Consumer Concerns in Health Security/Insurance
Schemes in India
Sukumar Vellakkal, PhD
Health Economist & Adj Assistant Professor,
SANCD, PHFI
vellakkal@gmail.com
1
Background
• India: Towards Universal Healthcare coverage
• Healthcare schemes: with the objectives to access to good quality
healthcare at secondary and tertiary level(private) at no out-of-pocket financial
burden at the time of needing care.
• Examples:
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i) CGHS, ECHS, ESI, Railway health scheme etc;
ii) RSBY, Arogyasree (AP), Kalaignar scheme (TN), Vajpayee scheme (KA) etc
Iii) Private health insurance schemes
• Healthcare delivery: Buying secondary and tertiary healthcare for
beneficiaries from private providers
• How healthcare providers are contracted and how do
healthcare providers get paid? What are the likely
impacts on consumer’s welfare?
2
Where beneficiaries stand: Demand models for
healthcare
3 Models:
1. The neo-classical model (the standard economic model of consumer behaviour): Consumer demand
is determined by utility maximization subject to a budget constraint
2. The medico-technical model :
Consumer demand is determined by medical experts based on objective needs
3. The imperfect agency model (Mix of both) :
Consumer demand is partly consumer-initiated and partly provider-initiated
India: Consumers are less empowered
•
just in deciding whether to seek care and from where etc…but thereafter it is
completely Medicos model
•
Moral hazard: More of supplier induced in nature than demand induced
3
Major Provider Payment Mechanisms
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Fee for service, Capitation, Case based (DRGs)
Fee for service Vs. package rates
Unscientifically fixed
Fixing provider payment mechanisms in India:
3 examples:
• 1) CGHS-ECHS etc
• 2. RSBY and similar state schemes
• 3. Private health insurance
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1. Provider payment in CGHS and ECHS
• Open bidding from healthcare providers for more
than 1000 healthcare services/procedures
• Same rates for certain services across small and
large (specialty) hospitals
• Some healthcare providers are unsatisfied with
this rates.
• Potential problems: Denial of care, low quality
healthcare services, over provision since no
monitoring, out-of-pocket expenditure
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Impacts of CGHS-ECHS package rates on consumers
• ICRIER study by Vellakkal et al (2010):
• 1. Denial of access to healthcare in some
hospitals, especially in emergencies
• 2. : A) 42 % of the patients incurred out-ofpocket expenses B) Proportion of out of pocket
expenditure to total health expenditure was
30%
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2. In RSBY and similar state schemes
• Same package rates across rural and urban &
secondary and super specialty hospitals & public and
private healthcare
• Dis-empanelment by some hospitals
• Denial of care by large hospitals
(Selection of patients for treatment only for select
services that have higher package rates...
Agrees to provide all services in MoU but behave
otherwise in practice...no mechanisms to monitor)
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3. Private health insurance
• TPAs on behalf of insurers bargain with hospitals
• TPAs are in align with the interest of insurance
companies and hospitals than consumers
• Vellakkal (2011): Based on a comparison between
insured and uninsured patients, study found that
Private health insurance results in
• i) higher health expenditure &
• ii) reduced length of hospitalization days in India
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Major concerns
• Healthcare market is underdeveloped and highly unregulated
• No criteria for pricing healthcare services
• No benchmark for provision of care
• Ambiguity in the definition of healthcare services/packages
• Grading of healthcare providers: Difficult to distinguish different
levels of healthcare provider or quality of healthcare services (NABH
& NABL is just accrediting agency only)
• Out of pocket expenses, Poor quality of healthcare & Denial of
healthcare, Over (unnecessary) provision of care
• Cost escalation in the health sector: Uninsured also will be affected
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Policy Steps
• Move for more scientific way of fixing the price healthcare
services by including all stakeholders and experts
• Quantity and quality of services must be clearly defined with
package rates
• Develop standardized treatment protocol
• Grading of healthcare providers based on quality of services
and Quality assurance
• Transparency and consumer empowerment
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