HEALTH INSURANCE IN INDIA

Health Insurance
Health Preventive no regulation Promotive no regulation Curative Partly regulated

Curative- OPD - IPD

Insurance
Life Non-life Reinsurance: All of them are regulated Life: critical illness Non-life: Medi-claim

Some basic concepts of insurance

Risk ? Risk pooling: law of large numbers, low&high, rich&poor, young&old Risk avoidance: LPG godown Risk mitigation: preventive Adverse selection vs risk selection Moral hazard vs induced demand (deductible & co-payment)

Present scenario
1. Enormous mismatch in global healthcare financing 2. Developing countrieshave 84% of population & 90% of disease burden 3. By 2020, world population-7.5 billion By 2050, world population 9 billion Most of the growth in developing countries. 4. According to NHA of India 2001-02, sources of finance in health sector Household 68.8% Central Govt. 7.2% State Govt. 14.4% Private Firms 3% Public Firms 2% External Funds 2% Local Govt. 2.2%

(continued)
Govt. spending on health care of GDP 0.9% Private spending 4 to 4.5% of GDP Overall Out of Pocket Expense 80% (incentivises supplier induced demand) In Bihar & UP, it is 90% NSS (1995-96) showed that rich consumed public service 3 times > the poor

BPL POPULATION - FAMILIES 2001

BPL URBAN BPL RURAL TOTAL BPL BPL URBAN Families

Figures In Million TOTAL BPL

RURAL Families

067.0

193.2

266.2

017.8

048.6

065.4

BPL POPULATION - FAMILIES 2004

BPL URBAN BPL RURAL TOTAL BPL BPL URBAN Families

Figures In Million TOTAL BPL

RURAL Families

80.79

220.93 301.72 020.1

055.23 075.33

Present status
2% - By Insurance Policies.

10% - By self funded Govt. Scheme i.e. CGHS, Railways, Defense, PSUs organization. ESI etc. 1.1% - Rural / BPL population { UHIS / Community Insurance}. 86.9% - Depend upon Govt. / Private Hosp.
40% - Unable to take treatment.

(continued)

REASONS- Unable to take treatment.

a. b. c. Mostly illiterate and poor. First priority is food. Rest later. Prefer traditional / local / home made remedies. Public facilities: far from reach distance and if managed to reach poor quality treatment to purchase medicines etc from out side Cant afford high treatment cost: in Pvt. Hosp. Borrowing money, sale of propertymake them poorer.

Financing Options
Self pay (include user fees) General tax revenue financing Insurance: Social insurance: Compulsory; Public or private management Private: Voluntary Community Financing Individual Savings Account/Catastrophic insurance

Comparison of risk pooling and equity of financing methods

Financing method
General revenue Social insurance

Risk pooling
Widest risk pooling Within the covered population

Equity
Most equitable Redistributive within the covered population

Private insurance

Group
Individual Community Financing User fees

Within a group
Within an age/sex group Within a community No risk pooling

Redistributive within a group

Not equitable Redistribution within a community Not equitable

1st NATIONAL HEALTH SCHEME FOR BPL- UHIS

BENEFITS
Sum Insured Limit for Anesthesia, Blood, Oxygen, etc. Limit for any one illness Personal Accident Cover Pre Existing Diseases Waiting period First Year Exclusions Maternity Benefits Bystander Allowance PREMIUM (for a family of five) (Sub-300) BPL Family Pays Rs.30,000 Rs. 4,500/Rs. 15,000/Rs.25,000/NOT COVERED 30 days NOT COVERED NOT COVERED NOT COVERED Rs.548 Rs.248 IT FAILED

Performance under UHIS

Name of the Co 2004-05 No. of Policies 52,772 67,259 1,14,432 69745 No. of Families 65,718 76,605 1,42,704 81494 No. of. Persons 1,82,641 2,47,801 4,65,638 308238 Premium Claims Paid

2005-06
2006-07 2007-08 (Up to Dec07)

(Rupees in lakhs) 280.655 40.02 350.53 154.01 739.98 335.44 396.40 10.057

REASONS FOR FAILURE OF UHIS

Lack of willingness of Insurers / other Stake holders. Absence of Nodal implementing agency Improper identification system of beneficiaries. Inadequate coverage / benefits. Huge premium burden Rs 165/- min per person hence Unaffordable in spite of govt. subsidy (Rs 200(1), 300(5) & 400(7). Lack of awareness / publicity. Cost of collection of premium more than the premium No confidence of public about treatment in case of need

Yashashvini
1. Benefits available to all members of all types of rural coops such as: Fisherman, Milk Weavers Industrial Artisans SHG/Stree-shakti groups 2. Age: newborn to 75 Years 3. Period starts from 1st June

Participation Year Year-1 (2003-04) Year-2 Year-3

Number (in Million) 1.6 2.0 1.05

Premium per farmer per Annum Rs. 60/= Rs. 60/= Rs. 120/= (Rs.60 per child below 18 Years)
Rs. 120+60/= Rs. 120/= (for adult & child)

Year-4 Year-5 (2007-08)

1.9 2.3

With 15% discount on 5 or more members of family

1. 2.

Coverage upto Rs 2. lakh per year and Rs. 1 lakh per hospitalization. 1600 surgical procedures @ 40% to 50% of price Normal delivery IV Year Neonatal Care IV Year Free OPD Discounted Lab tests Defined Medical Emergencies IV Year Surgery package includes everything during hospital stay Coverage for stabilization of defined Medical emergencies. Hospital for 2 days for Snake-bite Bull Gore injury Electric Shock Drowning Dog bite Injuries with agri equipments

3. 4.

Procedure
1. Member approaches Network Hospital with ID Card 2. Network hospital intimates TPA for validation & extent of cashless facility 3. Hospital sends claim docs to TPA for reimbursement

1. Pre- Existing disease no bar to avail the benefit. 2. 100% Cashless Treatment 3. Laminated Photo ID 4. Choice of Hospital available 5. Administrative Cost Minimal

2003-04 2004-05 2005-06 2006-07 2007-08(sept07)

Free OPD Surgeries

35814 9047

50174 15236

52892 19677

206977 39570

22428 12765


Members(in lakh) Contribution of Members(In crore) Contribution Govt. (in crore) Total(in crore) Surgery Cost (in crore) Cost/Member Collection/Member Total Admin.Cost (in lakh Admn.Cost/insured (in Rs)

YEAR
03-04 16.1 04-05 20.2 05-06 14.7 06-07 18.7

9.7
4.5 14.2 10.65 66 60 40.02

11.97
3.58 15.55 10.47 92 60 12.78

16.3
11.0 27.3 26.16 174 120 43.61

21.5
20.0 41.5 38.72 204 120

2.5

1.6

2.3

TPA (FHPL) FUNCTIONS

1.
2.

Enrolment & Photo ID Card

Cashless Treatment

3.
4.

MIS
District Coordinator

5.
6.

Member help-line/Call Centre

Medical/Case Management

7.

Claims Management

Network Hospitals Spread Across 113 Locations :Exclusive Front Desk Counter

2003-04

114

2004-05
2005-06 2006-07 2007-08

137
197 299 310

Sustainable - NO
1. Risk selection (voluntary) & not risk diversification 2. Renewal Rate: Y3 43%;Y4 62% 3. No Reinsurance 4. Individual Contract Vs. Community Contract

5. Low Insurance Premium

6. Misuse by Hospitals

7. Mandatory rather than voluntary

CLAIMS

Claim Incidence per 1000 Insured

Claim Cost per Insured(in Rs) Prem./Ins. (in Rs) No. of Claims Total Claims (Rs in cr.) Average Claims 9008 10.65 11822 Year 1 Year 2 Year 3 Year 4

5.6

8.6

14.1

24.6

66

104

187

253

60 14963 18.08 12083

60 19439 25.78 13262

120 37330 38.40 10286

120

Claim Incidence per Thousand age groupwise/ Claim cost per insured
Year 2 26.6/963 12.1/306 5.6/64 19.7/216 Year 3 50.7/1687 23.8/627 8.4/97 18.1/205 40% 51.5% Year4 63.9/1532 21.2/449 13.9/139 58.4/456

0-2 Yrs 3-7 38-43 73-78

Women Participation Top 5 Hospitals Claim share

Average of Top 5 Hospitals increased from Rs.18230/(Y2) to Rs. 39600 (Y4) Average of remaining hospitals remained almost the same at Rs 640/=

EFFORTS BY STATES- NRHM

A.P.- CRITICAL ILLNESS- 3 Districts
Formation of a State Trust Enrolment by family photo electronic ration card (Biometric Card). 20 lakh (1 phase), 48 lakh (II phase) Pilot project in 3 District. (5 more districts from 7/12/07) Coverage for 5 critical surgeries(heart,kidny,cancer,neuro and burns-now trauma also added). Negotiations of tariffs etc for 163 defined surgeries. (213) Cash less facilities. Sum Insured Rs.1.50 lakh. Government and private hospitals as part of scheme. Serviced by Star health - Private Insurer. 100% premium by Govt. for BPL families. Proposing to extend to 7 districts from 1/04/08

Statistics
District
No. Surgeries

(1st April 2007 to 31th Dec 2007)

Amount In millions No. of camps Patients screened Referred for admission

P H Mahboobnagar A Anantapur S E Srikakulam 1

From 01/04/07

2501
3201 2943

124.2
175.9 118.9

276
335 216

42223
64424 43855

3903
5296 4092

Total

8645
440 558

419.1
From 07/12/07

827
56 53

150502
15234 31438

13921
3226 3956

East Godavari P H A S E 2 West Godavari

21.7 29.5

Chittor
Ranga Reddy Nalgonda

167
305 374

07.5
16.1 17.2

67
38 63

42341
9847 14752

3136
1513 2674

Total

1844

92.2

277 113612

14505

RAJASTHAN - NRHM
Enrolment of families by Health Card based on BPL Data. Pilot project in 5 District. Sum Insured - Primary Cover Rs 30,000 and 7 critical surgeries for Rs 1,35,000. Premium Rs 480 + ST Beneficiaries 8 lakh BPL Families Negotiations of tariffs etc for all procedures Cash less facilities. Use of Government and private hospitals both Serviced by State Health Insurance Fund Agency. 100% premium by Govt. for BPL families.

EFFORTS OF OTHER CENTRAL MINISTRIES Textile Ministry: Scheme for weavers(16lakh). Rural Development Ministry : Health for BPL. Labour Ministry: Rashtriya Swasthya Bima Fisheries Department : Scheme for fishermen. Finance Ministry: UHIS Chemical & fertilizer Ministry: Drugs.
Ministries are interested in launching their own Insurance schemes.

RASHTRIYA SWASTHYA BIMA YOJANA

Benefits

Total sum insured of Rs 30,000 per BPL family on a family floater basis Pre-existing diseases to be covered Coverage of health services related to hospitalization and services of surgical nature which can be provided on a daycare basis

RASHTRIYA SWASTHYA BIMA YOJANA

Benefits

Cashless coverage of all eligible health services. Provision of Smart Card. Provision of pre and post hospitalization expenses. Transport allowance @ Rs.100 per visit

FUNDING
Contribution by GOI : 75% of the estimated annual premium of Rs 750, subject to a maximum of Rs. 565 per family. Contribution by the State Governments: 25% of the annual premium and any additional premium beyond Rs 750. Beneficiary to pay Rs. 30 per annum as Registration Fee/ Renewal Fee Administrative cost to be borne by the State Government. Cost of Smart Card to be borne by the Central Government. An additional amount of Rs.60 per beneficiary would be available for this purpose.

REQUIREMENTS
Insurance with adequate Sum Insured. Affordable premium. Simple terms and conditions of the policy. Coverage of pre existing diseases. Adequate capping on various procedures to stop misuse of the scheme. Identification and Networking of good & small private hospitals/ specialised day care centers Easy mechanism of collecting premium OPD and Drug cost