India aspires universal healthcare insurance; it�s time it adopted value-based care system

Rahul Nandan

Healthcare is a fundamental human need and its easy access, quality and cost effectiveness are stepping stones to achieve it. Universal health coverage implies that people receive high quality health services without facing financial hardship. It is a priority for all nations, as highlighted by the agenda of the UN Sustainable Development Goals and WHO's Thirteenth General Programme of Work.

The role of universal health insurance in helping people afford quality treatment and care is indispensable. The Covid-19 pandemic has reaffirmed the role of health insurance for a healthy society as the months following the lockdown in March 2020 has seen health insurance claims rise significantly as thousands who tested positive could not afford to pay steep hospitalization and critical care expenses out of pocket. As of September last year, Covid accounted for 40% of total health claims for the general insurance industry. ^[i]

With an underfunded and overstretched public healthcare system and low insurance penetration, millions of Indians have to shell out of pocket money to meet steep healthcare expenses.

Only 48 crore people (37.2% of the India’s population) were covered under any health insurance in the year 2017-18. ^[ii] The WHO’s health financing profile for 2017 shows that close to two-thirds of expenditure on health in India is out of pocket, while the world average is just 18.2%. ^{[iii] [iv]} India’s per capita out of pocket expenditure is $43 and is projected to touch $121 by 2050. ^[v]

Over 63 million Indians are faced with poverty every year due to health costs alone, according to government estimates. ^[vi]

Government-sponsored health schemes account for 75% of the 48 crore lives covered through any kind of health insurance and only 4.2 crore people have subscribed to individual policies. With only 9% penetration of individual policies in India, there is significant scope for insurers.^[vii] The private insurers also need to shift focus from high cost tertiary care to low cost primary care, secondary and preventive care and OPD care.

Let’s see how well is India providing effective, essential health services? The country scores 46.8 (on a scale of 100) on the universal health coverage effective coverage index 2019 that aims to represent service coverage across population health needs and how much these services could contribute to improved health.^[viii]

The per capita government health expenditure in India is a paltry $18 compared to its BRICS counterparts – Brazil ($388), China ($249), Russia ($334) and South Africa ($267) – and even its smaller neighbouring countries – Maldives ($719), Malaysia ($194), Bhutan ($72), Sri Lanka ($68), Thailand ($188) and Indonesia ($55). ^[ix]

India needs to protect a staggering 60% of its population that is still not covered under any kind of health insurance. There is need to think beyond popular government health schemes and rope in private sector in a big way – both insurance companies and hospitals – for designing an affordable targeted health scheme for the large middle class and the poor. Almost 70% of the country’s population looks to the private sector for healthcare needs.

Notwithstanding the existence of a host of Union and state government-sponsored health schemes in India over the years, we have seen how they have not been much success in increasing access to quality healthcare.  Low cost of services fixed under such schemes leads to poor quality of treatment and low outcomes. Low cost of healthcare does not assure high quality of care. The existing cost-based model incentivizes doctors to provide more treatments because payment is dependent on the quantity of care.

The ambitious Ayushman Bharat scheme that offers an insurance cover Rs 5 lakh per family (for both secondary and tertiary care) per annum and aims to cover 50 crore people has indeed been the most significant step in this direction so far but suffers from inadequacies such as low cost of services rendered by private hospitals and delay in payments, leading to poor quality of treatment and poor outcomes. The private healthcare sector has repeatedly reiterated that the scheme is not sustainable for them.

So, what can India do? It needs to fairly balance care and cost to achieve the best possible solution. Can we learn from some of the best healthcare systems existing in different countries and curate our own model based on our unique realities and challenges?  Countries like the UK, Australia, France, Switzerland, Germany, the Netherlands, the US, Singapore and Thailand have mixed approaches to healthcare with varying but high levels of patient care and outcomes.  The US spends far more on healthcare than any other country but has the least outcomes.

The UK is truly socialized healthcare where the government not only finances healthcare but also provides it through the National Health Service. Coverage is broad and most services are free to citizens. Government spending accounts for over 80% of all healthcare spending with only about 10% of people buying private insurance.   

Switzerland is another example which has a universal healthcare system with perhaps the best health outcomes in the world.  Everybody is required to buy health insurance. Almost 99% of Swiss citizens have health insurance and can choose between plans from a multitude of private insurance companies who compete on price and service, helping to curb health care inflation. People have absolute freedom to choose their doctor and appointment waiting times are very low.

Far away in Australia, inpatient care in public hospitals is free as are access to most medical services and prescription drugs. The government pays for at least 85% of OPD services and more than half of hospitals are public with remarkable outcomes.

Closer, Thailand achieved universal health coverage in 2002 with providing essential services in preventive, curative and palliative care for all age groups. Extensive geographical coverage of health-care delivery, a comprehensive benefit package free at point of service, and increased government capacity have helped achieve it. Additionally, sin tax on tobacco and alcohol helps fund health promotion. 

India is a large diverse country where perhaps no single approach can work. Our reforms must lead us to a healthcare model founded on the principles of accessibility, affordability, technology adoption, medical and financial innovation, and centralization of services.

What we need is value-based healthcare where a patient pays according to the quality of care offered not quantity, that focuses more on value for patients than just cost containment.

Why India needs value-based healthcare system?

India currently follows a fee for service system, where payment is dependent on the quantity rather than quality of care provided. This puts tremendous financial strain on patients who bear the brunt of high and often unnecessary medical expenses.

On the other hand, the value-based system – such as DRG reimbursement in the US – involves categorizing each case into a diagnosis-related group (DRG) which has a payment weight assigned to it based on the average resources used to treat patients in that group. This ensures that doctors and hospitals are paid for the quality of service rendered.

The successive governments have always been concerned about access and affordability than improving quality of care. In the name of free or subsidized treatment, the poor are often provided very low quality treatment.

Value-based health practices can provide advanced healthcare for individuals, improve population health management strategies and reduce overall healthcare costs. It will benefit the patient, the healthcare provider and the payer.

It will bring quality healthcare to the doorsteps of citizens, and that too cashless with sustainable health insurance scheme. Every citizen will have universal healthcare card. The innovative system will attract and retain talented, well-trained and motivated doctors and nurses, provide for well-equipped clinics at convenient locations and use information technology to make best services available to patients.

The government, instead of being competitors in the healthcare sector, must facilitate large scale involvement of private sector – hospitals and insurance companies to implement the reforms – and should itself act as monitoring body that will allocate funds and keep an eye on the services rendered by private hospitals and insurance companies. 

We can learn considerably from the Swiss model of healthcare where private insurers are required to offer basic coverage to everyone, regardless of age or medical history. At the same time, all residents are obliged to take basic health insurance. Unlike many of the state-supported European models of universal coverage, the Swiss system relies heavily, although not entirely on the private sector. The government provides subsidies to hospitals, plays a key role in regulating the industry and influencing premiums and medical costs.^[x]

In India, there is no evidence that the money collected on lieu of sin taxes on tobacco and alcohol is spent on healthcare. This can be an important initiative in funding a part of healthcare programmes, similar to what is there in Thailand.

We also need to bring in more insurance schemes as the existing ones offer limited coverage, are insufficient to cover the cost of treatment and often limit treatment options.

In India, more than primary care and secondary care, it’s tertiary care that remains beyond reach for most, even decent middle class families. It’ important to create very thin tertiary care insurance model that covers high cost and low volume conditions (eg. heart diseases and cancer) and is not necessarily comprehensive. Such an insurance scheme is likely to cost little and could be affordable for most except lowest income families for whom the government can pay the premium. ^[xi]

Such a tertiary care insurance model is also imperative as the burden of critical non-communicable diseases has increased significantly over the years. NCDs like heart ailments -   ischemic heart disease, COPD and stroke – diabetes and cirrhosis were among the top 10 causes of total number of deaths in the country in 2019. ^[xii] Cancer is the second biggest killer in India after heart disease, with WHO claiming in its report earlier this year that one in every 10 Indians will develop cancer and one in every 15 will die of the disease. ^[xiii]

India’s growing elderly population is also a worry with the country’s life expectancy increasing by over 10 years since 1990. The Global Burden of Disease Study 2019 published in The Lancet mentions that life expectancy in India has risen from 59.6 years in 1990 to 70.8 years in 2019.

The introduction of such strategies is imperative for India to achieve the Universal Health Coverage goal in the coming decades. However, without political will, collaborative decision-making and public-private participation, it will remain to be a farfetched dream.

Rahul Nandan is Director (Policy Analysis) at The Institute for Policy Research - A Centre for Multidisciplinary Studies, Bengaluru

You can reach out to the author at: rahulnandan@theipr.org
[1] 

ENDS