Ayushman Bharat

Health Insurance in India
and
Genesis of the Ayushman Bharat-
PMJAY
Presenter -Dr. Madhushree Acharya ( Academic JR, CMFM, AIIMS BBSR)
Moderator - Dr. Binod Kumar Patro ( Ad. Prof., CMFM, AIIMS BBSR)

Outline
• Introduction
• Health financing
• Health Insurance
• Definition
• Key concepts in Health Insurance
• Types of Health Insurance
• History of Health Insurance in India
• Rashtriya Swasthya Bima Yojana – Critical Review
• Genesis of Ayushman Bharat
• Ayushman Bharat- PMJAY : Challenges
• Summary 2

Health system: building blocks, functions
and objectives
3

Mechanism of Health Financing
Revenue Collection
Resource pooling
Resource allocation /
Purchasing
interventions
General revenue (taxation)
Social health insurance
Voluntary or Private health
insurance
Out-of-pocket Expenditure
( OOPE )
Donor funding/ grants
5

Revenue Collection
Resource pooling
Purchasing
interventions
insurance
( OOPE )
7
• Accumulation of health assets on
behalf of a population
• Financial and health risks are
shared among the population -
essence of “health insurance”

Revenue Collection
Resource pooling
Purchasing
interventions
insurance
( OOPE )
8
• Transfer of pooled
resources to service
providers on behalf of
population
• Strategic purchasing

Revenue Collection
Resource pooling
Purchasing
interventions
insurance
( OOPE )
9
Health insurance

Health Insurance - Definition
• Defined as “ the reduction or elimination of the
uncertain risk of loss for the individual or
household by combining a larger number of
similarly exposed individuals or households who
are included in a common fund that makes up the
loss caused to any one member ”
[ International Labour Organization ]
11

Key concepts in Health Insurance
Demand Side
Limitations
• Risk pooling
• Solidarity
• Adverse selection
• Under-utilisation of
health care
• Moral hazard (demand)
Supply Side
Limitations
• Supplier-induced
demand
• Pre-payment
• Exclusion
• Cream skimming
• Skimping
• Moral hazard (supply)
12

• Prepayment and risk pooling: Individuals or families pay
when they are healthy and are able to pay. However,
when they are affected by illness, the insurance fund can
be used to finance their healthcare needs.
• Health insurance functions when there are large
numbers enrolled. With large numbers, the chances of
adverse events are reduced and so is the outflow from
the insurance fund. 13

• Solidarity: A successful health insurance
programme requires people to contribute, knowing
fully well that their contribution may not help them
directly, but will help others who require the
support.
14

Risks in Health Insurance
• Adverse selection: Sick people enrol in large
numbers as compared to healthy.
• Cream skimming (risk selection): Opposite of
adverse selection. Insurance companies selectively
choose low-risk individuals.
• Moral hazard: fact of being insured changes the
behaviour of the patient or the provider
• Supply side moral hazard
• Demand side moral hazard
15

Strategies to reduce Moral Hazard
A certain minimum sum which the insured consumer has
to pay out-of-pocket before insurance company begins to
pay. It will deter unnecessary use, esp for small claims
Deductibles
Co-insurance
Co-payments
Prepayment
Third-party
control
Reducing supply
of doctors
Patient bears a certain percentage for every extra rupee
spent on medical care. It reduces the interest to seek
expensive care
A fixed proportional amount to be paid by the
patient for every visit. It restricts the number of
visits to the doctor
16

Types of Health insurance
• Mandatory health insurance schemes or government
run schemes (namely ESIS, CGHS)
• Employer-based schemes (Railways, Defence, Mines
etc.)
• Insurance offered by NGOs/ Community based health
insurance
• Voluntary health insurance schemes or private-for-
profit schemes
17

Source: Prinja S, Kaur M, Kumar R. Universal health insurance in India: ensuring equity, efficiency, and quality. Indian journal of community
medicine: official publication of Indian Association of Preventive & Social Medicine. 2012 Jul;37(3):142. 18

Source: Prinja S, Kaur M, Kumar R. Universal health insurance in India: ensuring equity, efficiency, and quality. Indian journal of community
medicine: official publication of Indian Association of Preventive & Social Medicine. 2012 Jul;37(3):142.
19

Risks involved in various health
insurance
20

Community based health
insurance schemes
• State specific schemes like Critical Illness and Personal
Accident Scheme -Assam, Sanjivini Scheme -Punjab,
Kudumshree -Kerala, Senior Citizen Health Insurance
scheme of Indore Municipal Corporation, Rajasthan
Swasthya Bima Yojna, Rajiv Gandhi Arogyashri scheme
in Andhra Pradesh, Yeshaswani scheme in Karnataka
• Some of the schemes have been closed due to high
administrative and transaction costs
• Some schemes have failed to reach a sizable number
of population either due to adverse selection or
problems like moral hazard and supplier induced
demand
21

Community based health insurance
framework
22

Voluntary health insurance schemes
or private-for-profit schemes
• In private insurance - buyers are willing to pay
premium to an insurance company
• Pools similar risks and insures them for health
related expenses
• The main distinction is that
• the premiums are set at a level, based on
assessment of risk status of the consumer (or
of the group of employees) and
• the level of benefits provided, rather than as a
proportion of consumer’s income
23

Private insurance
• General Insurance Corporation (GIC) and its four subsidiary
companies
• National Insurance Corporation
• New India Assurance Company
• Oriental Insurance Company
• United Insurance Company
• Mediclaim policy
• Introduced in 1986, it covers hospitalization expenses with
numerous exclusions
• It does not cover outpatient treatments
• Delay in reimbursement of expenses is its major criticism
• Government has exempted the premium paid by individuals
from their taxable income
• Because of high premiums it has remained limited to
middle class, urban tax payer segment of population
24

Genesis of Ayushman Bharat -
PMJAY
25

History of Health insurance in India
(Contd…)
Source: Lahariya C. ‘Ayushman Bharat’Program and Universal Health Coverage in India. Indian pediatrics. 2018 Jun
1;55(6):495-506.
26

History of Health insurance in India
27

Rashtriya Swasthya Bima Yojana
28
Government-sponsored first National
health insurance scheme in PPP mode,
launched in 2008
Key Features/Benefits:
• cashless benefit
• covers resource poor
population- all BPL families
and unorganized sector
• large service provider’s
network
• offers package rates for
different services
• covers pre-existing diseases
• no age limit for coverage
• premium support by the
government

30
Key Findings:
• RSBY has failed to reduce out-of-pocket expenditure of households
• To move towards UHC, risk pooling and prepayment are necessary. When a
large proportion of health expenditure is funded by out-of-pocket payment, as
is the case in India, households or individuals are subject to major financial risk
when they fall ill, because there is no sharing of risk
• To have the government pay for everybody and everything is not feasible, so
individual contribution is needed
• As OPD services is not covered, people could delay seeking care until they are
more severely ill, which is costly both from the perspective of costs and health.
• Despite rising healthcare costs, the scheme continues to be capped at Rs
30,000 since 2008. No revision of the financial coverage
• Post hospitalization costs are not included

Limitations of RSBY
• Vulnerable groups like Particularly Vulnerable Tribal
Group (PVTG) families, old age people, destitutes
were left out.
• Rural areas with high incidence or prevalence of
diseases were not targeted by the insurance
companies to reduce their claim ratio
• Unfair competition between private and public
hospitals in terms of costs and quality of care
• Out-patient services are not covered under RSBY
which leaves the financial burden of out-patient
care on the shoulders of resource poor people
32

Limitations of RSBY
• High Loss Ratios of government sponsored
Schemes - Government sponsored schemes in India
are generally plagued by very high loss ratios and
high claims.
• Net Incurred Claims Ratio (ICR), which is the ratio of
net claims incurred to the net premium earned is
an important ratio to gauge claim incidence and
quantum
33

Limitations of RSBY
• Empanelment of private hospitals – unscrupulous
malpratice of generating fake records of patient
admissions, increase of supply-side moral hazard
Sources- 1. Das J, Leino J. Evaluating the RSBY: lessons from an experimental information
campaign. Economic and Political Weekly. 2011 Aug 6:85-93.
2. Nandi A, Holtzman EP, Malani A, Laxminarayan R. The need for better evidence to
evaluate the health & economic benefits of India's Rashtriya Swasthya Bima Yojana. The
Indian journal of medical research. 2015 Oct;142(4):383.
3. Sinha RK. A Critical Assessment of Indian National Health Insurance Scheme–
Rashtriya Swasthya Bima Yojna (RSBY). European Academic Research. 2013;1:2299-325.
34

Ayushman Bharat – Pradhan Mantri
Jan Arogya Yojana
Launched Sep 23, 2018
35

Jan Arogya Yojana
36
• Largest government
sponsored healthcare scheme
for BPL families and
unorganised sector
• Inclusion of more than 10
crore families as per SECC
data 2011

Jan Arogya Yojana
37
KEY FEATURES
• Cashless treatment at
Public/Private empanelled
hospitals
• Secondary & Tertiary care
• Pre-existing diseases covered
• Pre & Post hospitalization
expenses covered
• 5 lakhs cover per family, No
premiums
• No cap on age or family size
• Fixed package rates
• Nationwide smart-card
portability

Ayushman Bharat PMJAY –
challenges in implementation
38

Meeting the objectives and Issues in
implementation of AB-NHPM
• Low Public Spending on Healthcare and High Out
of Pocket Expenses - 51% of the healthcare
expenses, which are out of pocket, go towards OPD
treatment
• Reduction in OOPE, which is an objective of the
scheme, cannot only be met by health insurance,
which covers in patient treatment or hospitalisation
expenses
41

Challenges in implementation
• Dependence on Private Healthcare – The scheme
provides for fixed rates or package rates for specific
treatments and surgeries. The poor scheme
beneficiaries might remain second priority or
second class citizens for private health providers
under the scheme
• Poor Existing Healthcare infrastructure In India –
with bed to patient ratio of 0.9, we are creating
demand for healthcare services by this scheme but
there is not enough supply in terms of health
infrastructure to cope with the demand
42

• Position of States as financier to the scheme - AB –
NHPM scheme is to be implemented as a
partnership of central government and states with
40% of the scheme to be funded by states and
balance by central government – More financial
burden on the state
• Inadequate Funds allocated for setting up Health
and Wellness Centres (HWC’s) - For setting up 1.5
lakh HWCs 1200 crores fund have been allocated
which is a proportionately improper fund allocation
43

• Covering pre-existing diseases from day 1 and
putting no cap on age of beneficiaries will invite a
high-risk pool of participants, which are bound to
increase the loss ratios of private insurers affecting
their profitability
• Private hospital empanelment – experience from
RSBY
Sources- 1. Pareek M. AYUSHMAN BHARAT–NATIONAL HEALTH PROTECTION MISSION A
WAY TOWARDS UNIVERSAL HEALTH COVER BY REACHING THE BOTTOM OF THE
PYRAMID–TO BE A GAME CHANGER OR NON-STARTER. International Journal of
Advanced and Innovative Research. 2018 Jul 12;7(7):1-0.
2. Angell BJ, Prinja S, Gupt A, Jha V, Jan S. The Ayushman Bharat Pradhan Mantri Jan
Arogya Yojana and the path to universal health coverage in India: Overcoming the
challenges of stewardship and governance. PLoS medicine. 2019 Mar 7;16(3):e1002759.
44

SWOT Analysis of Ayushman Bharat
45

Conclusion
• AB-PMJAY, an ambitious programme, has created
demand for healthcare services on unprecedented
level with no clue on generating resources for the
scheme
• The budgetary impact of the scheme will increase
the fiscal deficit in case revenues to meet the
increased expenditure are not found
• Health Insurance financing is important tool of
health care financing but should not be the only
tool for developing country like India
46

Conclusion
• Total subsidization of the scheme with zero
contribution from the beneficiaries burdens the
finances of the government unnecessarily. A small
token payment would have brought sense of ownership
of participants in the scheme
• Government should spend more on Public hospitals
and improving healthcare infrastructure in the country,
upgrading existing set up and opening up new
government hospitals and investing resources in PHC
and CHC and Tertiary referral centres for the scheme to
be truly successful
47

Ayushman Bharat

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