Maurya Dayashankar, Assistant Professor & Chair Healthcare Management, TA Pai Management Institute Manipal India and Asher Mukul, Professorial Fellow, Lee Kuan Yew School of Public Policy, Singapore, argues about the critical issues existing in social health insurance programmes like the Rashtriya Swasthya Bima Yojana (RSBY)
Limited financial protection and risk-pooling in healthcare is an important contributor to uncertainty and volatility in financial status of the Indian households. Last decade has seen rapid expansion of health insurance coverage, and at present 23 per cent of the population have some form of health insurance coverage compared to 2005 when merely five per cent of the population was covered. Rashtriya Swasthya Bima Yojana (RSBY), covering around 120 million population across 29 states, is one of the biggest drivers of expansion in health insurance coverage. Therefore, it is being viewed as a promising approach to expand health insurance coverage.
In Union Government Budget 2016-17, RSBY received a new taxonomy as Rashtriya Swasthya Suraksha Yojana (RSSY). In addition to new name, the coverage of the scheme has been increased to Rs 100,000 from present Rs 30,000 and budgetary allocation in 2016-17 has been pegged at Rs 1500 crores. Although resources has been increased, the design and implementation of the scheme has remained untouched. We argue that there are critical issues at the level of the design and implementation, which must be sorted out before it expands further.
Launched in 2008, RSBY is primarily targeted at the below poverty line (here by referred to as BPL) populationi. It also includes specific vocational groups such as domestic workers, Beedi workers and construction workers, etc. The states can enroll non-BPL households but they must bear full cost of these households. The scheme is voluntary, families who are in the state BPL list or specific vocational group can enroll in the scheme by paying Rs 30 as a registration fee. On enrolment, they get a smart card which has biometric information of the beneficiary and this card can be used throughout India at any RSBY approved hospital.
The benefit package comprises a maximum insured sum of Rs 30,000 per BPL family per annumii. Any family member can avail of this sum. The benefit package of the scheme covers hospitalisation expenses (including OPD expenditureiii and transportation expenditureiv) of all diseasesv including pre-existing diseases. There is no user charge or co-payment at the time of utilisation of service as the scheme is 100 per cent pre-paid.
The scheme is funded through general taxes where state and central government both contribute. Central government pays 75 per cent of the total funding and state government pays remaining 25 per cent vi. Beneficiary only pays a token amount of Rs 30 as a registration fee per annum. In the Union Budget 2013-14, Rs 1466.7 crores was allocated to RSBY scheme (both Central and state government combined together).
Families who are in the state BPL list can enroll in the scheme by paying Rs 30 as registration fee. Till 2014, 37.7 million families were enrolled in the scheme. On enrollment, they get a smart card which has a photo of the head of family, thumb impression of four other family members and value of Rs 30000. This card can be used throughout India at any RSBY network hospital. By 2014, more than 12000 hospitals (both public and private) across 29 states were empanelled in the scheme. The BPL family, when falls ill visits the network hospital. Providers at the network hospital diagnose the case, select the appropriate procedure from the list of 1094 packages, and block the package amount in the card. The provider after completing the treatment fills in the case details through an online claims database and submits the claim, which TPA is supposed to reimburse within 30 working days.
The scheme is implemented through a Public private partnership (PPP) mode, where state government contracts with an insurance company to provide defined health insurance coverage to a defined population in a district on the basis of a premium per family decided through a competitive bidding process. The insurance company provides health insurance coverage, and defined healthcare services in collaboration with other agencies and healthcare facilities from both public and private sector.
RSBY scheme performance
Success of any health insurance programme in developing country context, depends on containing cost and providing good quality care that is accessible and affordable to the population who would have not utilised the care in absence of programme or otherwise would have incurred catastrophic cost. The present scheme design and implementation approach while trying to achieve all of this but at the same time fails to do so, which must be sorted out before it can be expanded further.
Within a span of six years, the coverage of the scheme has increased to approximately 120 millionvii which is estimated to around 53 per cent of the BPL population of the districts in which the scheme has been implemented. Performance in the utilisation function can be measured by the hospitalisation ratio, which is rate of hospitalisation among the enrolled beneficiary. In the context of the RSBY scheme, higher hospitalisation rates can be considered a desired performance goal given the population to which the programme is targeted. By March 2015, there were more than 11 million hospitalisation under the scheme. A number of studies have raised issue of overall effectiveness of the scheme in terms of reducing healthcare expenditure of the targeted population (Saharawat and Rao 2011’ Selvaraj and Karan 2009) but they ignore the fact that although the benefit package included all expenses in principle, in practice beneficiaries spend considerable amount of money on drugs, investigations, travel and food during a hospitalisation episode (La Forgia and Nagpal, 2012).
Institutional design issues
First, though the coverage has increased but access to healthcare among the intended beneficiary is still limited because of scheme’s approach to identify beneficiary. The scheme is mainly targeted towards low income groups and relies on the state Below Poverty Line (BPL) lists to identify BPL population. But these BPL lists have extensive errors leading to high leakage. Dreze and Khera, (2010) found that in state of Andhra Pradesh, 57 per cent of the households listed as BPL actually do not belong to the BPL category. Example of Himachal Pradesh is illustrative in terms of how they have overcome these deficiencies by continually revising BPL lists after every enrolment. There is a need to urgently improve database and dynamically maintain database of intended household beneficiaries to bring exclusion and inclusion errors within internationally benchmarked range.
Second big issue is ensuring quality of the service provided. Health insurance programmes are known to have threat of spiralling cost due to unnecessary healthcare provision (supplier induced demand) and utilisation (moral hazard) because of the perverse incentives to providers and patients. In order to contain cost, RSBY scheme pays insurance companies a fixed premium per year for a family, who then pay providers a fixed price for providing a package of services for defined disease category. When a fixed price payment method is used, bidders bid aggressively to get the contract but, shred quality in order to reduce cost, induce demand and get engaged in fraudulent activities. Therefore monitoring quality, supplier induced demand and ensuring accountability for unethical behaviours becomes critical during policy implementation. In RSBY scheme quality monitoring is limited and at present there is no link between quality and payment. For many activities the standards have been defined but are not monitored and do not play a significant role in awarding of contracts either to insurance company or hospitals. Investment in quality can save cost in long run but the short duration of the contracts in RSBY further reduces incentives to agencies in investing in quality. In absence of quality monitoring, both insurance company and healthcare providers have incentive to reduce quality to cut costs. Insurance companies in order to get contract bid aggressively that has led to unsustainable premiums. In recent biddings the premiums have gone as low as Rs 169 out of which insurance company has to pay out at least Rs 100 only for making smart card and thus they are left with only Rs 69 to provide health insurance coverage of 30,000 per year for a family.
Similarly healthcare providers get empanelled in the scheme even though the package rates in RSBY are lower than market price anticipating that they can make up by inducing demand and providing low quality services. Poorly defined packages and lack of standardisation of medical care provides ample discretion to providers, in terms of package choice, course of treatment and quality of service. Providers select low-cost cases, choose a higher paying package, select the cheapest treatment plan, use low quality instruments, consumables and drugs, and discharge patients prematurely leading to a low quality low cost service (La Forgia and Nagpal 2012). Thus RSBY has emerged as low cost scheme providing low quality services, leading to underutilisation and thus provides limited financial protection to targeted population groups.
Ensuring quality of the contracted services requires monitoring specially by district level agencies who are responsible for facilitation and monitoring of the scheme implementation. Studies (Maurya, 2015; Asher et. al., 2015) suggest that district level agencies lack accountability, motivation and incentive to make the scheme work and if the rent seeking opportunity is available they collude with private agencies, leading to fraudulent and benefit – cheating behaviourviii, fourth key issue in the scheme.
The role of district administration is to facilitate implementation of the scheme specifically supporting insurance company, in enrolment of beneficiary and empanelment of the hospital as insurance company being an outsider in the district is dependent on district administration. The district administration tends to exploit this dependence of the insurance company and seek rent in lieu of the providing support. District administration also serves as arbitrator for the disputes between agencies at the district level which further bolsters veto power of the district administration. District administration use their clout to pressurise insurance company to empanel their favoured hospitals in return of the support they provide during enrolment.
A number of hospitals have sprung up in rural areas to capture the money coming from this scheme (International Insurance News, 2011), and anecdotal evidence suggests that many of these hospitals are owned and managed by friends and relatives of those involved in the scheme. These hospitals collude with public agencies (more specifically district administration) to get empanelled (i.e. to become officially approved provider of healthcare services) in the scheme and once empanelled the hospitals under the immunity of these officials get engaged in extensive frauds.
When the claims reach a threshold level, insurance companies, because of the inability to control frauds end up behaving opportunistically denying and delaying claims payment resulting into non-provision of care. Opportunism in hospital empanelment attract fraud prone hospitals in the scheme. If agencies foresee possibility of opportunism in the hospital empanelment and claims management, they behave opportunistically even during enrolment of the beneficiary leading to a vicious cycle of opportunism and counter opportunism.
Fourth critical issue limiting effectiveness of the scheme is shorter investment cycle. In the present design, the contract is renewed every year in the scheme, providing agencies limited time for learning and investment, as the investment cycle is too short. Shorter durations of contracts prevent agencies from investing in strategies for improving scheme performance, like pricing of the premiums and investment in preventive healthcare. One of the critical process in the scheme implementation is the enrolment of beneficiary. At present, this is repeated every year causing great inconvenience to both the beneficiaries and implementing agency, disrupting the delivery of the services. Every year contracting adds to the transaction cost and provides recurrent rent seeking opportunities to the stakeholders involved in the process. Increasing duration of the contract, will increase the investment cycle and reduce opportunity for rent seeking and disruption in services.
Economic theory suggests that insurance as financing tool is efficient for low risk and high cost conditions such as tertiary care. RSBY mainly covers secondary care (and primary care as providers convert ambulatory care to hospitalisations) as the highest claims were made in the category of elective surgeries like cataract (26.4 per cent) and therefore rather than insurance these high risk and low cost conditions would be more efficiently covered by other financing tools than insurance.
As public programmes for healthcare proliferate there is a need for moving away from a scheme based approach to systemic integrative outcome based approach. There are three areas which may be suggested to enhance coherence and greater systemic approach which in turn could improve effectiveness of the RSBY. First is to move beyond just shifting to the RSBY scheme to the Ministry of Health as undertaken by the NDA government elected in May 2014, where it should have been located since its inception. Though at the national level, the scheme has been moved to the ministry of health , but at the state level, the scheme is implemented by non-health departments leading to coordination and convergence gaps between RSBY scheme and state public health system. Bringing in health department will also improve control over public hospitals, which are one of the big stakeholders in the scheme, as observed in states like Punjab and Himachal Pradesh. The RSBY design and provisions need to be integrated with objectives of other programmes of the Ministry. Shifting of the ESIS (Employee State Insurance System) which is a mandatory scheme for health care provision for covered private sector workers, from the Ministry of Health and Family Welfare to Ministry of Labor. All major health schemes should be within the Ministry of Health for better policy coherence, and provision of integrated set of programmes and schemes. The second area concerns encouraging the development of medical devices sector, health care technologies and traditional medicine, which are becoming increasingly relevant for health care delivery in an affordable manner. The RSBY (and healthcare services in other schemes) thus could bring traditional medicine aspect (including Yoga) which is more conducive for preventive medicine, rather than relying solely on curative care. The Ministry of AYUSH could be made an integral part of the RSBY (and ESIS).
RSSY with increased coverage, has a good potential for up scaling further given its unique design and extensive use of technology (use of Smart Cards for identification of beneficiary, online claims monitoring) provided certain design and implementation issues are addressed to prevent low cost, low quality service which is contributing to underutilisation of the scheme by beneficiary and thus providing inadequate financial protection.
References:
Asher M., Vora Y.,& Maurya D (2015). An Analysis of Selected Pension and Healthcare Initiatives for Informal Sector Workers In India, Social Policy & Administration, Vol 6.
GIZ (2005), “Health Insurance For India’s Poor: Meeting the Challenge With Information Technology” Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH Accessed from http://health.bmz.de/good-practices/GHPC/Health_Insurance_India_New/index.html
International Insurance News (2011), Low Cost Indian Health Insurance Spurring National Healthcare Investment: International Insurance, 12 May, http://www. globalsurance.com/blog/low-cost-indian-health-insurance-spurring-national-healthcareinvestment-354920.html (accessed 22 June 2015).
La Forgia, Gerard, and Somil Nagpal. 2012. Government-Sponsored Health Insurance in India: Are You Covered? World Bank Publications.
Maurya D. (2015) Inter-Organizational Relations In Public Private Partnerships: National Health Insurance in India Unpublished Thesis National University of Singapore
Reddy, S., Sakthivel Selvaraj, Krishna D. Rao, Maulik Chokshi, Preeti Kumar, V. Arora, S. Bhokare, and I. Ganguly. 2011. “A Critical Assessment of the Existing Health Insurance Models in India.” A Report Submitted to the Planning Commission of India, January, New Delhi.
Selvaraj, Sakthivel, and Anup K. Karan. 2012. “Why Publicly-Financed Health Insurance Schemes Are Ineffective in Providing Financial Risk Protection.” Economic & Political Weekly 47 (11): 61–68.
Shahrawat, R., and K. D Rao. 2011. “Insured yet Vulnerable: Out-of-Pocket Payments and India’s Poor.” Health Policy and Planning.
The Financial Express. April 1 “The Soaring Cost of Medical Inflation.” 2015. http://www.financialexpress.com/article/industry/insurance/the-soaring-cost-of-medical-inflation/59590
(i)BPL population in India is considered as those earning less than a dollar per person per day.
(ii) The Benefit package has been revised in 2016-17 budget to 100, 000 INR per family per year.
(iii) Includes OPD expenditure for five days before hospitalization and post hospitalization visits (including lab investigations).
(iv)Transportation assistance of 100 rupees per visit up to a maximum of 1,000 rupees per year (10 visits a year).
(v) The conditions which are not included are congenital external diseases, drug and alcohol induced illness, sterilization and fertility-related procedures.
(vi)Except in case of J& K and North Eastern States where state governments 10% of the premium and Government of India contributes 90 per cent .
(vii) As of April 2014 (GIZ, September 2015)
(viii) Opportunism leads to benefit-cheating which reduces fairness and adversely affects intended outcomes of the RSBY
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