1

t e c h n o p a k

Company Name

CONFIDENTIAL

Policy Paper
for

Enhancing

Healthcare Accessibility
through

Financing

CII Healthcare Sub-Committee on Accessibility

23 October 2008

Enhancing Healthcare Accessibility through Financing

Contents
A. Executive Summary B. Preamble/Objectives C. Environmental Analysis D. Issues in Healthcare Financing E. Medical Requirements of the Population F. Newer Health Financing Options G. Recommendations H. Conclusion 1 1 2 12 13 15 19 21

Enhancing Healthcare Accessibility through Financing

Acknowledgements
The white paper on Enhancing Healthcare Accessibility through Financing has been prepared under the purview of CII Healthcare Sub-Committee on Accessibility. Valuable contributions from the following members of the Sub-Committee have been the guiding force behind this white paper:

1. Mr N Rangachary, Advisor to Government of Andhra Pradesh and Chairman of the CII Healthcare Sub-committee on Accessibility 2. Dr Ajit K Nagpal, Chairman - Executive Council, Batra Hospital & Medical Research Centre 3. Mr Nimish Parekh, Founder & President, Cecilia Healthcare Services Pvt. Ltd. 4. Dr T Jagannathan, Chief Administrative Officer, Sir Ganga Ram Hospital 5. Ms Rajni Sekhri Sibal, Director - Health Insurance, Max Healthcare Institute Ltd 6. Ms Ujjaini Dasgupta, Head Health Insurance, Bajaj Allianz General Ins. Co. Ltd. 7. Mr Chandrashekhar, Chief Marketing Officer, Apollo DKV Insurance Co. Ltd 8. Dr Ashoke Bhattacharjya, Executive Director - Health Outcomes & Policy, Johnson & Johnson Ltd

Enhancing Healthcare Accessibility through Financing

Abbreviations
CGHS CHI ESIS GDP GIC GOI HAS HMO IRDA MSA NBFC NGO NSSO PPF PPO RSBY TPA UHI US Central Government Health Scheme Community Health Insurance Employee State Insurance Scheme Gross Domestic Product Government of India Government of India Health Savings Account Health Management Organisation Insurance Regulatory and Development Authority Medical Savings Account Non- Banking Financial Company Non-Government Organisation National Sample Survey Organisation Public Provident Fund Preffered Provider Organization Rashtriya Swasth Bima Yojna Third party Administrator Universal Health Scheme United States

Enhancing Healthcare Accessibility Financing

A. Executive Summary
Accessibility to Healthcare pertains to the populations ability to reach, obtain or afford entrance to the healthcare services. India being the second most populous country with a pronounced fragmentation in its social, economic and demographic structure, accessibility to healthcare to the population has become a matter of concern. The growth of the healthcare sector per se has been rather slow to address the need of the society. The purpose of this document is to discuss the various options available in the binging of health care within common reach to and suggest that health care, if properly financed, can be a major impetus for improving accessibility among all the sections of the society. A multipronged approach by the government in partnerships with banks, micro finance institutions, Non-Banking Financial Companies (NBFCs) and Third Party Payers is required. Participation across all the services, modes and participants at all the levels of care designed to promote health from preventive to trauma care, whether directed to individuals or to groups is equally vital. The growth in the health insurance area has been slow and it is thought that insurance being only one of the modes of accessibility, various other possible options that could meet the unique needs of the different segments should be seriously considered. Measures such as health savings account, government grants, risk pooling insurance, capitation and other provider risk sharing, borrowing and self financing have been discussed in the main study. For a country where more than 25% of the population lives below the poverty line it becomes necessary to find out of the box solutions and not stick to traditional measures which prima facie have proved ineffective. A single system / limited approach to health financing may not work in a country of 1.2 billion with such diverse needs. The country needs viable alternatives to the existing pattern of accessibility to healthcare including possibly a medical investment account to be operated as a running account over a period of time enhanced by conditions and depleted by accessibility This document gives a preview to the approach which suggests how future policy needs to be formulated in order to encapsulate the role of each stake holder.

B. Preamble/ Objectives
The CII Healthcare Subcommittee on Healthcare Accessibility has been constituted under the chairmanship of Mr. N. Rangachary, for understanding the issues related to health manpower and to crystallize governments plans of action. The sub-committee will reflect the current issues and challenges facing the healthcare industry in terms of Accessibility, the financing of healthcare through various mechanisms.

Enhancing Healthcare Accessibility Financing

C. Environmental Analysis
Today India spends around 4.8% of its GDP on healthcare. Around 78% of healthcare spent in India is done from private funding. The voluntary (private) insurance cover is still limited to only 1.4% of the total population of India. The Government (central and state) spends is around 1.2% of GDP on health care. The focus of Government is today on primary healthcare and healthcare awareness programmes.

India is still among the few of the least spending countries on healthcare. It lags behind most of the developing countries in this aspect - except for certain emerging economy nations like Pakistan, Bangladesh Afghanistan etc as can be seen from the exhibit above. Comparable countries like China, Brazil and Mexico along with the developed world have a much better coverage of public spending on healthcare as a percentage of GDP. United States approximately has three times the public spending on healthcare as that in India, as depicted in the exhibit below.

Enhancing Healthcare Accessibility Financing

United States Australia South Africa Mexico Brazil China India 3.2% 2.9% 3.4% 2.0% 1.2% 2.0%

6.8% 6.4% 5.2% 3.3% 4.2% 3.6% 3.6% 4.0% 6.0% 8.0% 10.0% 3.1%

8.4%

0.0%

12.0%

14.0%

16.0%

Public Health Expenditure (% of GDP)

Private Health Expenditure (% of GDP)

Coverage of health care in India is limited to a small fraction of the population. The private funding still plays quite a vital role in filling the financing gaps, through out-of-pocket spending, insurance, employee benefit schemes etc. Sources of Health Financing in India Health financing is by a number of sources as depicted below.
Local, State and Central Governments, in addition to numerous autonomous public sector bodies; Employers Benefit Schemes, the not-for-profit sector (NGO and Charitable hospitals) organizing and financing healthcare; Households:out-of-pocket

Public Financing

Private Financing:

Others
Insurance-social and community-based schemes

Risk Pooling
Health Insurance

Enhancing Healthcare Accessibility Financing

1. Public Financing of Healthcare in India Health is primarily a state responsibility in India. State governments mostly take care of healthcare delivery and central government works more on the preventive and on national disease control programs.
Government Expenditure on Healthcare in India (US$ Million)

3528, 39% 5455, 61% Central Government State Government

State Government Healthcare Spending Distribution Health care functions Services of curative care Rehabilitative or long term nursing care Ancillary services & therapeutic appliances Reproductive and child health services Drugs control Nutritional program of State Dept of Health Control of Communicable diseases Control of non-communicable diseases Public health or RCH education/training Other public health related activities Health administration Capital expenditure Medical education and training of health personnel Research and development Food adulteration Function from other sources Total % Distribution 47.6 0.2 1.9 12.2 0.3 0.1 6.2 0.4 0.5 1.3 8.4 4.7 8.7 0.2 0.2 7.1 100

Source: National Health Account, 2001-02 Last published details

Enhancing Healthcare Accessibility Financing

2. Private Healthcare Financing in India Private Financing constitutes of: (1) Public and Private Employer financing, (2) Out of Pocket spending, (3) Non-Government Organizations etc. As discussed earlier, this constitutes around 78% of total healthcare financing in India. Around 5% of financing is done by private and public employers. Others such as not-for-profit organization, nongovernment organization etc constitute 2.4% of total healthcare spend. Around 69% of total financing in India is purely out of pocket. Employee Benefit is another way of private financing happening in India, which is still in a very limited scale in India, primarily due to the reasons: Most people work in the vast unorganized sectors in India and in these sectors the companies dont give any health benefit to employees The original schemes presently run do not cover self-employed personnel, professionals,e tc. This sector, because of the tremendous growth of the service sector in the recent times constitutes on major chunk of employed population still not governed by any health protection measures as part of employer-employee relationships. The daily wage workers are given very little or no benefits by employers and a large proportion of employee fall under these category. There is no mandatory regulation or legislation by government for enforcement of medical benefits for employee.

Recent statistics shows a major fraction of the private healthcare funding in India is financed out of pocket. The rising costs are and will pose major challenges to its sustainability in the times to come, as major hospitalization especially during emergencies often mean a huge financial burden on individuals.

Composition of World health expenditures

Sources of Finance in Health Sector in India

2.4% 7.2% 3.0% 1.4% 2.0%

18% 19%

4% 33% 14.4% 2.2%

26%

68.8%

General government (excl. Social Insurance) Out-of-pocket

Social Insurance

Private Insurance

Central Government Local Government Public Firms

State Government Household Private Firms Others

Other

Voluntary Insurance

Source: World Health Organisation, National health accounts Project

Source: Financing and Delivery of Health Care Services in India , National Commission on Macroeconomics and Health

Enhancing Healthcare Accessibility Financing

3. Risk Pooling - Health Insurance

With rising health care costs, risk pooling by health insurance is one of the significant modes of optimizing efficiency of health care financing and delivery. Health Insurance is still in its infancy, with a current meager coverage of approximately 2% in India.

Evolution of Health Insurance in India

Triton Insurance Company Ltd., the first general insurance company established in Calcutta by the BritishAdvent of General insurance business in India The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. Insurance Act,1938 for effective control over the activities of insurers General Insurance Council, a wing of the Insurance Association of India, formed & framed a code of conduct for ensuring fair conduct and sound business practices. The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. General Insurance Corporation(GIC) incorporated as a company and commence its business on 1st Jan,1973

1850

1907

1938

1957

1968

1971

The General Insurance Business (Nationalization) Act, 1972 nationalized general insurance business with effect from 1st January 1973. 107 insurers grouped into four companies viz. the National Insurance Company Ltd., the 1972- New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance 73 Company Ltd. 1986 Introduction of first mediclaim Insurance Scheme by GIC Malhotra Committee Set up to propose recommendations for reforms to complement the reforms initiated in the financial sector Malhotra Committee recommended that Govt stake in insurance companies to be brought down Pvt companies be permitted to enter the insurance industry Foreign companies be allowed to enter by floating Indian companies in a joint venture Insurance Regulatory and Development Authority (IRDA) constituted as an autonomous body on recommendations of Malhotra Committee and incorporated as a statutory body in April, 2000 IRDA opened market with invitation for application for registration August, 2000 Subsidiaries of GIC restructured as independent companies and GIC converted into national re-insurerDecember, 2000 Health Insurance Opened to the Private Sector

1993

1994 19992000

2000

2002

Enhancing Healthcare Accessibility Financing

Functioning of Health Insurance in India, the flow of finances and services has been depicted the exhibit below.

The coverage of health insurance has been gaining ground in India since its evolution d but the growth trajectory in terms of population covered has been quite gradual. 17 out of 1000 hospitalised cases are reimbursed as of now. This can be further bifurcated as 7 in rural and 39 in urban per 1000 cases, as per NSSO 60th Round Morbidity, Health Care and Condition of the Aged (Report 507, 2006).
Percentage of Population Covered
2.50% 2.00% 1.50% 1.00% 0.50% 0.00%
Gross Premium (USD Millions) Lives Covered (Millions)

Health Insurance
2.20% 1.55%
1000 900 800 700 600 500 400 300 200 100 0 30 25 20 15 10 5 0

0.80% 0.30% 0.10% 0.17% 0.20% 0.46%

1%

Source: Insurance Regulatory and Development Authority, Technopak Analysis

Enhancing Healthcare Accessibility Financing

Types of Health Insurance in India I. Voluntary health insurance schemes or for-profit schemes Voluntary health insurance is provided by all insurance companies in India - both public and private companies. Buyers pay premium to an insurance company that pools people with similar risks and insures them for health expenses. The premium is set at a level, which provides a profit to third party and provider institutions and they are based on an assessment of the risk status of the consumer and the level of benefits provided. Since last few years the health insurance market in India has been growing somewhat rapidly. Not only the premiums collected by the insurance companies have been growing but also the coverage of population has increased but not to those levels that promises universal coverage. The premiums of health portfolio has increased by 55% (year on year) in 2006-07. The reasons for this growth have been increased awareness and knowledge amongst the consumers. With more stand alone health insurance coming up the focus on health insurance is increasing. So it is expected that the industry will bring more innovative health insurance products which will push further the coverage of health risks. .

II.

Mandatory Social Health Insurance Schemes or government run schemes o Employee State Insurance Scheme or ESIS o Central Government Health Scheme or CGHS o Universal Health Insurance (UHI) scheme

Employee State Insurance Scheme

The Employee State Insurance Scheme (ESIS) is a social insurance scheme which provides protection to employees against loss of wages due to inability to work due to sickness, maternity, disability and death due to employment injury. It offers cash benefits, preventive care and health education. Medical care is also provided to employees and their family members without fee for service. The monthly wage limit for enrolment in the ESIS is under Rs.10,000, with a prepayment contribution in the form of a payroll tax of 1.75% by employees, 4.75% of employees' wages to be paid by the employers, and 12.5% of the total expenses are borne by the state governments. The number of beneficiaries is over 35.5 million spread over 620 ESI centers across states. Under the ESIS, there are 125 hospitals, 42 annexes and 1450 dispensaries with over 23 000 beds facilities. The scheme is managed and financed by the Employees State Insurance Corporation (a public sector undertaking) through the

Enhancing Healthcare Accessibility Financing

state governments, with total expenditure of Rs. 1,27,896 Lakhs.

Central Government Health Scheme

This scheme entitles Central Government employees medical facilities for which comprehensive provisions are contained in Central Services (Medical Attendance) Rules 1944. Presently, it covers employees in 30 cities including almost all state capitals, with more than 4,32,000 beneficiaries. Benefits offered include all outpatient care preventive and promotive care in dispensaries. Inpatient facilities in government hospitals and approved private hospitals are also covered. This scheme is mainly funded through Central Government funds, and a very small premium is collected from employees.

Insurance offered by NGOs / community based health insurance

There are 20 documented Community Health Insurance (CHI) schemes in India. The members prepay a set amount each year for specified services. The premiums are usually flat rate (not incomerelated) and therefore not progressive. The purpose of these funds is improving access to services rather than making profit. Quite often there is a problem with adverse selection because of a large number of high-risk members as premiums are not based on assessment of individual risk status. Typically targeted at poorer populations living in communities, in which they are involved in defining contribution level and collecting mechanisms, defining the content of the benefit package, and/or allocating the schemes, financial resources. These are generally run by trust hospitals or nongovernmental organizations (NGOs). The schemes that are normally on offer are group insurance schemes and not much of an encouragement is found to cover individuals for obvious reasons.

Enhancing Healthcare Accessibility Financing

Coverage under Various Insurance Schemes

Lives Covered (Millions)

0.7 17.6 30.0 4.4 35.5

Voluntary health insurance ESIS (Employee State Insurance Scheme) Micro Insurance

CGHS (Centre Government Health Scheme) Community Based Insurance

Critical Issues in Health Insurance There are many crucial issues associated with health insurance both from the supplier or insurers side as well as from the demand or the insured individuals side. The consequences faced and the possible corrective measures have been discussed in detail below:

Issues

Consequences

Corrective Measures

Supply side (Risk posed by Insurers) Supplier induced demand Increased demand by patients. Raises costs of care User provider payment like capitation, pre-payment, case payment etc Open enrolment, Community rating, Risk adjusted premiums for individuals Social Insurance Life time and compulsory insurance. Guaranteed renewability

Risk Selection (Skimming)

No insurance for sick, poor and elderly

Skimping Exclusions

Deny benefits to the sick Exclude pre-existing conditions and certain diseases for stipulated period or during the policy period

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Enhancing Healthcare Accessibility Financing

Demand side (Risk posed by the insured) Moral Hazard Adverse Selection Over-use of services by patients Deductible, Co-insurance, Copayments, Gatekeepers Little risk pooling. Tax subsidy, Group Coverage Insurance market to be adversely affected Education and awareness, Free Under use of health services or subsidized care, networking due to lumpy costs, mainly by the poor and also for preventive with hospital through TPAs to facilitate cashless hospitalization care

Under-utilization of healthcare services

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Enhancing Healthcare Accessibility Financing

D. Issues in Healthcare Financing

Certain crucial concerns associated with healthcare financing affect the accessibility to healthcare in India. The issues that need to be addressed are enumerated below: a) Health Insurance coverage Health Insurance has been able to cover less than 2% of population in India as of now. A better coverage can play an important role in addressing the societal burden of financial catastrophe that many Indians face when facing health problems.

b) Private Financing primarily out-of-pocket spending More than 78% of the population still meets the healthcare costs from their own resources 94% of this being out-of-pocket. c) People spending a lot even while accessing services from public providers Studies reveal that people especially the vulnerable individuals end up spending more than the required fee-for-service, even while accessing services from public providers, which might be primarily due to improper mobilization of the available limited resources. d) Low awareness Low awareness level about health financing mechanisms such as insurance, financing options, available products, role of TPAs, associated organizations etc contribute to a considerable extent to the problem of inadequate coverage. Even in terms of existing schemes in the organized sector, there is the phenomenon of information inadequate information amongst the vast majority of the population. Community financing schemes usually require training and education of all those involved. e) Lower Outreach Outreach of financing options as well as their modes has not been very significant, taking into account the vast differentiated population across the geography of the country. f) Insurance Malpractices Malpratice in insurance pertains to unfair trade practices, faulty claims, overcharged bills etc.

g) No other financing option In the light of meager public health budget, escalating healthcare costs coupled with demand for healthcare services, and lack of easy access of people especially from rural and low income group, insurance is the only major available alternative financing option of healthcare at present. There seems negligible efforts from concerned authorities to develop other sustainable mechanisms for healthcare financing.

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E. Medical Requirements of the Population

Health care embraces all the goods and services designed to promote health, including preventive, curative and palliative interventions, whether directed to individuals or to populations. The various services and their modes are described in detail below.

Tertiary care, Critical care, trauma care

Secondary Care, Maternity, Geriatric Care, Pre andPost Natal care

Primary care, Pharmacy, Diagnostics, Medical Transport

Nutrition, Safety Sanitation, Hygine

1. Tertiary care, Critical care, trauma care

This level offers super-specialist care, provided by regional or central level institutions. This is largely covered by most insurance products with certain selective clauses. Tertiary care is provided by many large Government and Charitable Hospitals spread across the country. Though these hospitals mostly provide services at highly subsidized rates, but the cost of medicines and consumables is mostly borne by the patient, which is often very high and unaffordable by many.

2. Secondary Care, Maternity, Geriatric Care, Pre and Post Natal care At this level, more complex problems are dealt with and basically represent care at midsize to large hospitals offering basic specialties and diagnostics. This level of care comprises essentially curative services and is provided by the district hospitals and community health centers in the public sector and serves as the first referral level in the health system and is largely covered by all health insurance schemes.

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Enhancing Healthcare Accessibility Financing

Most of the deliveries in India take place in houses by untrained people (Dai) rather than in hospitals or by trained medical personal. One of the reasons for that is affordability and accessibility of medical services. The current public infrastructure is unable to reach everywhere and cater everyone with its limited infrastructure and at the same place private healthcare facilities cannot be afforded by all.

3. Primary care, Pharmacy, Diagnostics, Medical Transport These are the first levels of contact between individual and the health system where essential healthcare is provided. A majority of prevailing health complaints and problems can be satisfactorily dealt with at this level. This level of care is closest to the people and basically represents outpatient clinical care by general physicians. In the Indian context, this care is provided by the primary health centers and their sub-centers, in the government sector and by general physicians and clinics in the private sector. In todays insurance regime, the out patient services are not covered largely and so primary care is mostly out of pocket except for certain employees whose employers cover the cost as reimbursement, though this is still considered as part of the employees overall remuneration. Mostly the cost of medicines is paid by the patient from pocket. This gives rise to the practice of self purchase without prescription and is expected to change if medicines get covered by insurance or some other mechanism. The patients then buy them only with prescription, to get the reimbursement / availing coverage. As in primary care and pharmacy coverage, the diagnostics segment also does not get covered by any insurance mechanism except being taken care of by some employers providing for reimbursement.

4. Nutrition, Safety, Sanitation, Hygiene The Indian government has focused increasingly on improving the nutrition safety and sanitation standards for the majority of the population.

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F. Newer Health Financing Options

Appropriate and sustainable financing mechanism with a multi-pronged approach to alternative options in financing are required, as insurance coverage alone is not always sufficient to ensure healthcare accessibility, in a country like India with varying geographical, demographical, infrastructural and epidemiological patterns. Different possible financing options that can be feasibly used in India are: 1. 2. 3. 4. 5. Health Savings Account Risk pooling - Insurance Capitation and other provider risk sharing Borrowing Government grants

1. Health Savings Account Around 78% people pay their medical bills from out of their own pockets in a way comes from either savings or borrowers. A way to get people to invest in their health by a mandatory Health Savings Account for Employees might be helpful. The Mechanism of HSA HAS accounts should be similar to the PPF (Public Provident Fund) accounts. The salary of an provident fund employee will have a deduction similar to deduction an amount equal to the employees contribution should be contributed by the employer. The accounts and the contributions are to be handled by a trust or a central organization which also shall take care of the application part of the process. The deposits to Health Savings Account would be totally tax free. The depositor will be able to use the money in the account for certain stated needs - medical needs of persons covered (self and members of the family). The deductions from the salary can be put at anywhere between 5-10% of their basic salary and an equal contribution will come from the employer. In case of the self employed and professionals, the contributions will be paid by them individually to the account such contributions will be. Funds deposited in the HSA by individuals or employees shall be completely free of any tax and a higher interest should be given on it. Use of HSA Funds The utilization of the contributions\ will be governed by prescribed rules and such an utilization will be tax recognized. The HAS would utilize the funds on its own to serve the health care needs of the members or will get an insurance cover from an insurer.

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Whether medical savings accounts would be mandatory and universal (Singapore) or private and voluntary (US). Whether universal MSAs would be funded by payroll contributions (Singapore) or through general tax revenue allocated by the government to individual accounts (and if so, how the allocations would be made). What restrictions there would be on eligible expenses and whether/how to use deductibles and co-payments to ensure fiscal solvency and to further restrain demand (as in Singapore). Whether MSA funds would be managed centrally (as in Singapore) or by private fund managers.

Funding Vehicles The Funding Vehicles for this could be 1. Banks 2. Post offices 3. Public Provident Fund Organisation

2. Risk Pooling Insurance & Capitation

Funding of healthcare by risk pooling is done through Health Insurance and Capitation. Health Insurance Both Public and Private Companies provide Voluntary Health Insurance. Buyers pay premium to an insurance company that pools people with similar risks and insures them for health expenses. Premium is set at a level, which provides a profit to third party and provider institutions and is based on an assessment of the risk status of the consumer and the level of benefits provided. Capitation and other provider risk sharing Capitation is defined a fixed sum per person paid in advance of the coverage period to a healthcare entity in consideration of its providing, or arranging to provide, contracted healthcare services to the eligible person for the specified period. For example, a hospital may receive a capitation premium per month for every member of a particular health plan. In return for this capitation (or per capita rate), the hospital agrees to provide hospital services to all members of that health plan, regardless of what the actual cost of these services ends up being. In the example above, the risk to the hospital should be clear, it receives a fixed premium (capitation) in return for services which may cost more or less than that premium. In effect, the hospital becomes a mini-insurance company which receives a guaranteed cost premium in return for an agreement to provide services whose value is not initially known. Among the different types of health insurance plans, capitation and its attendant risks can be pushed down to various levels. For instance, in a classic Prefered Provider Organisation (PPO)

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structure, the Prefered Provider Organisation insurance company assumes and retains all insurance risk. The healthcare providers are paid on a fee-for service basis, typically prenegotiated at a discount off of normal charges, The providers bear little risk except for the fact that they have agreed to receive lower rates in the hopes that their volume of business will increase. In a staff model Health Maintenance Organisation (HMO), the healthcare providers assume no insurance risk. Under this model, healthcare providers are employees (staff) of the HMO. The HMO collects a fixed premium per member in return for a promise to provide healthcare services to those members. The HMO assumes and retains all insurance risk.

Funding Vehicles The Funding Vehicles for this could be Health Management Organisations etc.

3. Borrowing In India, many people who cannot afford the ever-increasing costs of extended hospitalisation, medical tests, surgeries etc. borrow money from friends and relatives, as this seems to be the only way to ensure that the care for themselves or their families is not compromised at the time of need. According to NSSO 60th Round survey, 308 individuals in every 1000 hospitalized, funds their hospitalization through borrowing. An estimated 3.3% of the population is estimated to be getting pushed below poverty line on account of medical treatment. The interest rates in India are so high that most people cannot take loan for their illness and repay it. We need to have a system of Health Benefit Loans at much lower interest rates than personal loans. There could be various tax benefits attached the loan.

Funding Vehicles: 1. Banks 2. Post offices

4. Government grants and Subsidies With more than 25 % of the population living under poverty line the government has to intervene and take the responsibility to fulfill healthcare needs of the needy. This population cannot afford to be a part of any of the schemes of risk pooling. Government can thereby create funds for taking care of their healthcare needs. The Funding can come through: i. Direct Government Funding ii. Mandatory Healthcare Cess levied on tax payers (Like education cess) iii. Calling for donation in the fund (Like the donation to the prime minister reliefe fund)

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Utilization of these funds: i. In creating healthcare infrastructure (Government Hospitals) ii. Funding for in hospital cure and care of the Below poverty line hospitals. Few Government initiatives are already available and in place to pool the risks of these population, of which few important ones are enumerated below: Rashtriya Swasthaya Bima Yojna (RSBY) Rashtriya Swasthaya Bima Yojna is a Central Government scheme, a health insurance for the Below Poverty Line (BPL) families in the unorganized sector. It was formally launched on October 1, 2007. The objective of RSBY is to provide the insurance cover to below poverty line (BPL) households from major health shocks that involve hospitalization. The majority of the financing, about 75 per cent, is provided by the Government of India (GOI), while the remainder is paid by the state government. State governments engage in a competitive bidding process and select a public or private insurance company licensed to provide health insurance by the Insurance Regulatory Development Authority (IRDA). National Rural Health Mission National Rural Health insurance programme is also specifically aimed for the BPL families. Aarogyasri Aarogyasri is a Community Health Insurance scheme implemented in Andhra Pradesh. The scheme provides financial protection to families living below poverty line up to Rs. 2 lakhs in a year for the treatment of serious ailments requiring hospitalization and surgery.

Healthcare Needs and Sources of Fund

Funding Sources
Tertiary care, Critical care, trauma care Secondary Care, Maternity, Geriatric Care, Pre andPost Natal care Primary care, Pharmacy, Diagnostics, Medical Transport

Savings, Borrowings, Insurance

Savings, Borrowing, Insurance

Savings, Government Grants, Insurance

Nutrition, Safety Sanitation, Hygine

Government Grants, Savings

Healthcare Needs
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G. Recommendations
1. Non taxable Savings account with higher rates of Interest for Employees 2. Health cess in income tax like education cess be imposed to create a pool of Health fund to provide for the healthcare needs of below poverty line. 3. Healthcare borrowing at lower interest rates can be implemented. 4. Subsidies health services by private providers for below poverty line population, for which funds may be taken from the Health pool created by health cess. 5. Universal Coverage schemes to be made stronger 6. Initiatives from central and state governments needs to be taken in establishing more physical infrastructure. 7. Common regulator to regulate provider and payer and consumer Greatest problems in healthcare have been of increasing cost and malpractices. To overcome both India needs have a common regulator for all the stake holders of the healthcare system. The purpose of this regulator would be to control the quality of delivery, regulate the prices of procedures.

8. Public Private Partnership in healthcare 9. Health insurance still needs more awareness and takers in India, which will require designing a framework for consumer awareness and education. a. An Education system for ensuring awareness is essential for consumers to understand the philosophy of insurance as a risk pooling mechanism, meaning and the need of taking health insurance and the way it works, thereby creating a positive

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image of health insurance. Thereby they need to be educated on how to choose the right product/service, importance of age factor and the understanding of exclusions and claims process. b. Communication needs to focus also on providing clarity of products / services, grievance re-dressal system. c. Public awareness campaigns needs to be undertaken by government and nongovernment organizations through print and electronic media.

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H. Conclusion
India is a large country with huge population and immense diversity. It makes it very difficult to cover everyone under one scheme. One scheme like health insurance may not be the best way to cover this huge population. A Multi- Channel Healthcare Funding Model

India needs a multi- channel Health funding mechanism need to be implemented in India. A mix of Health Insurance, Government funding and Health Savings account can be implemented for greatest coverage. One of the challenges in the coming decade will be to find what is the most appropriate mechanism for financing healthcare across all segments of society.

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