Shib Sekhar Datta

Social Health Insurance

Framework

• What is Insurance

• Why Health Insurance

• Types of Health Insurance

• Social Health Insurance

History Characteristics of Health Insurance Models in Different Countries Indian Scenario of SHI CGHS and ESIS Problems and Challenges

• Conclusion

• Recommendation

• Way Forward

• References

WHY Health Insurance ?

Has the potential

• To increase access

• To provide financial protection

• To improve quality of Care

• To control costs

• To regulate the private sector

Downside

• Has been introduced for wrong

reasons

• Is conceptually difficult to explain

• Is administratively more complex

• Needs extra resources

Insurance

1. Voluntary health insurance schemes or private-for-profit schemes

2. Employer-based schemes

3. Insurance offered by NGOs / community based health insurance,

4. Mandatory health insurance schemes or government run schemes (namely ESIS, CGHS).

• Social health insurance in India and Europe, Germany, Japan and so on……

• Social health insurance in these countries, in fact, evolved from a conglomeration of small ‘community’ health insurance schemes.

Health Insurance Framework

INSURER

ORGANIZER

COMMUNITY PROVIDERS

MANAGEMENT

PAY

MEN

T

CARE

PREMIU

M

NGO

s

• Mandatory health insurance where everyone has to enroll and pay a

specified premium.

• Everyone enrolled is entitled to specified benefits.

• Benefits and premiums determined by regulations – difficult to adjust

• Funds are earmarked for health service

• Direct relation between demand and insurance premium

2 types

a. BISMARCK system – Employs multiple organizations which call for sickness funds

b. Only one parastatal agency outside the day-to-day control of the political process

Social Health Insurance

Buyers voluntarily purchase insurance coverage from private, independent, competitive, for-profit or not-for-profit insurance companies.

• Premium that reflect buyer’s risk rather than their ability to pay.

• Groups/ Individuals are usually based in employment

• Problems with Private Health Insurance

a. Adverse Selection

b. Risk Selection (Cream Skimming)

c. Informational Asymmetry and Moral Hazard

Private Health Insurance

• Can complement taxation and social & private insurance in order to reach

those left out by formal taxation and insurance schemes such as employed

in the informal sector, the unemployed, living in rural areas.

• Mostly evolve in the context of severe economic constrains, political

instability, and lack of good governance

[eg: such arrangements improve people’s access to drugs, primary care, and even to

more advanced hospital care. This community involvement allows rural and low-

income populations to raise more resources with which to pay for health care than

would otherwise have been possible.]

Study done by Preker et al (2002)

Community Financing

Out-of-Pocket Payments

• Payments by patients directly to health services providers that are not reimbursable by an insurance scheme.

User Fees• Subcomponent of OOP s and refer to payments when these are made for services

provided by the public sector

In both the system

money is raised and spent locally less leakage through insurance system patients see direct result for their payment so, more willing pay monitor services better – enhanced quality service in not free !

• Social insurance is an earmarked fund set up by government

• Explicit benefits in return for payment

• It is usually compulsory for certain groups in the population

• Premiums are determined by income (and hence ability to pay)

rather than related to health risk.

• The benefit packages are standardized

• Contributions are earmarked for spending on health services

The government-run schemes include

• Central Government Health Scheme (CGHS)

• Employees State Insurance Scheme (ESIS)

Social Health Insurance

• To generate sufficient and sustainable resources for health

• To use these resources optimally (by modifying incentives and through appropriate use of these resources) • To ensure that everyone has financial accessibility to health services.

Targets of Social Health Insurance

Social Health Insurance - financing targets and final health system goals

Performance of social health insurance scheme

in key design issues

Responsiveness

Fair financial contribution

Health

Resource generation(sufficient & sustainable)

Fin. accessibility of health services for all

Optimal resource use

CGHS (Central Government Health Scheme)

• Since 1954, all employees of the Central Govt. (present and retired);

some autonomous and semi-government organizations, MPs, judges,

freedom fighters and journalists are covered under the CGHS

• Designed to replace the cumbersome and expensive system of

reimbursements (GOI, 1994).

• Aims at providing comprehensive medical care to the Central Govt.

employees and benefits offered include all OPD facilities, and

preventive and promotive care in dispensaries.

• Inpatient facilities in government hospitals and approved private

hospitals are also covered.

CGHS (Central Government Health Scheme)

• Mainly funded through Central Govt. funds

• Premiums ranging from Rs 15 to Rs 150 per month based on salary scales.

• Coverage has grown substantially with provision for the non-allopathic

systems of medicine as well as for allopathy.

• Beneficiaries at this moment are around 432 000, spread across 22 cities.

• Criticized from the point of view of quality and accessibility.

• Often high out-of-pocket expenses due to slow reimbursement and

incomplete coverage for private health care (as only 80% of cost is

reimbursed if referral is made to private facility when such facilities are

not available with the CGHS).

ESIS (Employees State Insurance Scheme)

• Enactment of ESI Act in 1948 led to formulation of ESI Scheme.

• Provides protection to employees against loss of wages due to inability to

work due to sickness, maternity, disability and death due to employment

injury.

• Offers medical and cash benefits, preventive and promotive care and health

education.

• Medical care is also provided to employees and their family members

without fee for service.

• Service establishments like shops, hotels, restaurants, cinema houses, road

transport and news papers printing are now covered.

• Monthly wage limit for enrolment in the ESIS is Rs. 6 500

ESIS (Employees State Insurance Scheme)

• Prepayment contribution in the form of a payroll tax of

1.75% by employees, 4.75% of employees' wages paid by the employers,

12.5% of the total expenses are borne by the state governments.

• Beneficiaries are over 33 million spread over 620 ESI centres across states.

• Under the ESIS, there were 125 hospitals, 42 annexes and 1450 dispensaries

with over 23 000 beds facilities.

• Scheme is managed and financed by the ESI Corporation (a public

undertaking) through the state govt., with total expenditure of Rs. 3300

million or Rs 400/- per capita insured person.

Existing infrastructure under ESIS in India

No. of Centers 632

No. of Insured Persons/Family Units 84,45,000

ESI Hospitals 125

Number of ESI Hospital Beds 23,334

ESI Dispensaries 1,443

Insurance Medical Officers 6,220

Insurance Medical Practitioners 2,900

Problems faced in the ESIS

Some of the problems are:

• 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.

• There is low utilization of the hospitals

• The workers are not satisfied with the services they get.

• In rural area the access to services is also a problem.

ESIS (Employees State Insurance Scheme)

CGHS (Central Government Health Scheme)

Contribution Employees: 4.75% of wages. Employers: 1.75% of wages.All contributions are deposited by theemployer.State governments contribute a minimum of 12.5 % on ESIS expenditures in their respective States

Pay/pension Contribution (Rs/month) (Rs/month) <3,000 15 3001–6000 40 60001–10000 70 10001–15000 100 >15000 150The bulk of resources (85%) come fromgeneral revenues of the Central Govt.

Reimbursement Does not allow reimbursement of medical treatment outside of allottedFacilities.

1. Reimbursement of consultation fee, forup to four consultations in a total spell of ten days (on referral)2. Cost of medicines3. Charges for a maximum of ten inj. Reimbursement for specified diseases

Social Health Insurance Schemes

Social Health Insurance Schemes

ESIS (Employees State Insurance Scheme)

CGHS (Central Government Health Scheme)

Entitlement 1.OPD care at dispensariesor panel clinics,2. Consultation with specialist and supply of special medicines and tests in addition to outpatient care;3. Hospitalization, specialists, drugs and special diet.4. Cash benefits: Periodical payments to any insured person in case of sickness, pregnancy, disablement or death resulting from an employment injury.

1. First-level consultation and preventivehealth care service through dispensaries and hospitals under the scheme2. Consultation at a CGHS dispensary /polyclinic or CGHS wing at a recognized hospital.3. Treatment from a specialist throughreferral, emergency treatment inprivate hospitals and outside India.

Eligibility Employees (and dependants) working in establishments employing ten or more persons (with power) or twenty or more persons (without power) and earning less than Rs. 6 500 per month.

Employees of the Central Government(excepting railways, Armed Forcespensioners and Delhi Administration),pensioners, widows of CentralGovernment employees, Delhi Policeemployees, Defence employees anddependants residing in 24 specifiedlocations

• Membership is usually voluntary

• Spread of risk coverage from healthy to sick and rich to poor

3 common features

1. Affiliation is based on community membership and the community is strongly involved in managing the system

2. Beneficiaries are excluded from other kinds of health coverage

3. Members share a set of social values

(In order to deal with limited ability of community financing

Reinsurance tried:

Transfer of liability from primary insurer to another insurer)

Community Health Insurance

Non-profit social insurance schemes

Type I

Provider + Insurer

Type I: ACCORD, MGIMS, RAHA, SHH, VHS

Community

Name and Location of the CHI as Well As Year of Initiation

Target Population Remarks

ACCORDNilgiris, TN1992

Scheduled tribes who are members ofthe Adivasi Munnetra Sangam (AMS) – the tribal union.(N = 13,070 individuals)

Linked with the New India AssuranceCompany

MGIMSWardha, Maharashtra1981

The small farmers and landless labourers living in the 40 villages around Kasturba Hospital.(N = 30,000 individuals)

No linkages. The organisation operates the scheme

RAHARaigarh, Korba districts of Chhattisgarh1980

Poor people living in the catchment area of the 92 rural health centres and hostel students.(N = 92,000 individuals).

Have their own providers

Student’s Health HomeKolkata, West Bengal1952

Full-time student in West Bengal state, from Class 5 to university level.(N=5.6 million students)

Have their own health facilities

Voluntary Health ServicesCentre, Chennai1972

Centres in the suburbs of Chennai. (N= 104,247 individuals in two blocks)

Have their own hospital and health

CHI Schemes in India – Type I

Type II

Insurer (NGO)

Type II: DHAN, Yeshasvini

Community

Provider

Pre

miu

m

Care

Fees

Name and Location of the CHI as Well As Year of Initiation

Target Population Remarks

DHAN FoundationTheni district, Tamil Nadu2000

Poor women members of the community banking scheme and living in the villages of Mayiladumparia block. Total of 4,514 members and their families.(N = 19,049 individuals).

No linkages. The women operate thescheme by themselves

Yeshasvini TrustBangalore, Karnataka2003

Members of the cooperative societies in Karnataka(N = 25 lakhs)

Operate their own programme

CHI Schemes in India – Type II

Type III

Insurer Company

Type III: BAIF, Buldhana, Karuna Trust, Navsarjan, SEWA

Community

NGO Provider

Premium

Pre

miu

m

Care

Reim

bu

rsemen

t

Name and Location of the CHI as Well As Year of Initiation

Target Population Remarks

BAIFUruli Kanchan, Pune2001

Poor women members of the community banking scheme and living in the 22 villages around Uruli Kanchan town.(N= 1,500 women)

Linked with United India InsuranceCompany

BULDHANA Urban Cooperative and Credit society. Buldhana, Maharashtra

Farmers living in Buldhana District (N = 175,000)

Linked with United India InsuranceCompany

Karuna TrustMysore, Karnataka2002

Total population of T Narsipur block and Bailhongal block, with a focus on scheduled tribes and scheduled caste population(N=634,581 individuals)

No linkages. The organisation operatesThe scheme

Navsarjan TrustPathan District, Gujarat1999 (Discontinued in 2000)

Select scheduled caste individuals in two blocks of Patan district, North Gujarat(N= ?)

Linkage with New India AssuranceCompany

SEWA11 districts of Gujarat1992

534,674 SEWA Union women members (urban and rural), plus their husbands living in 11 districts(N = 1,067,348 individuals)

Linkage with National InsuranceCompany

CHI Schemes in India – Type III

• Launched on April 2007

• Take care of Rs. 30,000 annual hospitalization expenditure

• Five members of a BPL family in any part of the country

• Even if they migrate

• The BPL beneficiary has to pay Rs. 30 per year to get the smart card

with his thumb impression on the chip to identify

• Each year, 1.2 crores BPL family members will be targeted

• Total 60 million cards will be issued under the RSBY scheme over the

next five years.

Rashtriya Swasthya Bima Yojana

RSBY Framework

STATE NODAL

AGENCY

INSURANCE COMPANY

COMMUNITY PROVIDERS

MANAGEMENT

PAY

MEN

T

CARE

REGIS

TRATION

NGO

s

SMART CARD

STATE GOVERNMENT

CENTRAL GOVERNMENT

PREMIUM – 25 %PREMIUM – 75 %

Insurance schemes in other countries

• Universal compulsory social health insurance is not possible in India at this stage

• Experiences from other countries such as Malaysia and Philippines needs to be studies

(Malaysia 1999, Philippines 1999)

Key Features American System German System

Owners of health insurance

Private companies Sickness funds composed of Members who are workers of one type - as in a cooperative

Coverage, and access to health care

70 % of population covered,access to health care unequal

99.5% of population covered and access to every one is equal

Selection and refusals

Do occur Not allowed by law

Choice of providers Yes - but being restricted in HMO system

Yes wide choice

Nature of regulation

Minimal by government, mostly by market forces

Self-regulation by autonomous bodies under overall framework of social legislation

Conclusion

• A nodal agency is important

• Social Health Insurance has the potential

To increase access to health careTo provide financial protectionTo improve quality

• But a lot of systemic changes need to be made

• Long term perspective

• Freeze a design but with some flexibility

• Use competition to get a reasonable premium

• Need for building capacity of the government !!

References

1. World Health Organization. Reaching universal coverage via social health insurance . WHO, Geneva, 2004.

2. Richard BS, Reinhard Busse, Josep Figueras. Social health insurance systems in western Europe. England: Open University Press; 2004.

3. Doetinchem O, Schramm B, Schmidt, Jean O. The Benefits and Challenges of Social Health Insurance for Developing and Transitional Countries: Series International Public Health, Germany, 2006 .

4. Devadasan N, Ranson K, Van DW, Criel B. Community Health Insurance in India: An Overview. Economic and Political Weekly; 2004.

5. Mavalankar D, Bhatt R. Health Insurance in India Opportunities, Challenges and Concerns. Indian Institute of Management, Ahmedabad; 2000.

6. Ranson K and Acharya A. Community based health insurance: The Answer to India’s Risk Sharing Problems?. Health Action, 2003.