Free secondary and tertiary medicare to 10 crore families or 50 crore people i.e. 40 percent of India’s population as envisaged by the Ayushman Bharat-National Health Protection Mission (AB-NHPM), announced on 1 February by Finance Minister Arun Jaitley in his Budget 2018 speech, is easy to understand but difficult to implement. The mission as it is toys with the idea of fulfilment or implementation either through the trust or the insurance model.
The insurance model widely practiced in the United States both under the state-subsidised Obamacare model as well as otherwise is a subset of the health insurance model with a vital difference. When an individual takes health insurance policy on his own, it is strictly between him and the insurer. Some insurance companies offer policies on take it or leave it basis whereas others are flexible. But when the government negotiates through its proposed agency Ayushman Bharat National Health Protection Mission Agency (AB-NHPMA), there could be a lot of wheeling and dealing given the volume of business an insurer is likely to get.
Indeed the government is banking on volume discount from the insurers more than on anything else including the four percent education and health cess. An insurer makes more profit from group insurance offered by a company. What AB-NHPMA would be offering would be a gigantic group insurance policy an insurer cannot afford to spurn. But then health insurance has not been a very profitable experience for insurers anywhere in the world. Of course the scale of business under Modicare could change this.
As against the insurance model which could get a muted or less than enthusiastic response from the insurers based on their sobering experience, the trust model could find a large number of adherents both among the policymakers and the academia. Indeed global evidence shows that trust-based models have proved to be more successful in implementing such schemes that profit-maximising insurance firms are hesitant to take up.
Under this plan, trusts, funded by the Centre and states, will likely pilot the scheme. The trusts will act as the main gatekeeper for processing and settling claims of hospitals that treat the scheme’s beneficiaries. Andhra Pradesh’s Arogyasri scheme and Karnataka’s Yeshasvini’s programme serve as a proof-of-concept for trust-driven group health protection model, without cover from insurance companies. But then the downside of this model is micro-management resulting in greater administrative expenses with the dangerous possibility of mutual back scratching by the hospitals and the trust staff not ruled out.
A third possible model, the one which curiously has not been posited or visualised so far by the Health Ministry, is the managed healthcare model widely in vogue in the USA as an alternative to health insurance. A hospital or a clutch of hospitals offer a healthcare scheme akin to the one offered by insurance companies. For example, a private hospital can float a scheme under which for a fixed annual upfront fee, it undertakes to treat the insured and his family free.
The downside of managed healthcare is the natural tendency on the part of the hospital to scrimp on expenses and hence the treatment given could be sub-standard, defeating the very purpose of healthcare. This is the direct opposite of splurge hospitals indulge in including unnecessary diagnostic tests and hospitalisation knowing full well that after all the tab is going to be picked up by the insurance company. However hospitals quote pretty low vis-à-vis insurance company which then becomes the gravitas for the public.
The government can offer beneficiaries under Modicare the option of managed medicare so that they can choose the hospitals they are comfortable with either by reason of proximity with their residence or quality of medicare. This would reduce administrative expenses though it would doubtless condemn the beneficiaries to the hospital they have chosen. The insurance and the trust model could leave a number of hospitals in the cold without business whereas if they are allowed to quote under the managed healthcare model, they would find some of the business coming their way. Incidentally this would also reduce pressure on premium and high-end hospitals.
It is too early to say which model is the best. One also cannot be dogmatic. Perhaps the first two years would bring to fore more prominently the pitfalls and good aspects of a model. The office of the Comptroller and Auditor General (CAG) would in all probability examine the issue more dispassionately, of course with the benefit of hindsight.
(The writer is a senior columnist. He tweets @smurlidharan)
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Updated Date: Mar 26, 2018 11:30:39 IST