, and
developing the necessary prerequisites to ensure its success.
References
(1) Bhat Ramesh & Mavlankar Dileep (2000), ‘Health Insurance in India: Opportunities,
Challenges and Concerns’, Indian Institute of Management, Ahmedabad.
(2) Bhat Ramesh (1999), ‘A note on policy initiatives to protect the poor from high medical
costs’, Indian Institute of Management, Ahmedabad.
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(3) Ellis Randal et al (2000), ‘Health Insurance in India: Prognosis & Prospectus’, Economic &
Political Weekly, January 22, pp. 207-216
(4) Government of India (1994), ‘Annual Report, 1993-94’,Ministry of Health & Family
Welfare
(5) Krause Patrick (2000), ‘Non-profit Insurance Schemes for the Unorganized Sector in
India’, Social Policy Division 42, Working Papers No. 22 e, GTZ
(6) Peters David et al, (2002) ‘Better Health Systems for India’s Poor: Findings, Analysis, and
Options’, Health, Nutrition, and Population Series, World Bank: Washington DC.
(7) Ranson Kent & Acharya Akash (2003), ‘Community based health insurance: The Answer
to India’s Risk Sharing Problems?’ Health Action, March.
(8) Ranson Kent & Jowett Matthew (2003), ‘Developing Health Insurance in India:
Background Paper’, Prepared for Govt. of India Workshop on Health Insurance, 3- 4th
January, New Delhi.
(9) World Health Organization (2002), ‘World Health Report 2002: Reducing risks,
promoting healthy life’, WHO: Geneva.