There is no subsidy for a villager under community-based health insurance

Dr Alka Parikh

The 2003 budget continues with the same policies of government for health sector as before, and hence has nothing much in store to shock or surprise. The funds allocated to health are more or less of the same amount as has been for two to three years now, no innovative programs or schemes for enhancing the national health seem to have been thought of. It seems as if no one put much thought to this part of the budget, or paid any serious attention to its problems (isn’t that also the continuation of the same attitude?) The figures were simply reproduced from the last year. With some small changes. Like importance given to private sector.

The policy of liberalization continues with more incentives given to the private sector: Easier credit and more depreciation on medical equipment. The government is not proposing any improvements or new programs for the public health care sector. The dangerous trend of letting the private sector take over the entire healthcare infrastructure continues. It can be argued that Indians had always depended more on private providers, so what is so new about the “current trends of liberalization”? The government’s presence in the market ensures availability of a cheaper alternative to the consumer (which was the case until recently), which in turn affects the prices in the market. In the absence of a body like that, healthcare costs can rise unchecked. That implies lower accessibility to healthcare services for more and more people. In a democratic country, if people die because they can not afford to avail of health care facilities, it is a shame for the society. Hence the worry about the liberalization/ privatization trend.

To make healthcare facilities financially more accessible to the villagers, the Finance Minister proposes a community health insurance scheme in the budget. Although this is not the first time that the government has suggested this measure, it is worth considering what the government is trying to achieve. It is trying to make healthcare facilities more accessible to people by means of health insurance. Other countries have tried this option, and it has worked in many cases. You pay a small premium and would get the hospital expenses reimbursed (upto Rs 30,000), as and when required.

But is the premium small? The government does not seem to be offering much of a subsidy to the villagers by this scheme. Although the calculations of risks involved and premiums are different for Medicare and the community health insurance (the former looks at an individual’s health conditions and the latter looks at the probability of number of people being hospitalized from a community), a rough comparison would help to clarify the situation. For the insured amount of Rs 30,000, Medicare charges a premium of Rs 360 for the individuals upto the age of 45 years.

The government proposes the same rates (Rs 365) for its individual insurance. The older (aged 70-75) pay a premium of Rs 730 in Mediclaim, and the government asks the same amount from a family of seven which is most likely to have an older member. In other words, there does not seem to be any subsidy involved for a normal villager in this scheme. For the poor, the government proposes to bear Rs 100 of the premium, the rest (73 per cent of the premium) to be paid by the poor themselves.

From the above analysis, it seems that the viability of such a scheme is not an issue. But would the villagers want to buy such a scheme? The need for health insurance is being recognized by almost all the urban middle class families. Would the rural middle class families also see the rationale? Serious awareness building needs to be done for that. If India wants to increase access to hospital services for her citizens with the help of health insurance, it is a laudable intention. But we will have to have more concerted efforts going into advertising it instead of leaving it to the bureaucrats and NGOs, who have many other responsibilities. Also, popularity of the scheme finally depends on the efficiency with which the claims are settled and affordability of the premium. A tab on the market has to be kept for that. We need an agency for such a purpose.

(The author is an economist at the department of Health Services Studies in the Tata Institute of Social Sciences)