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India

Making Health Insurance Work for the Poor

It is estimated that approximately 75% of health care expenses are borne by the household in India; whereas the government contribution to health is less than 20%. The public funding that is available is inequitable and skewed toward curative health care, which more often benefits the rich, while preventative health services that more often benefit the poor take a back-seat. National Health Accounts (NHA) showed that one-half to two-thirds of public health expenditure is spent on secondary and tertiary care. The World Bank estimates that for every Rs 1 spent on the poorest quintile, the government spends Rs 3 on the richest quintile. Out-of-pocket expenditures for health put families, particularly the poor, into very vulnerable situations. Over 40% of those that are hospitalized borrow money or sell assets to cover expenses. World Bank estimates show that after meeting hospital expenses, 25% of those hospitalized fall below the poverty line.

Health insurance is a mechanism that can reduce out-of-pocket expenditures, as well as improve access to health care services. Current health insurance initiatives in India are diverse and rapidly changing as experience is gained in private, micro-, and government-sponsored health insurance practices. Several states have begun implementing or designing health insurance initiatives for large sections of their populations. Further, the International Labor Organization estimates that there are 90 micro-health insurance schemes scattered across the country. Despite this, it is estimated that only 10 percent of Indians are covered by some sort of financial protection for health care services.

The experience of many health insurance schemes in India is not encouraging. Key reasons for sub-optimal performance of these schemes include:

• Lack of clarity of objectives in implementing a health insurance scheme
• Inappropriate benefit design due to absence of beneficiary needs assessment
• Lack of health providers in rural areas
• Weak distribution and enrollment agency at rural level
• Virtual absence of scheme implementation agencies at grassroots level
• Adverse selection since schemes operate on voluntary rather than universal level
• Weak communication mechanism for generating awareness of schemes among beneficiaries

Health Systems 20/20 is beginning to work with the USAID/India mission to assist states in designing health insurance schemes, helping them to work through the many obstacles and design issues that have caused challenges in the past. Therefore, Health Systems 20/20 is working with USAID/India priority states to help lay the foundation for moving conceptual ideas of insurance to the point where the government is able to implement an effective insurance scheme for the poor and vulnerable sectors of the population.