EMPLOYEE HEALTH INSURANCE 1 | Page CHAPTER-1 1 INTRODUCTION AND METHODOLOGY S.NO CONTENTS PAGE NO 1 INTRODUCTION AND METHODOLOGY 01 1.1 Introduction 03 1.2 Background of the study 05 1.3 Purpose and objectives 08 1.4 Organization of the paper 09 1.5 Methodology 10 1.6 Scope of the study 11
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Hospitals are traditionally a place of healing. They have always been seen as an
institution for treatment, care and cure of the sick and wounded , for the study of the
disease and for the training of physicians, nurses and allied health personnel.
But we live in challenging times. Hospitals are beginning to organize their efforts by
focusing on VAS (value added services) that differentiate a hospital from its competitors
and bind the clients to the value added hospitals.
The health system of the country, the largest governmental organization next only to the
educational department is already very large and would increase much more in the next
decade. Co-ordination and management of these diverse components is going to be much
more difficult and complex.
In the health sector , such complexity and scarcity can be recognized in a host of
questions, that concern all who work there or use its services. Why has the volume of
resources absorbed by the sector increased so fast over the last four decades worldwide?
Why does it seem that no matter how many nurses and doctors are employed , new
technologies adopted new drug therapies introduced , that even the rich countries of the
world do not seem to be able to provide the highest quality of care for all citizens? Is usefollowing a wrong method of administration in the health sector?
Therefore due to the peculiar types of services and peculiar situations that arise in a
hospital but scientific approach is essential in its management. Management in hospitals
shall be professional for all the activities under taken in the hospitals.
Hospitals abroad now have a cadre of hospital administrators who combine some
knowledge of sound management principles and techniques. As it is essential in industry
to divorce management from ownership, similarly it is essential to separate management
from the care of side.
Ultimately, efficiency depend the proficiency and integrity of the persons employed in
the hospital. Unless and until they are proficient and expert in their respective areas ,
whether it be a medical side or administrative side, are cannot expert its worth from it.
Multi-employer health plan – Generally, an employee health benefit plan maintained
pursuant to a collective bargaining agreement that includes employees of two or more
employers. These plans are also known as Taft-Hartley plans or jointly-administered
plans. They are subject to federal but not State law .
Minimum premium plan (MPP) – A plan where the employer and the insurer agree that
the employer will be responsible for paying all claims up to an agreed-upon aggregate
level, with the insurer responsible for the excess. The insurer usually is also responsible
for processing claims and administrative services.
Multiple Employer Welfare Arrangement (MEWA) – MEWA is a technical term
under federal law that encompasses essentially any arrangement not maintained pursuant
to a collective bargaining agreement (other than a State-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private
last salary drawn. All dependents (to be defined) are to be eligible for the benefits. In
Phase III, the eligibility criteria would need to be further relaxed for the sake of
contractual workers holding contracts longer than a defined period, say 3 months.
The first phase would contribute greatly to an increase in the number of members, as
most of the higher-paid, or white collar workers would be covered. This would take
care of a constant complaint of the ESIS – that when an employee gets a raise in pay,
it disbars him/her from the ESIS and its benefits. At the same time, it is clear that the
higher paid workers presently do not see any benefit in contributing to the ESIS. In the
last decade or so, while the scope of ESIS has been expanded from those earning
from Rs 3000 per month to Rs 7500 per month, the utilisation of services continues
to made mainly by those belonging to the lower income strata within the covered
groups. Thus, despite contributing higher amounts per month, the relatively higher
paid workers seem not to be availing of the ESIS benefits to the same extent as the
lower-paid workers. This could be the reason for the income surpluses in the scheme
in recent years. However, by covering all the staff members, risk-protection and
riskpooling for all is taken care of, and all employees continue to benefit throughout their
employment period and even after.
Covering all employees has another advantage. Presently, under the Act, to opt outof ESIS, any establishment needs to show a better coverage already existing for its
employees and to seek specific exemption from ESIS. Thus, even if an establishment
chooses not to be covered by ESIS, adequate health coverage of all its employees
would continue to be ensured.
The risk pooling effect is greater when funds are pooled across establishments, e.g.
if the IT industry contributions are pooled with that of a small factory. If managed
properly, there would be money transfer from the better-off to the poor workers and
their dependents. On the other hand, this could also be interpreted by the higherpaid
workers as an additional „tax‟ on their wages, if they do not see any advantages
To provide an element of choice and help facilitate the process of consensus
for the expansion of the scheme, the employees could be provided with three
options as regards their health coverage: to enrol with the ESIS, to enrol with
a private health insurance scheme, or to remain in the institutions‟ healthcare
scheme (in the case of those institutions that provide their own health services
for its employees). The incentive to choose ESIS rather than the private health
insurance would be the lower premium and the higher coverage offered by the
ESIS as compared to the private health insurance. Thus, enrolees would opt
for non-ESIS insurers only if these alternative insurers give them better coverage
or better quality of services than ESIS. Competition would also inspire the ESIS
to provide better services so that it does not lose the enrolees to competing
insurance companies.
Employers with existing health facilities could either continue with the sameor hand them over to ESIS for administration. The ESIS could then use these
facilities for any of its beneficiaries. If the employers choose to continue with their
own facilities, and to opt out of the ESIS, they would still need to contribute the
difference of the contribution they would otherwise be paying into the EHIF, and
the equivalent risk-adjusted average premium amount which EHIF would have
paid to any of the private insurance schemes for covering all the employees of
the establishment. Also, the employers must ensure better coverage than ESIS
to be able to opt out. Such an arrangement prevents misutilisation, ensures
comprehensive coverage for employees, yet lets employers choose to run their
own facilities, if they so desire.
If the employee enrols in the ESIS and requires care, he/she can receive care
at any of the empanelled hospitals or providers of the scheme, and the provider
The ESIC can reinsure with the GIC or other appropriate reinsurer(s) to protect its
fund. Along with good fund management, this should ensure that there are enough
resources to provide good quality care to all the employees in the formal sector.
Currently, the ESIC‟s credibility is low, and it is seen as a bureaucratic organisation
that responds more to its own needs than of the employees. This image has to
change, for which professional managers (finance managers, health managers,
actuarials, human resource managers, etc.) need to be enrolled to manage the EHIF
and the provider network.
2.7 PREMIUMS AND CONTRIBUTIONS FOR THE
EXPANDED ESIS
2.7.1 SOURCE OF CONTRIBUTION
Contributions to the ESIS will be from four basic sources:
(i) the employees
(ii) the employers
(iii) the state government
(iv) the central government. The government contributions will be mainly to fill inthe gaps, if any, and will be subject to limits. The government would also, as
it does now, continue to contribute to the provision of health insurance in an
invisible manner by doing away with income taxes (individual and corporate) for
The facility available would be a semi-private room in the ESIS hospital and a
general ward in the empanelled hospital.
Co-payments will be required for those availing of facilities in non-empanelled
hospitals in emergency conditions, as a cost-control mechanism and to prevent
moral hazard.
Those who find that this package is inadequate for their needs can subscribe on
additional payment to an appropriate add-on cover from ESIS or a private health
insurance company, which will provide various additional benefits as per their
needs, like coverage in higher classes of rooms, greater annual ceilings, annual
executive health check-ups, etc.
To avail of IP care, the patient must be referred from an empanelled dispensary.
This will reduce moral hazard and also reduce costs. One of the basic documents
required would be a referral letter explaining why the patient could not be treated at
the primary level and required care at the secondary or tertiary level. This needs to be
monitored strictly to ensure that there is no fraud in the system.
One important consideration for the policy maker at this stage would be to provide
mechanisms for portability of the coverage across employers and perhaps also
during brief periods of unemployment. This will ensure that the employees do notlose benefits when they change their employers. One basic requirement for this
would be a unique beneficiary identification number that is used by the employee.
Once allotted, this could remain constant even when employers change. Also, the
scheme could provide for a limited period, say three months, of continued cove
Claims and reimbursements will be handled by the ESIC. All hospitals/dispensaries
with claims will submit them to ESIC on a monthly basis to the regional office of the
ESIC, which, after checking the validity of the bills, will clear them within one month.
This last point is important for the ESIC to be a credible insurer and a credible payer
for its bulk purchase of services.
The ESIC already has administrative departments but till now they have mostly
looked at accounts. Now they must add technical scrutiny to this job description,
using protocols like Appropriate Evaluation Protocols to check whether the treatment
provided is appropriate and relevant for the symptoms and diagnosis. Such
mechanisms will ensure that the providers are regulated strictly.
From the beginning it must clear that a cashless system of reimbursement will be
followed. The hospitals will have to take some risk in this system, of their claims being reduced or denied. The focus will be on the patient who will benefit from this
measure. Also, with smart ID cards, the risk of fraud, charging over the upper limit, etc.
is totally minimised.
Computerised data at all levels will help in accessing and processing information
quickly. Software for this purpose can easily be developed or customised. Once
this is in place, the performance of the scheme is likely to improve. More important,
these indicators ensure adequate focus on the patients and outputs vis-à-vis
people.
2.13 HEALTH INSURANCE PRESENT SCENE AND
ISSUES FOR THE FUTURE
During the last 50 years India has made considerable progress in improving its health
status.
Death rate has reduced from 40 to 9 per thousand, infant mortality rate reduced from 161
to 71 per thousand live births and life expectancy increased from 31 to 63 years.However, many challenges remain and these are: life expectancy 4 years below world
average, high incidence of communicable diseases, increasing incidence of non-
communicable diseases, neglect of women‟s health, considerable regional variation and
threat from environment degradation. At any given point of time 40 to 50 million of
population on medication for major sickness. About 200 million days are lost annually.
The annual rate (range) of outpatient: rural 30-152/1000, urban 9-81/1000 and for
increasing health care costs, high financial burden and income of poor gets eroded,
increasing burden of new disease patterns and increasing risks and government health
care system under-funded. Insurance mechanism is one of the financing mechanisms to
over come some of the problems of our system.
Based on ownership the existing health insurance schemes can be broadly divided into
categories such as: government or state-based systems, market-based systems (private
and voluntary), employer provided insurance, member organization (NGO or
cooperative)-based systems. Government or state-based systems include government
employees health scheme (CGHS) and ESIS. Employer managed systems cover about
20-30 million of population.
The schemes run by member-based organisations cover about 5% of population in
various ways. Market-based systems (voluntary and private) have Mediclaim scheme
which covers about 2 million of population. The performance of these schemes has not
been satisfactory.
The scheme to focus poor (Jan Arogya Bima Policy) was introduced in 1995 and covers
expenditure up to Rs. 5000 for a premium of Rs. 70 per annum. Its performance has also
remained less satisfactory. The present insurance schemes are more urban biased.
There are number of implications of introducing the private health insurance. These are
problems of moral hazard, adverse selection, and information gap problem. We have verylittle understanding on what are different insurance mechanisms and how do they serve
the different segments of population. Given the present presence of private sector and
provider payment mechanism, what is best for our country has not been debated.
Insurance Regulatory and Development Authority (IRDA) has been proposed to basically
regulate the entry of insurance providers, protection of interests of policyholders,
promoting efficiency, control and regulation of rates, regulating investment of funds and
supervision of insurer, insurance intermediary and other organisations connected with
insurance business. Given the provider payment systems, which works on fee-for-service
basis, unmanaged indeminity insurance schemes is definitely not the right solution for
considerable debate going on in the Parliament and outside Parliament about the pros and
cons of privatisation of insurance sector. It is now certain that the economic reform
process unleashed since 1990 have left little options for us to retrieve back. Economic
changes need financial support from international financial institutions in present day
global situations. World over, economies are liberalizing the state control on trade,
commerce and industry. It is a subject of debate, whether insurance sector should be
opened up or not in India. We are not going to discuss the same from this platform. We
are here to discuss the Health Insurance in India. There are many concerns:
(a) Environmental pollution is causing serious health problems to humans. The fast
spreading AIDS, poisonous gases, various wastes including nuclear waste generated by
the people are seriously endangering the life on earth.
(b) A person may face a serious monetary problems for the medical treatment and
hospitalizations during life. In India, GIC and its subsidiary companies and LIC have
various health insurance covers for Indian nationals like: Ashadeep Plan II and Jeevan
Asha Plan II by Life Insurance Corporation of India and various policies by General
Insurance Corporation of India as under: Personal Accident Policy, Jan Arogya Policy,
Raj Rajeshwari Policy, Mediclaim Policy, Overseas Mediclaim Policy, Cancer Insurance
Policy, Bhavishya Arogya Policy and Dreaded Disease Policy. The most popular health
Insurance cover is Mediclaim Policy. A person between 3 months to 80 years of age can be granted mediclaim policy up to Rs. 5 lakh against accidental and sickness
hospitalizations during the policy period as per latest guidelines of General Insurance
Corporation of India.
(c) The health care demand is rising in India now days. Only 10% of Health Insurance
Market can be tapped till today. Still there is a scope of rise up to 35% in near future.
The Indian health care industry is now worth of Rs. 73,000 crore and expected to surge
by 10,000 crore annually as per market study. The share of Insurance market in above
figure is significant. Out of one BILLION population of India 315 million people are
estimated to be insurable and have capacity to spend Rs. 1000 as premium per annum.
Global Insurance giants like CIGNA, EAGLE STAR, ASTNA and ROYAL SUN
ALLIANCE have already into pacts for future mega business in India. Market research,
detailed planning and effective insurance marketing has become the prime need of the
hour. Health insurance has a wider scope in present day situations in India. It requires
efforts to tap Indian health insurance market with proper understanding and training.
2.16 MEDICLAIM SCHEME OFFERED BY GIC AND
OTHER INSURANCE COMPANIES
The current statistics on health insurance indicate that out of 1 billion population only 3.8
million population is insured. The product of health insurance is new to the GIC and its
subsidiary companies. Health insurance represents very small percentage of overall
business.
There is also not much preference for present health insurance products. The government
insurance companies started health insurance in 1986 and thereafter Mediclaim has
revised and the companies have tried to make it attractive product. First there is used to
be categorywise ceilings on items such as medicine, room charges and later when the
policies were revised these intra ceilings were removed. After this the demand for
Mediclaim has picked up. People are becoming more and more aware of the policies andare asking questions about the rules of the policies. The GIC companies has little means
to monitor the scheme and we should understand that it is because of technical problems
there are number of cumbersome rules to many undesirable complications. It looks that
health Insurance is growing fast There have number of cases where the cases have been
refused to become of mediclaim polices. Age has been one such factor. It has been
observed that agents as well as insurance companies are reluctant to admit the persons
whose age is beyond 60. It is perhaps because of the reasons of adverse selection.
There is no information on what is course of action available to a person who wants to
become member of mediclaim. GIC companies have instituted mechanisms but this
information is generally not avail be to the customers. There is potential problem of other
following the similar practices. It was suggested that the prospectus should include
information on whom to meet in case of grievance or complaints.
Time limit for renewal should be mentioned in the prospectus. It was observed that very
few people read the prospectus. To popularize the schemes it is important that proper
marketing is done. It will be possible if the insurance companies show efficiency and
reduce the price.
There is also problem of fraud and manipulation. The monitoring systems are weak and
there are chances that if the doctor and patient collude with each other, they can do more
harm to the system. There is no data on this issue.
2.17 PRESENTATION ON EMPLOYEE STATE
INURANCE SCHEMEIt is essential for the people to be healthy so as to contribute to the social and economical
development of a society and thereby to a nation. A healthy population makes a nation
prosperous by achieving developmental goals on all fronts. But the members of a society
are exposed to certain risks like sickness, maternity, old age, death etc. Moreover, social
and economic order also creates certain imbalances against which members of society
should have protection by society. Social Security aims at building a medico-social
organisation in a participatory approach that can safeguard the health and economic prosperity of people in the society. Social security based on the idea of liberty and human
dignity and its benefits are dispensed in a manner consistent with sense of self-respect
and principle of social insurance.
The social security expenditure is not merely consumption expenditure, but also an
investment because it enhances the productive potential of such workers & thereby of a
nation. So, pooling of risks, resources and benefits are the hallmark of any social security
scheme. Insurance is defined as 'coverage by contract whereby one party agrees to
compensate or agrees to guarantee the other against loss by specified contingent event or
peril'. In case of Health Insurance an insured party pays a premium and the insurance
company provides required services or pays the agreed sum spent on hospitalization in
There are two types of health insurance one is compulsory, which is economically viable
due to large number of participating persons and lesser administrative cost entailed. But
average health care quality and long waiting period with resultant dissatisfaction are the
disadvantages e.g. ESIS in India
and N.H.S. in U.K.
Under the ESI Act, 1948 ESI Scheme provides protection to employees against loss of
wages due to inability to work in exigencies like sickness, maternity, disability and death
due to employment injury and medical care to employees and their family members.
When implemented for the first time in India at two centres namely Delhi and Kanpur
simultaneously in February 1952, it covered about 1.2 lakh employees. Presently the
scheme is spread over 22 states and Union territories across India covering 91 lakh
employees and more than 350 lakh beneficiaries. The Act covers:
(a) all power using non-seasonal factories employing 10 or more Persons
(b) all non-power using factories employing 20 or more employees and
(c) establishments like shops, hotels restaurants, cinema, road transport and news papers
are covered. ESIC is a corporate body headed by Union Minister of Labour as Chairmanand the Director General as chief executive. Its members are representatives of central
and state governments, employers, employees, medical profession and parliament.
ESIC is made up of contributions from:
(a) Employees who contribute at the rate 1.75% of their wages (if daily wage is Rs.25 or
less, his contribution is waived)
(b) Employers who contribute at the rate of 4.75% of total wage bills of their employees
to contribution on behalf and for employees having daily wage of Rs. 25 or less
(c) State Governments who contribute 12.5% of total shareable expenditure worked out
by prescribed ceiling on expenditure which is Rs. 600 per insured person per annum and
expenditure incurred outside/over and above the prescribed limit.
The State Government runs the medical part of this unified and integrated scheme of
social insurance meant for employees covered under the ESI Act 1948. This scheme -
compulsory and contributory in nature - provide uniform package of medical and cash
benefits to insured persons in implemented areas all over Gujarat through 11 hospitals
and 52 diagnostic centres and 124 dispensaries.
The delivery of medical care is through service (direct) system and/or panel (indirect)
system. It provides allopathic medical care, but medical care by other systems like
ayurvedic and homoeopathy in the states is also provided as per the state government
decision. The medical care consists of preventive, promotive, curative and rehabilitative
types of services are provided by the scheme through its own network or through
arrangements with reputed government or private institutions by concept of proper
referral system and regionalisation.
Preventive services include immunisation of pediatric population, maternal and child
health, family welfare services. Promotive services include health education and health
check-up camps. Curative services include: dispensary care, hospital care, maternity care,
supportive services including diagnostic centre, drugs, dressings, surgical procedures,
dental care, prosthesis and other appliances. Rehabilitative services include: physicalrehabilitation, economical rehabilitation, and provision of artificial aids (social,
psychological rehabilitation)
2.18 PARTICULARS IN INDIA
No. of Centers 632 32
No. of Insured Persons/Family Units 84,45,000 7,03,050
ESI Hospitals 125 11
Number of ESI Hospital Beds 23,334 2,035
ESI Dispensaries 1,443 124
Insurance Medical Officers 6,220 669
Insurance Medical Practitioners 2,900 102
ESIS, largest and premier social insurance scheme, provides comprehensive medical care
to its beneficiaries. It is expected, that quality of services provided will definitely
improve and in the coming years it may be able to provide a definite base for extension to
other sectors to formulate a unified national health scheme.
There are many problem areas in managing this scheme that will need the attention of
policy makers.
These are: a large number of employers try to avoid being covered under the scheme, a
large number of posts of medical staff remains vacant because of high turnover and
lengthy recruitment procedures, there is duality of control, rising costs and technological
advancement in super specialty treatment, management information system is not
satisfactory.
India, one of the most promising countries of South-East Asia, has a large network of
health insurance cum social security scheme in the form of ESIS besides C.G.H.S. and
other health insurance scheme. The health insurance has not developed fully in India, but
if decision to open up medical insurance for privatisation is taken, there are many
opportunities for development of health insurance schemes for various sections of the
Indian society. Based on principles of sound management, equitable distribution and
evolution of long network and linkages, such organised and structured health insurance
schemes can be developed. For this purpose, first, regional network of health insurancecentres should be established. This lead to better cooperation among health care providers
by pooling their resources of manpower, training facilities to provide comprehensive
medical care services to one and all in that geographic area.
Secondly, efforts should be made to develop public-private partnership in tertiary health
care services (CT Scan, MRI, Cancer therapy) so as to increase utility of health insurance
service and to make them financially more viable.
The existing health insurance scheme like ESIS may be upgraded by covering
PSU/MNC employees under them, by making due budgetary provision to train and
develop human resources, to allow to generate revenue by allowing access to affluent
class of society to avail tertiary medical care.
2.19 I NSURANCE AND SOCIAL SECURITYSCHEMES FOR THE POOR
With 70 per cent of population in India living in rural areas and 95 per cent of
work-force
working in unorganized sectors, and disproportionately large percentage of these
populations living below poverty line, there is strong need to develop social security
mechanisms for this segment of population. The most vulnerable group among these is
the women. The SEWA has developed an initiative to protect the poor women from
financial burdens arising out of high medical costs and other risks. Each member has
option to join the programme by paying Rs. 60 per annum and it provides cover for risks
arising out of sickness, maternity needs, accidents, floods and riots, widowhood etc. The
scheme is also linked with saving scheme. Member can deposit Rs. 500 in SEWA Bank
and interest on this deposit will cover the annual premium. SEWA started its insurance
programme with the support of one of the public sector insurance companies. The
experience of SEWA has been that the insurance companies are not well equipped tohandle the present day complexities of health insurance particularly responses it requires
to handle the specific issues in context of lower income groups. Given the bureaucratic
rigidities in settling the claims, procedures, which one has to follow, and poor monitoring
mechanisms make it difficult for the poor to continue with these schemes. For example,
the patients belonging to lower income groups opting for the schemes would need
systems which are simple, flexible, prompt, relevant, having less paper work and have
fewer tiers. The design of the product including what it covers, scope of coverage and at
what premium are important considerations for people belonging to lower income groups.
SEWA experience suggests that the design of the insurance products have to be
integrated with several add-ons that may be priced differently. For example, health risk
coverage should include sickness as well as maternity aspects. SEWA experience
illustrates that other aspects of risk which need coverage include natural (accidental)
(a) Cost effective public health and personal services provided.
(b) Financing policies promote health - effective financing policies must be in place that
reward systems and providers for improving the health of the individual and community
and place a premium on cost effectiveness. Public and private sector financing of medical
care should reward preventive care, effective treatment of acute illness and management
of chronic diseases in a way that maintains a person's optimal function and independence.
Financing should emphasize such elements as quality, continuity, and co-ordination of
care, as well as accessibility, acceptability and consumer satisfaction.
(c) Primary care emphasized - quality primary medical care should be available to all.
Adequate infrastructure such as clinical facilities, medical equipment, records and
staffing should be universally available.
(d) Appropriate utilization of secondary and tertiary care services - Individual seeking
care by a specialist physician should have initial contacts with a generalist. The physician
and the patient together should have adequate information regarding quality of care,
likely outcomes, and cost to determine whether consultative services of a specialist
physician are necessary. There are large number of men, women and children in the ruralcenters as well as towns, who because of poverty are unable to take advantage of medical
and surgical services or use the drug that may be prescribed for them.
To achieve the above goal, government alone cannot fulfill all the expectations required
by the society. The combined experience of mankind is today predominantly in favour of
state compulsory health insurance. One might naturally ask, "should not health insurance
be left to the independent will and responsibility of the individual." The answer would be
NO. Individuals will find it difficult to pay the premium to an insurance company as to
pay the doctor's fees or the druggist's bills. And among our agriculturists, artisans or
middle class men in India more than in other countries the surplus in the family budget is
so limited that the ability or willingness to pay the premium or the bill is non-existent.
Besides, those who are in need can hardly appreciate the advantages of the "insurance
principles".
Indeed, if the combined experience of economically developed nations, e.g., Europe and
America is of any value, it has been proven the voluntary health insurance cannot be
depended upon either as an effective measure of health provision for the people or as a
measure of administrative economy.
Sickness must not be treated as a private misfortune. It is not to be regarded as a calamity
against which the individual should protect itself as much as it can. It is not even to be
counted as a misfortune in which the family alone is interested and therefore which the
family alone should attempt to combat or prevent. Rather, it is time to look upon sickness
as a national misfortune. We should take it as a calamity for the entire community and
therefore one to be prevented or cured by the community, and the State.
Remarkable in its social and moral bearing is the advantages conferred on the community
by compulsory sickness insurance legislation. On the one hand, the medical practitioner
is relieved of the burden of honorary service. On the other hand, the patient is spared the
ignominy of depending on the medical practitioner‟s benevolence or some philanthropic
institution's charity.
The financial burden of sickness cannot be borne by the individual. It must be widely
distributed through out the country. Premium is therefore to be paid by three parties, first,wageearner or salaried person, secondly, the employer, and thirdly, the state. Since the
premium is paid by a large number of persons, the healthy as well as the sick, the risk is
well distributed and the rates per individual can become very small. Besides, the social
goal derived from such a system is extensive.
As soon as the state and the community become financially responsible for the health
insurance of the individual the prevention of diseases is rendered almost on a fait
accomplish. In every scheme of sanitation and public health, compulsory health insurance
on a wide basis should be regarded as a great prophylactic.
The implication of private sector coming in insurance is that the costs are definitely going
to increase. Given the present system of fee for service and current scenario of health
infrastructure in private sector, the development of insurance will need improvements in
quality. The new investments to improve quality will result into high cost and therefore
increase in prices of insurance products. There would be developments in the direction of
exploring options of managed care, which would help in reducing the costs. The
developments would be in the direction of developing strong information base and
accreditation system for providers. The models, which have emerged elsewhere need, to
be examined and their applicability to India situation need to be examined. These aspects
would need detailed programme of study.
There are also examples within the country, for examples schemes of NGO's like SEWA,
Tribhuvandas etc. These need to be looked into and strategies to upscale these examples
need to be studies. Since 70 per cent of population lives in rural India, the relevance these
schemes will grow.
We lack adequate information base to operate insurance schemes at large scale. Theinsurance mechanism prevalent in many developed countries has their history. Health
reforms experiences in many countries are replete with the suggestion that the systems
cannot be replicated easily. Self-regulation is an important in any market driven system.
The regulation from outside does not work. Implementation is difficult. We significantly
lack mechanisms and institutions, which would ensure self-regulation and continuing
education of provides and various stakeholders. The accreditation systems are hard to
implement without mechanisms to self-regulate. For example it took 35 years in US to
put the accreditation system effectively in place. For example, it has been difficult for
many States in India to put nursing homes legislation in place. So it is important to