How many of these ailments progress to serious illnesses is anybody’s guess; but healthcare costs, when met, bring financial ruin to about 3% of the population annually. With cost inflation at an estimated rate of12-15% annually, we can only look forward to the situation progressively worsening in the years to come.
At present, an estimated 52% of inpatient care and 82% of out-patient care is provided by the private sector; and this level of out-of-pocket expenditure is only going to add to the misery. It is obvious by now, that the government allocation of health expenditure is never going to meet the growing demands. So what is the solution to this seemingly insurmountable problem? The answer must lie in “risk pooling” so that whilst care will be available to all, at any one given time, the healthier sections of society pay for the less fortunate ones. This is the essence of insurance.
Health insurance in India kicked off with the ESIS scheme in 1952 and the CGHS in 1954. However these catered to select populations. Gradually there was an expansion with central schemes like the Rashtriya Swasthiya Bima Yojana (RSBY), and state sponsored schemes like the Rajiv Aarogyasri (in AP), Kalaignar (TN), and Vajpayee Arogyasri (KA). Private insurance took off with the Mediclaim in 1986, and with the opening up of the economy and the proposed hike in FDI in insurance, this sector is set to take off in a big way. Hopefully, by 2015, health insurance will cover (as predicted) 50% of the population.
However there are numerous problems that plague this sector and threaten to defeat the very purpose of all such well-intentioned plans. Two recent and exhaustive reports, “A Critical Assessment of the Existing
Health Insurance Models in India” by the Public Health Foundation of India, and a World Bank report “Government-Sponsored Health Insurance in India; Are You Covered?” by Gerard La Forgia and Somil Nagpal have dissected every aspect of healthcare insurance in a manner not often seen in this country.
The main area of concern is insurance fraud. A modest estimate by GIC puts the fraud burden at 15% or Rs. 800 crores annually. Central or state funded schemes are often designed to cater to the BPL, group. However the definition of “BPL” itself is a subject of such variation, that it becomes easily open to abuse. BPL miss-classification is estimated to be as high as 49%. AP tried to get around this issue, by making its scheme available to all effectively covering 85%of the population. However the downside was that relief was available to specified serious ailments; whereas the disease burden is highest with common ailments. There are therefore reservations about any state sponsored scheme being made “universal”.
The fraud comes in various shades and colours. The World Bank has already warned that as more people are able to afford healthcare and the government ramps up insurance coverage, the risk of excessive care may increase. This may take the form of over investigation, over diagnosis and indeed unnecessary treatment. Added to this is “defensive medicine” and aggressive marketing by hospitals, (which costs the United States an estimated $250 billion to $300 billion annually). The World Bank warns that these are emerging as serious problems in India. “Individuals in India with private voluntary health insurance are two to three times more likely to be hospitalized than the national average.” There has in fact been an attempt to launch a “Society for Less Investigative Medicine”, at AIIMS to increase both doctor and patient awareness of the issue. The IRDA has attempted to bring some accountability in with the “Health Insurance Standardization Guidelines”, which all health insurance providers must follow.
The “leakage” in India is estimated to be around 20%, and the most common perpetrators of Healthcare Insurance fraud are healthcare providers. Often this takes the form of excessive billing, claiming for services not actually rendered, or claiming to have rendered treatment for a “covered” illness whilst actually treating an illness not covered.
Insurance companies themselves contribute to the problem either on their own initiative or in collusion with the provider. Companies often deny claims on flimsy grounds, or underpay the provider for services rendered.
“The continuance of various innovative health insurance schemes ultimately hinges on the financial sustainability of the scheme.” And financial sustainability is linked to the realistic claims ratios. No scheme can last with persistent claims ratios in excess of 100%. This invariably results in hiking of premiums and this in turn causes a fall off of the numbers insured due to unaffordable premiums, (in case of the private sector), or drainage of government funds in the public sector. Either way this will prevent a workable solution ever being found for plugging the other issue that affects the financial status of rural households, namely OPD expenditure. This in fact contributes most to dragging people into financial difficulties. At present covering OPD expenses is considered unworkable because of the greater scope for abuse. Physicians increase the frequency of consultations, prescribe more drugs, and pharmacies dispense the higher end products. In fact the reports suggest that OPD coverage cannot and should not be provided.
The State government has put on hold the mediclaim policy reportedly with the intention of replacing it with a more workable policy. It appears that the plans are bogged down with working out packages, payouts and very importantly accreditation of healthcare providers. The CEA bill for example is “lost” in a “black hole” in the secretariat. Unless the government gives due attention to the many problems highlighted in the two reports above, the problems will merely change complexion and abuse will continue. They will certainly not go away.
(Dr Gladstone D’Costa is the Chairman, Accreditation Committee and member, Executive Committee, Goa Medical Council.)
