20. HEALTH INSURANCE IN INDIA
PROGNOSIS AND PROSPECTS
* RANDALL P ELLIS, MONEER ALAM, INDRANI GUPTA
There is growing evidence that the level of health care spending in India – currently at over 6 per cent of its total GDP – is considerably higher than that in many other developing countries. This evidence also suggests that more than three-quarters of this spending includes private ‘out-of-pocket expenses’. Despite such a high share of expenditure by individuals, the provision of health care, that is adequate in terms of quality and access, is becoming more and more problematic. Particularly, public delivery of health care is poor in quality, presumably for reasons of inadequate financing. This highlights the need for alternative finances, including provision for medical insurance at a much wider level. The paper attempts to review a variety of health insurance systems in India (defined here as any mechanism which covers the risks of payment for health care at the time of its requirement), their limitations and the role of the General Insurance Corporation as an important insurer agency. It also attempts to develop a prospectus of strategy for greater regulation and increased health insurance coverage by making suitable changes – particularly in claim settlements and the exclusion clause. Also highlighted is the need for a competitive environment (which is at present completely missing), and an opening up of the insurance sector.
Since independence, the health care system in India has been expanded and modernised considerably, with dramatic improvements in life expectancy and the availability of modern health care facilities and better training of medical personnel. At the same time, however, much remains to be done. Several recent papers and reports have critically reviewed the Indian health delivery and financing system [Berman and Khan 1993; World Bank 1995; Ministry of Health and Family Welfare 1995; Planning Commission 1996, etc]. These studies have documented many serious problems with respect to the accessibility, efficiency and quality of the health delivery system. They have also made several policy recommendations to alleviate these problems. One aspect of this ongoing has centred on health expenditure and health financing. As shown in the World Development Report 1993, health expenditure in India as a percentage of its GDP was 6 per cent in 1990 which is higher than the level in many other developing countries in the Asian region. Evidence indicates that this higher level of spending is not only due to price differences but also represents a real difference in health care spending [Berman 1996]. A very revealing calculation by Berman about sectoral shares in the total health spending indicates that in a break-up of this 6 per cent, as much as 4.7 per cent of the expenditure is accounted for by the private sector (Table 1). Moreover, of the 4.7 per cent, around 4.5 per cent comprises out-of-pocket expenditures of the households. The remaining 0.2 per cent includes contributions from private employers and other non-government organisations. Almost all of this private spending is on curative care: consultations, diagnostics and in-patient care. Most of the discussions on health care financing in India have centred on the financial constraints of the public sector and the efficiency of resource allocation by the government. ‘Health for all’ has been seen as the central assumption of the health sector debate, thus making the government the central player. While we admit that the ‘health *Economic and Political weekly, January 22, 2000
for all’ objectives are laudable, the overwhelming focus on a public health care delivery system appears somewhat unrealistic – particularly in view of the fact that health spending in India is mostly private.
This paper is devoted to one particular aspect of health care financing in India – namely, the enormous financial burden faced by individuals in the...
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