Healthcare is a scarce resource in developing countries, access to it limited by the absence of a network of primary health care facilities or affordable private facilities with a wide enough reach.
The poor and rural communities are least served, because they also lack the supporting infrastructure, roads, drinking water, sanitation, and so on. The failure to provide affordable and suitable healthcare has negated efforts by the government to reduce poverty. One major illness in the family is sufficient to pull the entire household back into poverty and deplete the hard-earned capital.
The National Health Protection Scheme (NHPS) announced by the Centre in Budget 2018 could potentially become the centrepiece to achieve universal health coverage, once a few implementation issues are resolved.
The cost factor
The first major issue is the financing of universal health care and the infrastructure to support its delivery. Even at a modest coverage of ₹200 a person and for a household of five, the total cost for ten- crore households would be ₹10 lakh crore.
A more realistic (higher) premium would require financial resources that far exceed those announced by the government. Currently, outpatient care costs (which far exceed inpatient costs as a share of total health costs) are borne by patients.
The experience with Rashtriya Swasthya Bima Yojna (RSBY), which covered only hospitalisation and limited the benefits to three to five persons per thousand, shows that people want coverage of outpatient costs, and would be willing to pay something for health insurance that covers both outpatient and inpatient costs.
Therefore the health insurance programme needs to be designed with an understanding that those who pay a contribution will benefit from the government subsidy for health protection. By applying contributions, India will have a two-tier financing model, which is the international standard almost everywhere.
Unsuitable package
T he RSBY and the insurance companies apply a standard package. This “one size fits all” model is unsuitable because it assumes the tacit fallacy that all people are exposed to the same risk mix; it is clear that risks vary by region, profession, and so on. This misconception has made health insurance schemes less popular.
To align the local community’s interest with health insurance coverage, the packages must be context-relevant, based on community involvement and the model of “have a say before you pay”, that is, community voice on setting local priorities, paid for by contributions of the members.
Each community would develop its “micro insurance unit” (MIU), with the responsibility to engage members in consultations on context-specific benefit packages reflecting local perceptions of risk exposure and ability to pay. Where people understand the programme and agree that the benefits are relevant for them, they would be willing to contribute money, information, and other resources. It is necessary to encourage the creation of community-based MIUs as lead implementing agencies and develop technical assistance for them.
As the purpose is to reach uninsured households, it is best that the vast networks of 85-lakh Self-Help Groups, and more than 90,000 credit societies, cooperatives and similar associations are leveraged. They are well-structured, well-managed and capable of handling public funds, and have been active for years mostly in rural and the informal sector.
The MIUs are the ideal implementers as they can create the one-stop-shop delivering access to (health) insurance with a long-term presence at the grassroots level. MIUs can put in place the infrastructure to collect contributions in many small instalments. The money so raised would be managed by the MIU. The incentive to enrol voluntarily with MIUs will be strengthened by the application of the “have a say and pay” principle for the mutualised risks.
Three advantages
The three distinct advantages of this approach are that risk coverage would be decided according to local requirements; that the risk of fraud / false claims would be reduced as the local community will be well-informed about sicknesses in a family; and thirdly, the members, as contributors to the micro-insurance unit, would resist misuse of funds, and ensure that the cost of medical treatment remains reasonable.
The community, through its Micro Insurance Unit, will fulfil the essential requirement of covering health risks as decided collectively. Since members would be contributors, they would exert sufficient pressure to avail the legitimate benefits within the agreed limits. The model has been tried and tested successfully in pilot locations in India, with compelling results regarding insurance education, technical assistance to create a governance structure for risk management at community level.
Efficient systems
The health delivery system is the responsibility of the State governments. The NHPS could then leverage grassroots-level insurance education and claims settlement mechanisms for operation at lower cost and with a better information flow.
The lower prices of administration will flow from hiring staff at village level (after being trained in the needed skills) which would be much cheaper than concentrating the administration in urban settings, as well as by liberating NHPS from “first rupee” claims. The State governments could leverage funds from skill development to train local persons to provide support to the micro-insurance units. These units could be federated right up to the State level to ensure infrastructure, technical and education support without having any right to interfere in local decision-making.
Prima facie , this model of health insurance could take some time to develop and establish itself, but once the people associate community participation with benefits (in health coverage, agriculture, and livestock insurance), and benefits with paying a contribution, there will be the foundation for broad-based social security framework in rural settings and in the informal sector.
Past experience
Those who expect that remotely managed health coverage would bring quick results should consider the experience with previous programmes, as well as with the (very low) voluntary uptake of the Pradhan Mantri Fasal Bima Yojna. The NHPS offers a unique opportunity to innovate, by harnessing best-practice lessons from many pilots. There is a large community of experts and specialists with field experience in India standing by to assist NHPS to succeed.
David M. Dror is Chairman, Micro Insurance Academy, and former professor of health insurance, Erasmus University Rotterdam and former senior social protection specialist, ILO. Sanjiv Nair, IAS, is a former Director General of NECTAR
