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Journal of the Academy of Hospital Administration

Proceedings of the National Conference on Health Insurance and Financing (HIFCON-2004)

Author(s): R. Kumar*, C.S. Pandav**, S.K. Gupta***

Vol. 17, No. 2 (2005-01 - 2005-12)


India is committed to the principle that funded healthcare should be available to all citizens regardless of their ability to pay. Currently, the National Advisory Council is debating on Public Healthcare System. In line with the commitments made in the present United Progressive Alliance Government's Common Minimum Program, it has also presented draft model of "National Health Insurance Plan" to the government. This envisages an annual expenditure of Rs. 150-200 per person, which will be equitably shared by the Center, the State and the individual. For those below poverty line (BPL), the government plans to bear the cost of individual's share in the insurance sector. The country is now in the midst of a dual burden of communicable and non-communicable diseases. This is coupled with spiraling health costs, placing a high financial burden on the poor and eroding their incomes. Around 24 percent of all people hospitalized in India in a single year fall below the poverty line due to hospitalization (World Bank 2002). An analysis of financing of hospitalization shows that large proportion of people (especially those in the bottom four income quintiles) borrow money or sell assets to pay for hospitalization (World Bank, 2002).

In current scenario, healthcare is financed through general tax revenue, community financing, out of pocket payment and social and private health insurance schemes. India spends about 4.9% of Gross Domestic Product (GDP) on health (National Health Policy 2002). The per capita total expenditure on health in India is Rs. 1035/- (US $ 23), of which the per capita Government expenditure on health is approximately Rs. 180/- (US $ 4). Hence, it is seen that the total health expenditure is around 5% of GDP, with public expenditure contributing 0.9% and private expenditure 4.0%. The private expenditure can be further classified as out of pocket (OOP) expenditure (3.6%) and employees / community financing (0.4%). It is thus evident that public health investment has been comparatively low, infact as a percentage of GDP it has declined from 1.3 percent in 1990 to 0.9 percent as at present. Furthermore, the central budgetary allocation for health (as a percentage of the total central budget) has been stagnant at 1.3% while in the States it has declined from 7.0 percent to 5.5 percent. There is also an inequality in per capita public spending between developed and backward States. However, health insurance is a complex issue, there are serious market failure problems due to factors like moral hazards, adverse selection, skimming, high administration cost and lack of information.

Moral hazards: Like over medications & investigation, unnecessary hospitalization and over charging.

Adverse selections: The disproportionate insurance of patients who are considered high risks because they are poorer or more prone to suffer loss or make claims than the average persons. Adverse selections may result from the tendency among poorer patients or sick people to seek or continue insurance coverage to a greater extent than healthy people.

Skimming: The practice in health programs and insurance companies that are paid for on a prepayment or capitation basis of seeking to enroll only the healthiest people as a way of controlling programs costs. This is possible since the income of program or company is constant whether or not services are actually used.

Lack of standardization of healthcare and absence of suitable accreditation system for hospitals further compounds the situation. Given India's daunting size, diversity and complexity, there is no single solution to reform the system. An incremental and pluralistic approach appears to be inevitable with different States and regions pursuing divergent paths and healthcare reforms. Only the Government of India and State Governments can determine which options are politically feasible and accordingly set priorities. Insurance Regulatory Development Authority (IRDA) has suggested that future health insurance products should be customized to focus on clients demands. Importantly the "Grey Areas" need to be identified, discussed and agreeable strategies formulated to address and regularly monitor the issues.


"National Conference on Health Insurance and Financing (HIFCON 2004)" was aimed at creating a linkage between various stakeholders in the healthcare industry and bring them all under one platform to jointly address the issues related to health insurance and make a sincere effort to come out with viable and sustainable solutions relevant in the Indian scenario.


The objectives of the conference were:

3.1 Sharing experiences of various stakeholders regarding recent trends in social and commercial health insurance in our country.
3.2 Addressing the complex problems of bridging the gap between affordability, quality and cost of healthcare through viable and sustainable cost recovery mechanisms.
3.3 Analyzing the causes for poor penetration of health insurance in India and chalking out a road map for synergistic coordination between public and private sector players to provide optimum, affordable and quality healthcare to maximum people in India.


The mammoth task of organizing this Conference was undertaken by the Department of Hospital Administration, All India Institute of Medical Sciences, New Delhi, on 16th - 17th October 2004. To provide a wide coverage of various topics, a large number of eminent speakers were approached from amongst various stakeholders in healthcare sector. It was a challenge convincing the distinguished personalities about the seriousness of the Conference and ensuring their participation. This was well reflected by the scientific program which in turn led to pouring in of registrations from India and abroad. Institutions and organizations registered in groups of large number. The largest group being of 58 delegates coming from Indian Institute of Health Management & Research, Jaipur. The conference succeeded in bringing together, under one roof, over 640 delegates who represented a "Mini India". The delegates came from all corners of the country and also from several countries abroad. Various participants in different capacities included senior bureaucrats from the Ministries of Health, Finance, Consumer Affairs, Labour, Defence , Railways, Representative from WHO Geneva, South East Asia Region Office. Country office, Representative from World Bank, senior doctors, Health and Hospital Administrators, Executives of various Public & Private Hospitals, Executives from Insurance Companies and Financial Institutions, Representatives from most of the Third Party Administrators (TPAs), Social Scientists, Health Economists and Academicians, Print & Electronic Media, Representatives from Medical & Surgical Equipment Industry and others with interest in the field of healthcare. Experts and distinguished personalities addressed, discussed and interacted with the delegates on the multidimensional facets of healthcare insurance and financing. The scientific sessions were planned to comprehensively address the relevant issues on the subject by way of presentations, discussions, keynote address, panel discussions and interactive sessions. The sessions included overview of the subject, micro and macro issues, existing and futuristic dimensions, Indian and Global scenario and experience, strategic and operational aspects, consumer's, provider's and regulator's view point and public vis-a-vis private sector models of healthcare insurance and financing.

The quality of the scientific program was reflected by 95% to 100% attendance of delegates during the two days of conference. A trade exhibition was organized in which banks, insurance companies, Third Party Administrators and NGOs displayed their products for mass awareness. A large number of promising participants who could not be accommodated in our tight schedule due to constraint of time, were given opportunity to display their work as poster presentations.


The vast and rich experience of the faculty as well as the distinguished delegates from all over the country resulted in a vibrant and enriching scientific programme that was stimulus for the beginning of a national endeavour to chart the road map towards "Health For All." The discussions according to sessions were as follows:

Healthcare Financing

The deliberations focused on the most important aspect of financing of healthcare. It reached a consensus that in order to ensure fair financing while providing appropriate incentives to healthcare providers, countries need to reform and harmonize the three interrelated sub-functions of financing, namely;

Fee for service - A method of charging whereby a physician or other practitioner bills each encounter or service rendered. Capitation - A method of payment of health services in which an individual or institutional provider is paid a fixed, per capita amount for each person served, regardless of the actual number or nature of services provided.

  1. collection of revenues,
  2. pooling of financial resources,
  3. purchasing of interventions.

Of these sub functions, pooling of financial resources is of particular significance for fair financing. It was agreed uniformly by all speakers that payment to provider for out patient care can be done either by, "fee for service" or "capitation".

The role of private and public sectors to provide health services was considered essential. Contracting as a tool was considered as an option to provide health services e.g. frame work agreement between government and Non Governmental Organizations (NGOs) or contracts with private hospitals to provide range of health services.

Dr David Evans, Director Health System Financing, WHO Geneva & Mr Mathew Verghese, member IRDA stressed that Government should ensure that all insurers price the standard package by the same method. Incentives to insurers, providers and consumers should be aligned. Government should ensure providers payment method to encourage quality of care. However, it is the mix of collection, pooling and purchasing which is critical.

Mr. Jairam Ramesh, Member National Advisory Council acknowledged that Government was not spending optimum amount in health and education. He reiterated that there was a felt need of enhancing the level of public financing for health sector both at the Central and State level. Not only at the center, but even the State, health expenditure has come down from 7% to 5.5% of the total budget. Therefore, efforts should be made to increase the State expenditure. It was admitted that only additional financing is not sufficient. Organizational and management changes must be made in Primary Healthcare delivery system, particularly in poor and backward States of the Northern & Eastern parts of the country, where the bulk of the health deficit lies.

In order to address the above, education and health are key elements of the government's agenda. It was proposed that education and health will get prominent place in budget. The first step taken in this regard was by the Union Finance Minister Mr. P. Chidambaram. In the budget that was presented on July 8th, 2004, education cess was proposed by him. There was no public criticism of this additional levy that was imposed on the tax payers, showing that the tax payers are willing to pay if the cause is socially worthwhile. The first step of the new government was to impose this education cess to mobilize additional resources for the universilization of elementary education. In addition to imposing education cess, the government set up a primary education fund, what's called the "Prathmik Shiksha Kosh", which would be a designated fund into which all money collected from this education cess will flow. It would be non-lapsable. He stated that health will be given priority and a central place in investment planning of forthcoming budget. He continued that the reasons why health has not got the type of importance it needs in our country, is primarily due to the fact that the level of public funding and the level of financing has been pathetic. He suggested that primary education cess and the creations of `Prathmik Shiksha Kosh' are useful models to replicate in the health sector through the imposition of special levies to raise additional resources for health. It will be non-lapsable funds in order to ensure continuity of funding. Elementary education will have vital bearing on health, and the two cannot be looked as separate compartments. The Union Health & Family Welfare Minister Dr. A. Ramadoss stated that public expenditure on health should be increased from 0.9% to 2% to 3% by 2005.

Universal Health Insurance Plan for Poor (UHIP)

"We must move towards Universal Health Insurance plan for poor," said Mr. Jairam Ramesh. The Common Minimum Program of present government talks about Universal Health Insurance Scheme for Below Poverty Line. According to him, studies have shown that the single most important reason for rural indebtedness very often leading to suicides in many States is expenditure on health .It is this reality that prompted him and other members involved in the drafting of Common Minimum Programme to make commitment that the Government must move towards Universal Health Insurance Plan for the poor.

1 Universal Coverage is coverage of all citizens of a country under a particular insurance scheme or variety of schemes. He recognized that the present Health Insurance Plan reach only very narrow segment of Indian population. They reach either the organized sector of the work force which accounts for just about 7% to 8% of the total labour force in the country or they reach very small segment of the selfemployed professional category which is in a position to pay for the premium that is involved in the provision of health insurance. Mr. Jairam categorically mentioned that there will not be one model for Health Insurance. In-fact, there will be multiplicity of approaches and divergent schemes. Different schemes will address different constituencies of rural India and not chase the mirage of having one mega national or homogenous scheme that will address all problems for Below the Poverty Line families. It was strongly suggested by Dr. Montek Singh Ahluwalia, Deputy Chairman, Planning Commission that government will have to retain a role in financing and should aim at universal coverage to ensure coverage of poorest people in the population. However, Health Insurance should expand to satisfy the needs of higher income group who are leaving pubic care for high cost private care. It was analyzed that the Universal Health Insurance Scheme for Below Poverty Line families did not take off and the reasons for low performance under Universal Health Insurance scheme were varied like, low income affordability, lack of health infrastructure in rural area, lack of awareness, lack of services and limited reach of State insurer. Ms. Sujatha Rao, Secretary, National Commission on Macro Economics & Health said that there were five barriers that stopped us from achieving Universal Health Insurance Schemes.

  1. Skewed health risks leading to large pool of the uninsurable
  2. Inequitable spread of infrastructure and skewed pattern of human resource development
  3. Critical data gaps
  4. Absence of institutional frameworks of accrediting, monitoring, regulating and adjudicating.
  5. Market failure and high administrative costs

However, she suggested three options for provisioning and financing. It can be public only, which is ideal but there is low, incentive to perform. It can be private only, which can be exploitative and unsustainable. However, she said that the best option could be Public-Private-Partnership which is feasible. Ms. Sujatha Rao concluded that key element (or vital aspect) to all these aspects is quality of governance.

2 Different Approach to Health Insurance
It was unanimously agreed that India is too large and diverse for one uniform model and it could consists of

  1. Variety of models
  2. Health Maintenance Organization (HMO) - Managed care when financing and provisioning both are combined.
  3. Government controlled health trusts can also facilitate public-private-partnership in a competitive environment
  4. Community Based Insurance Schemes and
  5. Social insurance / Employer Based Insurance for organized sector

Dr. Neelam Seekhri emphasized on moving towards prepayments and risk pooling which will lead to universal health coverage and will promote equality. "Low income countries could encourage different forms of prepayment, job based, community based and provider based, as a part of a preparatory process of consolidating small pools into larger ones".(World Health Report, WHO, Geneva 2000)

3 Levy of Insurance Premium / User Charges to those with ability to pay.

Dr Montek Singh Ahluwalia, stated that since health is a public good, it needs to be subsidized to make it available to public. Government will clearly not subsidize all health expenditure. This system is not viable as government cannot fund public hospitals proportionate to the demand. Government will only cover a part of cost in some basic minimum healthcare to poor or those who cannot pay, while those with ability to pay, will pay user charges. Government will be provider of health service through public hospitals. At present, Public hospitals have 3 percent of user charges. He emphasized that the standard of care provided may not be the same like, at the All India Institute of Medical Sciences, New Delhi or any private hospital. Anybody getting treatment in the hospital "free or near free", will not have incentive to be insured. The key issue is to look at the total number of people demanding hospital services. Those who cannot pay for services, government should subsidize the services for them. But a large number of people with capacity to pay should be levied insurance premium / user chargers. Ms. Sujatha Rao said, "there is a vast interState differentials in the quantum of out of pocket expenditures reflecting the ability to pay". The experts expressing concern over the hike in service tax on insurance said that the 26 per cent cap on foreign direct investment was hindering the growth in insurance sector. The government has proposed raising the cap to 49 percent. However, the future of it still remains uncertain.

4 Health Infrastructure Upgradation
Union Health Minister Dr A. Ramadoss, stated that the health infrastructure in our country needed quality improvement which was also admitted by Mr. Jairam Ramesh. He said that government funds in India should be used to upgrade quality of infrastructure of Primary Health Center in rural areas. The Health Minister showed concern on various government insurance schemes like, "Janraksha" and insurance scheme for Below Poverty Line announced in the budget 2003-2004. However, these scheme have not taken off well, till now. The Health Minister said , "Out of 1.1 million insured a total of only 9,500 families were BPL". He also mentioned that the healthcare facilities should be categorized, standardized and accredited.

He further stated that the National Commission on Macro Economic and Health is mapping eight districts in our country as a pilot project. This will help insurance companies to provide need based healthcare to users in their own vicinity. The report of this exercise would be available soon. The Government would then undertake geographic mapping of health infrastructure across the country which would help in locating the facilities available in various areas for insured people. Therefore, Health Insurance sector - cannot work in isolation. An integrated approach is critical.

5 National Data Base Repository, Standardization & Accreditation
Mr. Mathew Verghese, member Insurance Regulatory Development Authority (IRDA) and eminent speakers strongly opined that promotion of mandatory coverage, affiliation through groups, cooperatives and associations, innovations based on local needs should be encouraged. Member IRDA, suggested that, there should be creation of Health Insurance data base, accreditation and benchmarking of health providers. This should include codification of health treatment protocols. Agents and private players should target new markets rather than tapping the same market. However, Mr. Bhujbal, Director, Insurance said that, one should ensure that supply should not create demand .The availability of health insurance product should not lead to the delivering of tertiary care when the need is for primary or for basic healthcare.

6 Community Based Health Insurance Schemes (CBHIS)
"Larger financial pools are better than small ones as they can provide for a better sharing of health risks, and at the same time, raise more revenue", said Dr. Deepti Chirmuley, Senior Program Officer, GTZ Program. A larger pool can also take advantage of economics of scale in administration and reduce the level of contribution required to protect uncertain needs, while ensuring that sufficient funds are available to pay for services. Dr. U Thansein, Director, Health Systems Development, WHO, SEARO, New Delhi addressed, that Social Health Insurance (SHI) is generally perceived as "a financial protection mechanism for healthcare, through health risk sharing and fund pooling for a larger group of population. It is known as the "Bismarck Model". There were certain characteristics and prerequisites for the introduction of SHI, such as solidarity, compulsory membership and ensuring equitable and sustainable social financing, and fostering health systems efficiency and effectiveness". He emphasised that the ultimate goal of healthcare financing is to achieve universal coverage. The experience already gained by implementing various models of Community Health Insurance schemes, especially in ensuring consensus on solidarity and contribution, and on community management of collecting & allocating funds, would play a useful role in expanding the national Social Health Insurance schemes. Mr. Jairam Ramesh, addressed that close-ended user group insurance providers like dairy cooperatives, self help groups, micro finance groups are in a position to take on the provision of Health Insurance in very basic way of meeting day to day health needs of the rural population. Therefore, the challenge is to devise instruments and give legal and regulatory structures to enable research institutions to be providers of Health Insurance.

It was unanimously agreed that social capital which is a prerequisite for implementing CBHI, varies among States and even among localities, and thus the design and action programmes are very local and specific. This makes it difficult to replicate the schemes in other areas. Mr. Jairam Ramesh said, "many CBHI Schemes have limited scope as they are often expensive, considering the high hidden costs which are usually subsidized by donors and governments. Once donor funding dwindles, on an average, only 10% of such schemes survive."

Dr. Neelam Seekhri deliberated that existing CBHI Schemes in most countries cover limited packages of benefit that generally include preventive healthcare including very basic medical and diagnostic services. When a comprehensive package is introduced, these schemes usually collapse. The CBHI schemes with a small pool of participants are not financially viable in most cases. The experiences abroad have shown that the health management organizations (HMOs) with less than 100,000 participants are not viable.

7 Mandatory / Employer Based Health Insurance Schemes in India
Ms. Sujatha Rao provided a brief on Mandatory Health Insurance Schemes in India. While India has a multitude of systems of medicine with mixed ownership patterns and different kinds of delivering structures, the private sector dominates in healthcare. Mandatory Health Insurance Scheme are available only to civil servants and a certain proportion of employees in the organized sector. Mr. Bhujbal, Director Insurance addressed that General Insurance Corporation (GIC), a Public Sector Undertaking, along with four of its subsidiaries offer voluntary health insurance (Mediclaim Plan). These schemes mainly covered hospital care and domiciliary hospitalization benefits (specified outpatient care provided in lieu of inpatient treatment). In addition, certain private insurance companies also offer health insurance. The GIC recently introduced new health insurance packages to extend the coverage of healthcare needs to middle and low income groups. Both public and private sector companies offer employer-based insurance, through employer-owned facilities, by way of lump sum payments, reimbursement of health expenditure of employees, or coverage of employees under group health insurance policies. The population coverage under these schemes is low and is estimated to be about 30 to 40 million people.

i) Experiences from Employer State Insurance Scheme (ESIS) and Central Government Health Insurance Scheme (CGHS)

Neither ESIS nor CGHS offers social insurance models that can be used as a basis for expanding healthcare systems. ESIS applies only to lower income employees in the organized sector and is tied to a State owned delivery system. The wage ceiling for employers insured under ESI scheme has increased from Rs. 400/- (1952) to Rs. 7500/- (2004). The per capita expenditure is Rs. 1500/-. It has developed proper tie up arrangements for super specialty services. Beneficiaries take treatment in ESI Hospitals only. For treatments, not available, they are referred to other approved hospitals. There is no capping on re-imbursement / treatment of individuals.

However, problems are faced due to dual control, shortage of medical staff and equipment, leading to dissatisfaction with services. Expenditure on medical care is more than the per capita ceiling on medical care. Dr. S.K. Jain, Deputy Medical Commissioner, ESIS expressed concern over challenges for ESIS which are:

  • Implementation of scheme in new geographical areas.
  • Extension to new sectors of employment for increasing demographic coverage.
  • Need for increase in wage ceiling on cost index basis.
  • Ensure optimum utilization of existing infrastructure to contain costs.
  • Need based improvement in medical care services to increase acceptability/ popularity of the scheme.
  • Defining reasonable medical care.
  • Growing competition from Private Health Insurance schemes.

Recommendations given by Dr. Jain for improvements included:

  • Establishment of revolving funds in States.
  • Upgrading services in operations.
  • Hospital Vigilance Committee to monitor the functioning of hospitals.
  • Strengthening of occupational health services.
  • Regular training programmes for staff.
  • Tie up arrangements for super speciality services.

Some proposals which are under consideration of ESIS are:

  • Opening to general public against charges.
  • Running of new hospitals and under utilized hospitals through private participation.

In contrast, the CGHS has no wage ceiling. The infrastructure is small, mainly small dispensaries. The per capita expenditure is Rs.3000/-. It has proper tie up arrangement for specialty and super specialty services. However, in CGHS, the reimbursement is as per capping, whereas in ESIS, there is no capping on reimbursement/treatment of individuals. CGHS provides special services to many relatively wealthy public sector employees, diverting public sector support away from the poorer members of society. In addition, both ESIS and CGHS have been widely criticized for their limited medical coverage, substandard medical services and inadequate administration.

ii) Experiences from Railways

Dr. D.K. Das, DG Railways spoke at length about Retired Employees Liberalized Health Scheme. In this scheme, a retired employee can deposit a lump sum amount of money equivalent to his/her basic salary drawn during his/her last month of the service and can join the scheme. The infrastructure available is huge with 121 Railway hospitals all over the country. There are 591 health units and polyclinics and 89 dispensaries available. It provides compulsory healthcare to all railway employees and also to those who have retired. All government hospitals all over India (both State Government and Central Government) have been approved for providing medical treatment. In addition, 85 private hospitals have been approved for providing medical treatment. As there are few railway hospitals which provide tertiary healthcare facilities, patients are referred to nearby government hospitals and recognized private hospitals for tertiary healthcare.

Dr. D.K. Das said that in case of emergency, a railway employee may avail emergency medical treatment in any nearby suitable government or private hospital. Expenditure thus incurred will be reimbursed.

The annual expenditure on health is Rs.6.6 billions with total working employee of 1,550 million and total retired employees of 250,000, the per capita expenditure on healthcare delivery is Rs.3666/year. This has been possible by a perfect combination of in-house system and public/ private partnership. Dr. D.K. Das highlighted the strengths and weaknesses of the system.

  • Equity front - All railway patients are given medical treatment equally. No discrimination is being made on any account.
  • Accessibility - Accessibility is very good for 85% of beneficiaries who are located in bigger railway stations and townships. The balance 15% of the employees posted at isolated Railway stations, the accessibility is very poor.
  • Efficiency - In major hospitals (100 beds and more) and quality of care and the efficiency is very high. For other small hospitals and health units, there is a lot of scope of improvement in the efficiency.

Dr. D.K. Das recommended that the "Model" of Healthcare Delivery of Indian Railways can be considered for implementation to rest of the country.

8 Consumer Awareness / Standard Treatment Protocols

Mr. Bejon Misra, Chairman Consumer Coordinator Council suggested and it was unanimously agreed that consumer awareness should be increased. Third Party Administrators (TPAs) mainly provide cashless hospitalization services. The problem faced by TPA services are the different tariff rates for similar services in various hospitals. Rates are not under control / negotiations by TPAs. TPAs go by the schedule of charges provided by the hospital and match the claim. There are no standard treatment protocols. The 24 hours call centers are not functional. IRDA has framed the Third Party Administration - Health Services Regulation, 2001. It was also suggested that they should standardize the treatment protocols.

9 Implementations of Mandatory Risk Equalization

Mr. N.S. Sisodia, Secretary, Insurance & Banking, suggested that in a big country like ours, there is need to have differential planning. First, group of people who are rich, can afford health insurance or Out of Pocket Expenditure (OOP), they are not to be focused as far as policy making is concerned. Second, category of middle class or formal sector with regular income should be covered by social insurance or voluntary insurance. Third Group which is 46.6% of the poor population which is in unorganized sector, needs greatest attention of policy planners. Dr Montek Singh Ahluwalia suggested that, if a person joins insurance cover at an early age (for e.g. at 20 years) there should be age adjusted premium. If they are later hit by disease, their insurance coverage should not be withdrawn or premium increased. This will encourage people of younger age groups to buy insurance. Mandatory risk equalization and reinsurance should be implemented. Well regulated and managed insurance market can play an important role in moving health financing towards equity. Poorly regulated insurance market can threaten very basic fabric of the financial health of the system.

A "Strengths, Weaknesses, Opportunities and Threats" (SWOT) analysis of these schemes will enable us to formulate need based models.

  • Strengths: That can boost the private sector and can also expand access to care which were not available due to financial barrier.
  • Weakness: Which can widen inequity and create a dual system of care.
  • Opportunities: Which can provide source of financing to the starved health sector.
  • Threats: That can increase costs and wreck the health system.


In a diverse country like ours, health insurance needs differential approach. Global experience with variety of approaches will work. Health insurance for India needs to be contextualized to suit Indian conditions. Health insurance is not an end-all solution, but is a step in the right direction. Health insurance should not be seen as a complete solution in achieving the goal of quality healthcare for all. The experts felt that the much-recited, "mantra" of health insurance for the poor cannot cure the acute paucity of funds in the health sector. At best, it can be one of the options for the poor to find money to treat illnesses. It cannot be a stand alone option. It has to be a part of the wider issues of primary healthcare, manpower crisis and regularization and standardization for private service providers.

The Government is keen to look at a tripartite model of health insurance, involving the center, States and contribution from the beneficiaries. There are several examples in States like Karnataka and Gujarat to illustrate the insurance covers among members of women self-help and co-operative groups. If they are encouraged by small changes in the legal and regulatory structure, they do not require financial or budgetary support from the government. A "Strengths, Weaknesses, Opportunities and Threats" (SWOT) analysis of these schemes will enable us to formulate need based models. These can serve as role models and can be replicated all over the country. However, a vast majority of the unorganized sector still remains uncovered. Therefore, a tripartite mechanism involving subsidies from the Central Government, involving contributions by the State government and also involving contributions by beneficiaries developing a tripartite model like the "Yashaswini Scheme" of Karnataka Government is laudable. The experts also expressed their apprehension that health insurance will surge the demand for better quality tertiary care. There is a danger that rapid expansion of health insurance coverage without appropriate safeguards could result in health systems moving away from their basic goals. The key is to have the strategy and design it correctly - to study, consult and look at evidence and think. Though Health Insurance is very important issue, it has to be addressed in the context of health financing and in the larger background of upgrading the quality of public health infrastructure.

The deliberations and interactive sessions lead to an evolution of a holistic approach, directional thinking, futuristic guidelines/models, effective perspective planning, successful operational and strategically designed action plans on healthcare insurance and financing. The scientific program is attached as an annexure. The deliberations and discussion led to the following key recommendations:


1 Differential approach to Health Insurance

  1. Health insurance is not an end-all solution, but is a step in the right direction. Health insurance should not be seen as a complete solution in achieving the goal of quality healthcare for all. It cannot work in isolation and an integrated approach is critical. Health insurance needs differential approach. Global experience with variety of approaches will work.

2 Healthcare Financing

i. Reforming the three sub-functions: i) Collection of revenues ii) pooling of financial resource iii) purchasing of interventions. Healthcare financing should be in such a way that health systems protect people financially in the fairest way possible. Appropriate incentives are given to healthcare providers to motivate them to improve the health of the people by improving the responsiveness of the systems.

ii. The Central and State government have to be substantially enhanced in Public health expenditure

iii. To provide quality care, people with ability to pay must be levied user charges.

3 Primary Health Center Infrastructure

i. Government fund in our country should be used to upgrade quality of infrastructure of Primary Health Centers in rural area and not for Health Insurance Schemes. The healthcare facilities should be categorized, accredited and standardized

4 Community Based Health Insurance

i. There should be a strong stewardship from the Government in enhancing community health insurance and, if possible, providing additional funds.

ii. Community initiatives in marketing and servicing of health insurance especially in the rural communities in the form of offering micro insurance product should be encouraged as more and more people get into debt on account of heathcare expenses.

iii. Fostering of Public Private Partnership, integrating private insurance with public and private healthcare should be encouraged. Low income countries should encourage different forms of pre payment - job based, community based and provider based - as a part of preparatory process of consolidating small pools into larges ones.

5 Insurers and Third Party Administrators (TPA)

i. There should be preventive component along with curative cover. There should be integration between insurer, TPA and provider with common billing formats. Mass awareness programs should be initiated

ii. Co-ordination between insurers and TPAs through regular meetings should be permitted.

iii. Encouragement of Health Maintenance Organizations (HMOS) and managed care is a must for sustaining the business. Community rating should be encouraged to promote equity. It should be ensured that all insurers should price standard package by the same method.

6 Accreditation and Standardization

i. The healthcare facilities need to be categorized, standardized and accredited.

ii. Government stewardship should play an active role. Ministry of Health must be active in regulating and monitoring (e.g. accreditation, quality assurance, public health activities)

iii. There is an urgent need to develop quality standards and protocols

iv. Owners of corporate hospitals & nursing homes felt need for formulation of a healthcare regulator which will approach both the provider side and the payor side (jointly under Ministry of Health and Family Welfare and Ministry of Law and Justice). There should be formation of an accreditation body for provider credentialing and contracting.

7 Universal Coverage

i. Government should retain a role in financing and should aim at universal coverage to ensure coverage of poorest people in the population.

ii. Universal coverage should be the goal, with "prepayment" as an important role. The path way to universal coverage needs constant attention by government as the steward.

iii. Mediclaim policy should be reviewed to cover pre existing illness. There should be introduction of new products for different segments.

8 Policy and Regulatory Issues

i. Public policy can engage the private sector to promote efficient and sustainable healthcare delivery which are not available due to financial barrier.

ii. Health insurance should be made mandatory - the key is creation of large risk pool.

iii. Benefit packages should be designed in accordance with systems capacity

iv. Reform public health system - decentralization, autonomy, greater investment to ensure standard act as benchmarks for quality / excellence.

v. Invest in training of doctors, providers, health economists, cost accountants, epidemologists, hospital mangers, record keepers in management and computerization

vi. Establishment of enforcement mechanisms

vii. Enabling legal and regulatory mechanisms which recognizes the distinctive needs of organizations which are catering largely to workers in the unrecognized sector, providing social insurance and social security with a very large out reach.


  1. National Health Policy, Ministry of Health and Family welfare, New Delhi : Government of India, 2002, New Delhi.
  2. World Bank Report, 2002.
  3. Naylor, David. A Fine Balance: Some options for Private and Public Healthcare in Urban India. Washington, DC: Human Development Network, The World Bank, 1999.
  4. WHO-SEARO, Report and Documentation of the Technical Discussions held in conjunction with the 40th Meeting of CCPDM, 4-5th September 2003, New Delhi.
  5. Chidambaram, Shri P., Minister of Finance, Speech presenting Central Governments Budget for 1997-98, New Delhi, Government of India, 28th February 1997, Part A, pp. 16-18.

* Joint Medical Suptd. Sir Ganga Ram Hospital, New Delhi
** Professor & head Dept of Community medicine. AIIMS, New Delhi,
*** Medical Suptd Dr. R.P. Centre for Ophthalmic Sciences, AIIMS, New Delhi

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