The
Constitution of India states that it is the “duty of the State to raise the level of nutrition and standard of
living and to improve public health”
With a tax to GDP ratio falling to a
decade low of 9.88 per cent in FY20
Defining Protection Gap / Underinsurance:
- The health protection gap is defined as the sum of financial stress arising from unforeseen, direct and out-of-pocket medical expenses and that unaffordable portion that households avoid (Swiss Re, 2012).
- Underinsurance is the gap between the amount of insurance that is economically beneficial and the amount of insurance actually purchased (Schanz & Wang, 2014).
- The difference between the level of healthcare costs which would be required to meet the consumer needs versus the amount that would be available to cover those costs (Geneva Association, 2018).
The
Insurance Regulatory and Development Authority of India (IRDAI) estimates the
protection gap to be approximately Three Lakh Crore (USD 400 billion)[1]. Another study puts the
protection gap in India at USD 369 billion as at the end of 2017
Insurance,
both public and private plays a key role in reducing the protection
gap. The penetration of insurance in India is very low and only one in five
individuals is covered by some form of insurance
Of the total population covered by
health insurance in India, 88 per cent is through government-provided insurance
in the form of either compulsory or social insurance. That leaves a very small
segment, which has voluntarily purchased health insurance to cover their costs.
The problem is even more acute for the population in the lowest income decile
who have the lowest coverage. This has led to a major gap in financing the
healthcare needs of the population and given rise to high out of pocket
expenses (OOPE). OOPE on healthcare are payments made by an
individual at the point of receiving healthcare services or goods.
Financial contributions for health
are considered as fair when health expenditure of households is distributed
according to their ability to pay rather than to actual costs incurred because
of illness. In India, in the past two decades, OOPE has been upwards of 60 per
cent of the total healthcare expenditure
While India continues to aim to be
amongst the largest economies globally, it cannot grow so by leaving a large
segment of its population falling below the poverty line for failing to access
proper health care, either due to lack of medical facilities or insufficient financing to meet the cost of the treatment.
A major thrust is needed to reduce the protection gap and a substantial portion
of that has to come from increased public spending. While the government has
announced that it intends to increase the health budget to 2.5 per cent of GDP by
2025, it has been in the making for years. Even the ambitious Pradhan Mantri
Jan Aarogya Yojana (PMJAY), which aims to provide free insurance cover up to rupees five lakh per annum per family to bottom 40 per cent of the population, has
seen minuscule sums being allocated, and a further smaller proportion actually
being spent.
The IRDAI will have to encourage
innovation in products to suit the demographic requirement (both health and
financial) and their distribution/reach to increase the uptake of insurance
policies voluntarily. Also, creating awareness about the importance and need for
insurance and controlling mis-selling (as merely an investment to save tax,
unclear policy terms) will be important areas to focus on, to begin
with.
Remember, India needs to get rich
before it gets old or else it not only runs the risk of being caught in the
middle-income trap but also faces an increasing health care burden, which will
derail the economic progress. There is a silver lining though amongst the dark clouds of
Covid-19. The pandemic has brought discussions around health and health care
financing to the mainstream and hopefully, the subject will receive a
much-needed impetus from the policymakers and the public at large.
References
Government of India. (1950). The Constitution of
India. New Delhi: Government of India.
MoHFW. (2019). National
Health Profile. New Delhi: Ministry of Health & Family Welfare,
Government of India.
National Health
Systems Resource Centre. (2017). Household Healthcare Utilization &
Expenditure in India. New Delhi: Ministry of Health & Family Welfare.
National Sample
Survey Organisation. (2019). Key Indicators of Social Consumption in India
- Health. New Delhi: Ministry of Statistics and Program Implementation.
PTI. (2019,
February 1). Protection gap at 70-80%, insurers should exploit situation:
Irdai chief. Retrieved from www.business-standard.com:
https://www.business-standard.com/article/pti-stories/protection-gap-in-india-is-70-80-per-cent-says-irdai-chief-119020100631_1.html
Seth, D. (2020,
June 24). India's tax-GDP ratio plunges to 9.88% in FY20, lowest in 10
years. Retrieved from www.business-standard.com:
https://www.business-standard.com/article/economy-policy/india-s-tax-to-gdp-ratio-plunges-to-a-decade-low-of-9-88-in-fy20-120060801629_1.html
Swiss Re
Institute. (2018). Health Protection Gap in Asia - A Modelled Exposure of
USD 1.8 trillion. Zurich: Swiss Re Management Ltd.
World Bank. (2020,
April 1). Out Of Pocket Expenditure (% of current health expenditure) -
India. Retrieved from www.data.worldbank.org:
https://data.worldbank.org/indicator/SH.XPD.OOPC.CH.ZS?locations=IN
Excellent. Well written and very informative. Looking forward to the next post already.
ReplyDeleteWell, informative great content.
ReplyDeleteExcellently presented . Crisp and to the point - issues which need immediate attention. The issue pertaining to CHE is....disturbing to say the list. Thanks to share your concerns with us .
ReplyDeleteSuch a well articulated piece. Loved it.
ReplyDelete