Health Insurance in Indian Context: Need of the Hour

Department of Community Medicine, Smt. Kashibai Navale Medical College, Narhe, Pune, Maharashtra, India

Corresponding Author:

Harshal Tukaram Pandve, MBBS, MD
Department of Community Medicine
Smt. Kashibai Navale Medical College
Narhe, Pune, Maharashtra, India
E-mail: dr_harshalpandve@yahoo.co.in

Received Date: November 02, 2012; Accepted Date: November 03, 2012; Published Date: November 05, 2012

Citation: Pandve HT (2012) Health Insurance in Indian Context: Need of the Hour. J Community Med Health Educ 2:e109. doi:10.4172/2161-0711.1000e109

Copyright: © 2012 Pandve HT. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

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The strength of any nation is its health. There is empirical evidence that the health of a nation significantly enhances its economic development, and vice versa. India is a second populous country in the world and also a largest democracy of the world. Since its independence India has made considerable progress in terms of the health indicators and health infrastructure. India’s National Health Policy first formulated in 1983 and revised in 2002 has been to improve the health of the population.

Indian health system is characterized by a vast public health infrastructure which lies underutilized, and a largely unregulated private market which caters to greater need for curative treatment [1]. Healthcare costs in India today are not only high but also rising. The rise in health care demand has increased the cost of health care system to the extent that specialized care is beyond the reach of Indian common man. Curative services favor the non-poor. For every Rs. 1 spent on the poorest 20% population, Rs.3 is spent on the richest quintile. Hospitalized Indians spend on an average 58% of their total annual expenditure. Over 40% of hospitalized Indians borrow heavily or sell assets to cover expenses. Over 25% of hospitalized Indians fall below poverty line because of hospital expenses [2]. According to the World Health Organization (WHO), private expenditure represented 73.5 per cent of total health expenditure in India in 2007 (of which out-of-pocket expenditure of households was about 90%), when public funds covered only 26.5 per cent of total healthcare costs [3]. High outof- pocket health expenditures poses barrier to access for healthcare [1]. To cope up with the rising healthcare costs health insurance can be the better option. Only 10% Indians have some form of health insurance, mostly inadequate [2].

To address this burning issue in 2008 Government of India introduced the “Rashtriya Swasthya Bima Yojana” or National Health Insurance Programme (RSBY). RSBY is uniquely mandated to cover the entire territory of India and all occupational groups. Eligibility for RSBY coverage applies to all the BPL population entails full premium subsidy, and the GOI extended the same terms to certain “above poverty line” (APL) groups [4]. Rashtriya Swasthya Bima Yojana (RSBY) scheme has suddenly catapulted the proportion of India’s population under insurance cover from 3 to 4% (2005) to about 15% (2010) and hopes to increase the same to 30% by 2015. The highlights of this scheme are its paperless transaction, portability of benefit, and being cashless to beneficiary. The hallmark of RSBY is the choice to beneficiary between a list of government and private empanelled providers. RSBY is being lauded to hold much promise for the secondary healthcare in India. The scheme has been designed with utmost care to being responsive to needs of the population, along with having a business model so that all stakeholders have an incentive to carry forward the scheme. However, this scheme needs to be evaluated to diagnose the maladies of health insurance viz. cream skimming, moral hazard, etc., at the earliest [1].

Social Health Insurance (SHI) is a system of financing health care through contributions to an insurance fund that operates within a tight framework of government regulations. It provides a pool of funds to cover the cost of health care and it also has a social equity function which eliminates barriers to obtaining health care services at the time of need especially for the vulnerable groups [5]. Few SHI are functional in India like Central Government Health Scheme but the effectiveness of such SHI is again doubtful. Community-Based Health Insurance (CBHI) is a form of private health insurance whereby individuals, families, or community groups finance or co-finance costs of health services. CBHI is designed for people living in the rural area and people in the informal sector who cannot get adequate public, private, or employer-sponsored insurance [5]. Numerous community-based health insurance (CBHI) schemes hugely diverse in terms of design or implementation, coverage, and target groups exist in India. Community insurance presents a workable model for providing high-end services in resource-poor settings through an emphasis on accountability and local management. Private insurance based on profit motive is theoretically difficult, if not impossible, to operate in healthcare market in view of problems of information asymmetry leading to adverse selection, moral hazard, and supplier-induced demand [1]. Many private health insurance companies are operating in India. The private health insurance sector has been mired in restrictive regulations and outdated business models and continues to operate under losses, in an unsustainable mode. The health insurance industry needs to relook their business models and evaluate emerging concepts in health care that can help correct the imbalance and help the industry operate in an effective manner [6].

To conclude with, the Indian health insurance scenario today is a mix of Governmental insurance schemes, Social Health Insurance (SHI), voluntary private health insurance and Community-Based Health Insurance (CBHI). As per the recommendations of High Level Expert Group on Universal Health Coverage on institutional reforms, to make quality health care affordable, insurance penetration should increase to at least 50 per cent of the population by 2020 and 80 per cent by 2030 from the current 15 per cent [7]. The mixture of various health insurance service providers must be used effectively to ensure the health of citizens. For the Indians the health insurance is the need of the hour.

References

1. Prinja S, Kaur M, Kumar R (2012) Universal Health Insurance in India: Ensuring equity, efficiency, and quality. Indian J Community Med 37: 142-149
2. Ministry of Health and Family Welfare, Government of India (2012) National Rural Health Mission.
3. World Health Statistics (2010) World Health Organization Geneva.
4. Government of India: Rashtriya Swasthya Bima Yojana (RSBY).
5. Adinma ED, Adinma BJ (2010) Community based healthcare financing: An untapped option to a more effective healthcare funding in Nigeria. Niger Med J 51: 95-100
6. Thomas KT, Sakthi Vel R (2011) Private Health Insurance in India Evaluating Emerging Business Models. Journal of Health Management 13: 401-417
7. Aarti Dhar (2012) Private health care no panacea. The Hindu.