India has a lot to learn from that nation’s expertise and accomplishments in running the NHIS programme that provides low-cost access to quality health care to its citizens. Challenges faced by PM-JAY are not very different
During Prime Minister Narendra Modi’s recent visit to South Korea, both countries signed seven agreements to enhance cooperation in key areas, including infrastructure development, media, start-ups and combating trans-border terrorism and international crime. Health could have been yet another possible area of cooperation as India has much to learn from South Korea, which has over 30 years of experience in implementing the National Health Insurance Service (NHIS) scheme that covers its entire population (almost). Currently, India is at the initial stages of rolling out the world’s largest hospital insurance programme, the Pradhan Mantri Jan Arogya Yojana (PM-JAY), for the poor and the vulnerable. Some of the challenges faced by PM-JAY are not very different from those faced by South Korea. The way it dealt with the issues holds useful lessons for India. A lot can be learnt on how to save the self-employed deal from vested interests, generate necessary intel from claims data and integrate different schemes covering different population sub-groups. This article will, however, focus on covering the self-employed or the non-poor in unorganised sector.
About NHIS: South Korea, now an advanced nation, was a middle-income country when its NHIS achieved near universal population coverage in 1989. In 1977, Korea made social health insurance mandatory for its employees (including dependents) of large corporations. It was gradually extended to other organised sector workers (including dependents). However, in 1989, NHIS, with identical benefit package, was extended to the self-employed (and their families). In terms of funding, it is a contributory scheme for all organised sector employees, wherein both employer and employee contribute towards insurance premiums.
For the self-employed, the Government partly tax-subsidises premium. In addition to contributing towards premium, all insured members have to make co-payments at the time of seeking care. These co-payments vary, depending on the level of healthcare provider (from physician clinics to tertiary hospital). For the poor, who account for a small share (3 per cent to 5 per cent) of the population, the Government fully subsidises premium and co-payment rates, which are significantly smaller or nil. NHIS has a well-defined benefit package that covers curative care (including outpatient care), diagnosis, emergencies, pharmaceuticals, health check-ups and the like. During 2000, the Government integrated different schemes, each having a separate risk pool into a single scheme with a single risk pool.
South Korea’s experience in implementing NHIS will be useful for India even though the context is different. While India has social health insurance for a majority of its organised sector employees, it is seeking to provide free hospital care for the bottom 40 per cent of the population through PM-JAY. For the non-poor households, working in the unorganised sector, private voluntary health insurance is the only option.
Covering the self-employed — the why and how: South Korea is an excellent example of how premiums from non-poor households in the unorganised sector can be leveraged to mobilise additional funding for the health sector. This is particularly important in a context where public health spending has been low and ‘sticky’, which is true of India. Moreover, the Korean experience informs us that there are potential risks for not bringing this section of the population under the health insurance programme.
In South Korea, extending NHIS to the self-employed was necessitated due to rising inequity in the amounts paid by the insured and the uninsured. Under NHIS, reimbursement rates to the health care providers were regulated. As these rates were restrictive, health care providers were prompted to charge higher rates to the uninsured, which led to increasing inequity in the amounts paid by the two groups. There were other factors at work, too, notably political considerations that led to the inclusion of NHIS in campaign agenda and rising economic prosperity that improved the ability of the self-employed to pay insurance premium. Insuring the self-employed brought with it challenges of deciding contribution levels, enrolling/collecting contributions and administering benefits. South Korea responded to these challenges well.
India will soon be confronted with the issue of divergence in the reimbursement rates paid to hospitals and ones charged by hospitals to the non-insured. This divergence will be significant even if the non-poor unorganised workers were to participate in private voluntary health insurance. This is likely to become untenable sooner than anticipated. Unlike South Korea, where the Government fully subsidises premiums only for a small percentage of its population, India is fully subsidising premium for a significantly higher share of its population. The fiscal burden will likely preclude the Government from giving any subsidy to the non-poor. Even so, extending the scheme to the unorganised sector workers at full and fair premium should attract them to the programme. Korea made it mandatory for its population to join the scheme. India will have to look for mechanisms to create semi-mandatory conditions such as subscribers of specific services like telecom, tapping into affinity groups like housing society members and so forth.
Also, extending PM-JAY to the unorganised sector has other solid advantages such as reduced administrative costs and greater bargaining power as care purchaser relative to care providers. There are good reasons for extending the scheme to the non-poor unorganised sector workers (and their families). This may not get extended immediately as the scheme is still being rolled out to cover the poor and the vulnerable. Nevertheless, a plan needs to be put in place for covering the non-poor for which the Korean experience is useful. Learning and technical know-how from Korea could, perhaps, be formalised through a bilateral agreement or through an international agency like the WHO.
(The writer is a development economist, formerly with the Bill & Melinda Gates Foundation and the World Bank)
