Editorial: Saving people from Illness-induced poverty

Even though Universal Healthcare continues to be a distant and unrealised goal, India has made impressive strides in expanding the formal coverage through government and private insurance schemes. However, a recent report by a leading global professional services firm highlighted the gap between the rising cost of critical illnesses and financial protection available to people.

The widening gap and the consequent catastrophic health expenditure will adversely affect the financial situation, pushing families into loss of savings and debt. In the case of economically vulnerable and disadvantaged families, it results in falling below the poverty line.

The 1991 economic liberalisation transformed the country’s healthcare sector, as the private and corporate hospitals emerged to cash in on the demand from the middle and upper middle class who have greater purchasing power. Public and private sector health insurance companies stepped in with products tailored to meet the new requirement. The organised sector, too, offered health insurance benefits to the employees as a perk.

However, the mismatch between expenditure on critical illnesses and the cover that insurance offers began to hurt the family finances, and having been used to the private hospitals, the newly affluent families could not return to government hospitals, even though many of them had good doctors and facilities. The insurance provided by employers was under Rs 5 lakh, which is clearly inadequate. Even critical illness riders – that is, add-ons to cover serious illnesses – are often capped to under Rs 10 lakh. The report rightly recommends innovation and customisation to fulfill the need.

The larger issue however is the need to regulate the private healthcare system where maximisation of profit and shareholder value tends to compromise the health of the patient and their funds. Though there is a legal and regulatory framework, their effectiveness is under a cloud, given the allegations that range from exorbitant and non-transparent billing to thrusting unnecessary diagnostic tests, and expensive, branded medicine purchases, when equally good cost-effective alternatives were available. The private hospitals are in conflict with health insurance companies and there is trust deficit between these two key stakeholders. As a result, the patient is caught between the inflated bills of private hospitals and denial of claims by insurance companies.

The main challenge is enforcement of practices that promote detailed record-keeping, standardised methods of billing, and sticking to well-defined and appropriate treatment protocols by private hospitals. This will give the insurance companies fewer pretexts to deny claims or resort to partial reimbursements. The insurance companies, on their part, should design products that are both patient-centric even while being profitable to sustain their operations.

On the brighter side, the report pointed out the rapid digitalisation and expansion in coverage in the health insurance sector, much of which was prompted by competition. Secondly, the central government’s Ayushman Bharat–PM-JAY scheme gave public health insurance coverage to over 100 million families. The results relating to its implementation have been mixed, but it is certainly a major step forward, especially in providing healthcare access to families belonging to economically disadvantaged sections of the society. Once the glitches are fixed, smart technology solutions are deployed, and the officials and medical practitioners are sensitised, it could act as a strong bulwark against disease-induced deprivation and poverty.