Healthcare

<p style="text-align: justify;">India has a population of more than 1.38 billion, making it one of the largest health insurance markets. The Indian health insurance market is estimated to be ~INR 700 billion in FY20 and growing at an average rate of 19% per annum.</p><p style="text-align: justify;">The market size of government health insurance is nearly INR 64 billion (9.14 % of the total market), which covers nearly 500 million (36% of the total population) beneficiaries through various government health schemes.</p><p style="text-align: justify;">The penetration of health insurance in India is just 55%. Hence, 45% of the population (i.e., 621 million Indians) don't have any health coverage, and most of the uncovered population belongs to the bottom of the socio-economic pyramid.</p><p style="text-align: justify;">The pandemic has shown us the importance of having universal health coverage for the population. During the pandemic, not only have people lost their kin, but they had to bear the financial burden of the treatment. During these trying times, health insurance can come as a relief, especially in cases of hospitalization and invasive treatment.</p><p style="text-align: justify;">One of the prime reasons for patients of the lower-income group to delay their treatment and hospitalization is the burden of medical expenditure, which eventually leads to higher complications and mortality. Given such a scenario, Universal health coverage is a must to make healthcare accessible to the bottom of the pyramid.</p><p style="text-align: justify;">Indian health insurance sector, be it government schemes or private players, has its own set of unique challenges. &nbsp;For private players, the challenges are:</p><h3 style="text-align: justify;"><span style="font-size: 12pt;">Accessibility:</span></h3><p style="text-align: justify;">For private players reaching the rural population invites higher costs, thereby increasing the premium of the policy.</p><h3 style="text-align: justify;"><span style="font-size: 12pt;">On-time Premium:</span></h3><p style="text-align: justify;">A major challenge faced by private players is the high rate of default in paying the on-time premium.</p><p style="text-align: justify;">Similarly, for the government, the challenges are:</p><h4 style="text-align: justify;"><span style="font-size: 12pt;">Lack of System:</span></h4><p style="text-align: justify;">Government has access to the grassroots &nbsp;level through various central and state government machinery, but they lack the system/division that can manage such a large volume of process work.</p><h4 style="text-align: justify;">Limited List of Healthcare Providers:</h4><p style="text-align: justify;">Beneficiaries of the government health schemes can avail themselves of the healthcare benefits at the government hospitals or some of the private hospitals that are affiliated with the government schemes. The number of such hospitals is limited. In case of an emergency, it becomes difficult for the patient to avail themselves of the healthcare facility.&nbsp;</p><p style="text-align: justify;">The solution to these issues lies in a simple process of introducing a Public-private Partnership (PPP) model in health insurance by bringing government and private players together. Here the government will draft the policies while the private players will implement the same as they have a better reach due to the rise in consumerism in India.&nbsp;</p><p style="text-align: justify;">The government has done an excellent job by bringing nearly 36% of the population under the purview of various government schemes. But still, there is a large part of the population (nearly 45%) without any medical coverage.&nbsp;</p><p style="text-align: justify;">Most of the uncovered population belongs to rural areas where agriculture is the prime occupation. The farmers are already availing periodic financial support from the government. The agriculture and health ministry can join hands and help the farmers with a health policy, especially for those who are still uncovered in any health scheme.</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">The Advantages of PPP in Healthcare</span></h2><p style="text-align: justify;">As the volume will be high in such cases, the public-private partnership in healthcare is a win-win for both the private sector insurance companies, who will get bulk business, as well as for the government, who will get lower premium/individual due to the sheer volume.</p><p style="text-align: justify;">Since the premium will be paid by the government, there will not be an issue of default in paying the premium or lapsing out in the middle, and continued health coverage can be provided to the citizens.</p><p style="text-align: justify;">The PPP model can ease out the roll-out process as well. The form fill-up and health card distribution can be done using government infrastructure like local panchayat, banks etc. This way, the reach to the beneficiaries can be improved manifold.&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">How the Government can Further Leverage PPP</span></h2><p style="text-align: justify;">The government, in discussion with IRDA, should also bring the vaccination of communicable diseases like COVID-19, Swine flu, Hepatitis A etc., under the medical insurance cover. This will not only make the vaccines accessible to more people, but also the government won&rsquo;t have to allocate separate funds for vaccination.&nbsp;</p><p style="text-align: justify;">In the 2021 budget, the government had allocated around INR 350 billion for covid vaccines. If most of the population is covered under health policy and vaccines are included in the policy, then this fund could have been utilized to improve the healthcare infrastructure. A simple back of the envelope calculation shows in INR 350 billion, an additional 70,000 hospital beds can be added, which can treat nearly 150 thousand additional patients in a month.&nbsp;</p><p style="text-align: justify;">I feel that through PPP in health insurance, the government can bring most of the population, especially from villages and rural areas, under the purview of universal health insurance. It requires data and policy level support from the government and the delivery of quality services from the private sector.</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This <a href="https://www.linkedin.com/pulse/ppp-health-insurance-rajat-sarkar/">article</a> was contributed by our expert Rajat Sarkar.</em></span></p><h3 style="text-align: justify;"><span style="font-size: 14pt;">Frequently Asked Questions Answered By Rajat Sarkar:</span></h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What does PPP mean in health?</span></h2><p style="text-align: justify;">Due to operational inefficiencies/ lack of able administrative personnel, often government provides the finance/incentives/land/ land with the built facility to private players to operate under a signed MoU and mutually agreed commercial terms to create a win-win proposition for both government and the private party. Such arrangements where the government is also a stakeholder are known as a public-private partnership (PPP). PPP in health is created with a motive to provide access to quality healthcare facilities to every citizen of the country irrespective of the income class.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. Can public/private partnerships improve health in India?</span></h2><p style="text-align: justify;">I strongly feel PPP will improve the healthcare sector in India. India is the motherland of more than 1.3 billion people. For such a large population providing quality healthcare means huge operational budget and effort to run the bureaucratic and operational machinery. However, if joined hands with the private sector, the effort required on behalf of the government becomes low, and by agreeing on a few of the commercial terms, people can avail a better healthcare facilities that the government always envisions. Also, the sheer volumes attract FDIs into the healthcare segment, which is continuously increasing the service levels.</p><h3 style="text-align: justify;"><span style="font-size: 12pt;">3. What are some examples of PPP in healthcare in India?</span></h3><p style="text-align: justify;"><strong>a. Chiranjeevi scheme implemented by Gujarat Government:</strong> PPP between government, private doctors and private service providers.</p><p style="text-align: justify;"><strong>b. Ayushman Bharat Scheme implemented by Government of India: </strong>PPP between government and private hospitals to provide quality healthcare services to indigent and weaker class.</p><p style="text-align: justify;"><strong>c. BSES MG Hospital:</strong> PPP between Brahmakumari&rsquo;s GHRC, Municipal Corporation of Greater Mumbai and Reliance ADA group for providing quality secondary and tertiary care services to the citizens of Mumbai.</p><h3 style="text-align: justify;"><span style="font-size: 12pt;">4. Why is UHC essential for every health system?</span></h3><p style="text-align: justify;">In spite of all the technological advancements, healthcare services are becoming more and more expensive, especially secondary and tertiary care. Any ailment requiring hospitalization and/or surgical procedure leads to a financial burden for the family if the patient is not covered under any insurance. The situation goes from bad to worse as we move down to the lower economic class. Hence, for the larger good, Universal Health Coverage (UHC) is essential.</p><h3 style="text-align: justify;"><span style="font-size: 12pt;">5. What are the 3 pillars of universal coverage?</span></h3><p style="text-align: justify;">The three pillars of UHC are:</p><p style="text-align: justify;"><strong>a. Population coverage: </strong>The UHC should cover the entire population, i.e., all the citizens of the country.</p><p style="text-align: justify;"><strong>b. Range of health services: </strong>The UHC should cover almost all the health services except the lifestyle-related services like cosmetic surgery for look enhancement, etc.</p><p style="text-align: justify;"><strong>c. Financial protection from direct payment for health services when consumed:</strong> The UHC should provide the cashless treatment facility, i.e., no money to be paid for the treatment or pay only the differential amount if 100% of the treatment doesn&rsquo;t fall into the purview of the coverage.</p>