Dr Krishna Reddy Nallamalla

Since the beginning of the Covid-19 pandemic in India, the common response and dialogue have dominantly been around meeting the sudden unexpected healthcare needs of scores of people, be it face masks, hand sanitizers, diagnostic tests, hospital beds, drugs, vaccines, oxygen, ventilators, doctors, and nurses among others. There has been little discussion on how people are financing these unexpected health needs.

The tax-funded public healthcare system offers access to free services. However, mostpeople, including the poor, do not prefer these services due to a mistrust about its quality. This trust deficit has been worsening over the years due to a chronic neglect of public healthcare systems by successive national and state governments. With the sudden surge in demand for private healthcare services in the face of limited supply, the prices of these services, understandably, went up significantly.

Health insuranceis fundamentally meant to protect people against the financial risk of unexpected healthcare needs. In India, health insurance is either tax-funded public health insurance, contributory social health insurance for formal labor, community-based health insurance, or private health insurance. TheEmployee State Insurance (ESI) was the first social health insurance program in India dating back to the early years of independent India. The Central Government Health Scheme (CGHS), Ex-Servicemen Contributory Health Scheme (ECHS), and various schemes under Indian Railways Medical Services (IRMS), offer social health insurance for their employees, both in-service and retired.

The Rajiv Arogyashri Scheme (now called YSR Aarogyasri), launched by the erstwhile united Andhra Pradesh, was the first tax-funded public health insurance scheme in India. Many state governments followed suit, modelingtheir own schemes around the Arogyashri scheme. The Central government launched the Rastriya Swasth Bhima Yojana (RSBY), that was partly subsidized with tax funds and partly contributed for, by the beneficiaries. It was predominantly meant for migrant labor to access secondary care services across the country. The more ambitious tax-funded public health insurance program – the Pradhan Mantri Jan Arogya Yojana (PMJAY) – was launched in 2018 to provide financial protection to ~500 million poor people across the country.

Private health insurance in India has been witnessing a double-digit growth since its arrival. However, its penetration is still below 5 percent of the population, despite the impressive growth. In addition, most of the products are linked to individual risk and risk pooling has been poor. The Insurance Regulatory and Development Authority (IRDA) was established to regulate the private general insurance market. It has been entrusted to regulate the health insurance market as well. However, it lacks sufficient capacity and capability to regulate the health insurance market that is more complex than general and life insurance.

And yet, these health finance protection schemes could not provide financial protection to people during Covid pandemic. People continued to avoid tax-funded free public healthcare facilitiesowing to trust-deficit. Due to a lack of clarity on the coverage for various Covid care services, it became common for empaneled hospitals to decline cashless facility to the insured.Coverage amount limits were grossly inadequate, especially for theserious cases that need intensive care. People with insurance could not exercise a choice for hospitals as they scrambledto find empty beds in any hospital – whether empaneled or otherwise. Covid care was not included in the current Arogyashri scheme of Telangana. It may seemlike the health insurance payer system collapsed in the face of a real crisis.

The net impact of this is that people, even with existing health insurance protection, are being forced to shell out money out of their pockets to access healthcare to save their lives. In the process, manyare ending up exhausting their savings and assets. They are borrowing unsecured funds, where possible, at very high interest rates. Some people are resorting to crowd-funding in desperation to pay the bills. Many are notseeking care in fear of health expenses. Many middle-class families are facing the risk of being pushedinto poverty anddebt traps. This may set Indiaback by a decade or more in its drive to reduce and eliminate poverty.

How can we address health financing needs in these times?

Health insurance players, both public and private, need to mount a concerted response to address the issue. They should engage beneficiaries and empaneled hospitals in providing the right information, in addressing their concerns, and in clarifying doubts. They can issue advances to their long-term empaneled hospitals to manage their cash-flows and adjust the advances against claims. They can offer amendments to the existing terms to accommodate Covid care needs, including outpatient investigations which are costing thousands of rupees. As claims for non-Covid services decline, these players can afford to extend the needed help.

Governments can pitch in towards improving the access to personal health loans by providing the needed guarantees to banks, as many people have exhausted their assets in mortgaging. It can extend possible financial help through direct transfers. The IRDA can provide stewardship and regulation to safeguard the interest of those insured.

As digital payments are growing every day, fintech solutions can aid in addressing some of the financing needs of people. They can enable health consumer loans. They can aid in crowd funding. They can also enable innovative mutual aid solutions, wherein members pool in money at predefined quantities and periodicity to meet the needs of one of the members group. It is akin to chits operated by self-help groups across the country. International and national donors can come together to offer blended financing solutions to both patients and providers. Bringing India out of the current situation is in the larger interest of rest of the world, as India can then continue to provide drugs and vaccines to other countries.

There certainly are ways to mitigate the financial hardships being faced by millions of people today, which in the long term may be more devastating than the pandemic itself. It requires a collective will of all the actors involved.

Dr Krishna Reddy Nallamalla
President, InOrder
Country Director, ACCESS Health International