Converting wealth into health

A poor person needing a bypass surgery or chemotherapy can hardly expect any private hospital to treat him/her even though the government ha...

A poor person needing a bypass surgery or chemotherapy can hardly expect any private hospital to treat him/her even though the government has mandated hospitals to reserve a certain minimum number of beds for the poor. The non-fulfillment of this obligation, that was mandated in exchange for certain fiscal incentives, that has finally forced the government into asking such hospitals in Delhi to pay the difference between the market price and the concessional price at which land was allotted to them.

This step is expected to generate revenue to the tune of Rs 500 crore. From the interest income on this, the Union urban development minister is thinking of providing health insurance cover to the poor in Delhi. In particular, the minister is thinking of providing the poor the universal health insurance policy of public insurers. The policy provides a health cover of Rs 30,000 and accident benefit of Rs 25,000. For a family of five the scheme costs Rs 548 per annum, of which Rs 300 is already subsidised by the Centre. If the balance Rs 248 is paid for the 4 lakh Delhi’s BPL card holders, the amount comes to less than Rs 10 crore. At 5 per cent interest, the subsidy that could be made available is Rs 25 crore which can in fact cover 10 lakh families. The scheme, if successful, could be extended to other states.

While the policy of providing an exit route to hospitals sounds good, the idea of introducing health insurance is not that reassuring. A successful health insurance programme depends not just on proper risk underwriting but also on standardising treatment protocols, developing costing for various procedures, creating a network of healthcare providers, and streamlining a claims settlement system. Putting this together is proving to be difficult even for the non-poor, given the largely unregulated nature of healthcare delivery in India. In the case of the poor, introducing health insurance has additional problems. One, given the low level of awareness among the poor they fail to benefit from any insurance scheme. As a result, claims ratio tends to be low, at least, in the initial years. This is also true in the case of the first year performance of UHI scheme. Part of the premium must be collected from the beneficiaries so that they consider seeking healthcare as their right. This raises the issue of who the collection agency would be. Second, health insurance is only for in-patient care which is only one of the components of healthcare. In the case of the poor, preventive and out-patient care is also important. Therefore, health insurance for the poor should be embedded in a larger healthcare programme.

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Perhaps, the minister can think of spending a part of the interest income on the other two components of healthcare. That way, the proposed health insurance intervention can be made more meaningful. Even if this is done, the insurance cover of Rs 30,000 can hardly provide bypass surgery or chemotherapy to the poor. Still, it will mark a significant step forward.

The writer is a senior fellow at ICRIER, New Delhi