Time to review public health insurance

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Time to review public health insurance

Monday, 10 May 2021 | Moin Qazi

Time to review public health insurance

It is now for the policy doctors in India to collaborate with the real doctors to come up with radical solutions that can build a healthier world for everyone

Healthy families are the foundation of healthy communities, thus, there is nothing more important than good health and reliable healthcare for the family. Universal health coverage aims to ensure that all people receive quality healthcare without suffering financial hardship. The biggest challenge is to combat the multiple scourges ravaging the world’s poor and sick. Due to the current pandemic we are facing pressing challenges and health-related expenditure has now become a primary route to impoverishment. India took a great leap in public health insurance when it launched the Prime Minister Jan Arogya Yojana (PM-JAY) and the Ayushman Bharat (AB) scheme. These are the country’s flagship structures created to help universalise healthcare so that economically vulnerable families get the medical care they need without being pushed into debt. The cost to the Government is around Rs 1, 052 per family, with 60 per cent of it being borne by the Centre and the rest by States.

Although the scheme has several laudable objectives and novel features, it has its limitations. Despite having an apparently formidable beneficiary base, the AB-PMJAY still has a small share in the overall inpatient care provision. This is due to low empanelment of hospitals, a general reluctance of private providers towards dispensing AB-PMJAY benefits, and limited contribution of AB-PMJAY to the overall business of hospitals. The Government   pays public and private hospitals fixed rates for treating people covered under the programme and this doesn’t fit in with the viability of the private sector. New ways will need to be explored to see how the private sector can be co-opted in the delivery of public health. At the same time, the public health system — particularly in rural India — will have to be regenerated.

For the poor, health is often the dividing line between the path to prosperity or a slide into destitution. To make matters worse, the combination of typically volatile and precarious incomes and the absence of quality healthcare means low-income communities not only need access to healthcare, but also the ability to pay for it. Private healthcare has catastrophic costs that shave off hard-earned savings of patients. The repercussions have spillover consequences, resulting in less money being available to households for food, education, housing and other necessities.

A health emergency is a bigger risk to farmers than an unsuccessful crop. Once they sell their land/livestock, they become indentured labourers and that takes a generation or more to fix. Care at India’s public hospitals is technically free. But in reality the poor quality of care, lack of human resources and equipment have impeded them from coping with overwhelming patient loads. As a result, many underprivileged Indians are forced to seek treatment in costly private hospitals they cannot afford, or, simply go without care.

Not only are there steep medical costs involved in a health episode, but there are also incidental expenses. This is further compounded by the loss of income during the period an individual is ill/injured or caring for an ailing loved one. Without insurance, people often turn to informal means to manage these risks, but such strategies provide inadequate protection. So when misfortune strikes, many get drawn into debt traps as they borrow beyond their means. This can lead them to sell productive assets, take children out of school or put them to work, compromise on food, or leave other illnesses untreated. Due to this dynamic, a health issue can easily become a financial sinkhole. Health insurance serves two primary functions for individuals. First, it secures financial access to healthcare, both for preventive services and/or treatment. Second, it evens the costs of those services, protecting against potentially devastating economic shocks.

Health insurance policies in India typically don’t cover outpatient or domiciliary treatment, where the major expenses involve pharmacy bills, diagnostic and pathological tests. Several health insurance programmes cover wage loss on account of illness or other health-related issues, but many don’t. Due to these coverage gaps, even insured beneficiaries can incur high indirect costs, especially in cases that require hospitalisation. For instance, India’s flagship public health insurance scheme, AB, fails to recognise and compensate the indirect costs associated with hospitalisation — and these are quite significant for the poor. These include expenses on travelling to the hospital and back. Additionally, staying in a hospital or at home, after hospitalisation, implies a loss of wages. Often, attending caregivers from the family also have to forgo wages for several days and arrange for their lodging in case the treatment is being undertaken away from their native town. Poor households may  take on debt, selling productive assets or even their homes.

This risks a negative feedback loop: Poverty leads to bad health, which generates further poverty. They may be forced to avoid or delay treatment, as they cannot afford to lose their wages. Similarly, those who need longer-term hospitalisation may go back to work even if they have not fully recovered. Lost income, often one of the largest components of a financial shock, is far lower among the insured, because it allows them to seek care sooner.

Since many of the concerns of women are not easily insurable, e.g., maternity costs, a more relevant product would be one that combines insurance and savings. In this way, for example, a woman could use her savings to cover the cost of normal delivery, and insurance to cover the cost of unexpected complications. In evaluating the success of AB, what matters, even more than the beneficiaries count, is whether it removes the need in the target population to  prioritise livelihood over their daily needs. This is normally the case for most poor families who lack income support during the treatment. 

It can also consider including primary, day-to-day healthcare instead of just secondary and tertiary care. This is because poorly-delivered primary care inevitably increases the burden on health and finance at the secondary and tertiary levels down the line. Nurses and practitioners of traditional medicine will have to take “bridge courses” to keep abreast of the bewildering forms of new diseases. Diseases are not static things. Pathogens change, hosts change and environments change. Our immune systems change as well, as a result of fending off infections. And, of course, our lifestyles change, as also social standards, medical systems and public-health programmes.

Thus, it is necessary to enlarge the benefits to include loss of wages and incidental expenses during hospitalisation. This is already the prevailing practice of specific comparable schemes. Such plans provide a “hospital cash” or “wage loss” benefit, which is a fixed amount for transportation and wage loss for each day of hospitalisation. Some plans in developing countries provide a fixed amount to the beneficiary for each night of hospitalisation, irrespective of the actual expenses incurred. This top-up coverage can be used with any other social security scheme that members may enroll in. The enhancement of the coverage could make the scheme truly pro-poor. And, considering that this added benefit would be conditional on prior hospitalisation, there is no risk of moral hazard or unwarranted claims.

Universal health coverage will become a reality only if individuals, families and communities are empowered to identify their own health needs and take action to address the diseases that increase cost of care and contribute to the burden on our health systems. It is the Government’s primary job to invest in a dependable State-run system and also devise regulations that keep players, public and private, committed to serving national interest. 

Several laudable policies are already in place. Yet, for reforms to be successful, we need hardcoded changes and higher and more productive investments. A lot of money is wasted on excessive administrative expenses, inefficiencies, duplication of services, and fraud and abuse in insurance claims. It is now for the policy doctors to collaborate with the real doctors to come up with radical solutions that can build a healthier world for everyone.

The writer is a well-known development professional of international repute. The views expressed are personal.

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