New generation of health financing schemes can help India progress towards universal health coverage, says new World Bank study

October 11, 2012

More than 630 million persons, or half the country’s population, likely to be covered with health insurance by 2015

New Delhi, October 11, 2012 – In an environment of low public financing for health in India, the new generation of government-sponsored health insurance schemes (GSHISs) is introducing explicit entitlements, improving accountability, increasing patient choice, and leveraging private capacity, particularly with an aim of reaching the poor, says a new World Bank study. The study also identifies a number of design and operational challenges that the schemes need to address to make them sustainable.    

The World Bank study"Government-Sponsored Health Insurance in India: Are You Covered?"is the first comprehensive review of India’s major government sponsored health insurance schemes. It has analyzed the findings from three central-level schemes and six state schemes[1]. The study focuses on some of the new generation schemes that target the poor and documents key design, institutional and operational features of these GSHISs. It also identifies emerging issues, opportunities and challenges faced by these schemes.

“The study has come about at a highly opportune time as India plans to significantly increase public spending on health to spearhead India’s march towards universal health coverage,” said Keshav Desiraju, Special Secretary, Ministry of Health and Family Welfare. “The study provides new knowledge that will help policy makers at a time when India is rapidly expanding the breadth and depth of health coverage.”

According to the study, over the last five years, government sponsored schemes have contributed to a significant increase in the population covered by health insurance in the country, scaling up at a pace possibly unseen elsewhere in the world.  Through their efforts, over 300 million people, or more than 25 percent of India’s population, gained access to some form of health insurance by 2010, up from 55 million in 2003-04. More than 180 million of these were people below the poverty line.

Given these trends, the study projects that by 2015, more than 630 million persons, or about half of the country’s population, can be covered with some form of health insurance. In 2015, spending through health insurance is also likely to reach 8.4 percent of total health spending, up from 6.4 percent in 2009–10, the study says.

"The new generation of government-sponsored health insurance schemes is improving the use of public resources for health, especially for the poor,” said Onno Rûhl, World Bank Country Director for India. “This is heartening since out-of pocket payments on health accounts for nearly 69 percent of all health spending in India – posing serious financial burden for the poor and vulnerable communities. This study, we hope, will help the government undertake the steps required to strengthen and expand government-supported health insurance as well as improve the broader health financing and delivery systems,” he added. 

Innovations Introduced

Some of the innovative features common to all the new generation GSHISs include patients’ choice to visit any public or private provider empanelled by the government; in most schemes transactions are fully cashless, requiring no payment to be made by the patient to the hospital; targeting of low-income groups; impressive use of information and communication technology, including electronic beneficiary registration; use of pre-agreed package rates for payment; creating a novel mechanism of engaging with the private sector in the areas of insurance, administration, and health delivery; and, contributing to improvements in the performance of public hospitals. For example, schemes in the states of Kerala and Andhra Pradesh are providing public hospitals with an additional source of financing which is now being used to upgrade infrastructure and introduce new services.

Through the implementation of the Rashtriya Swasthya Bima Yojana (RSBY) as well as their own state-level schemes, some of the state governments are at the centre stage of implementing government-sponsored health insurance schemes. States such as Andhra Pradesh and Tamil Nadu have managed to cover as much as 50-80 percent of their population under the health insurance umbrella.

Challenges ahead

Coverage, however, remains far from comprehensive as the schemes are focused on inpatient, often surgical care. Besides working on deepening their benefit package, GSHISs also need to address several operational constraints, the study says. For example, most schemes need to strengthen operational components related to cost containment, quality enhancement, consumer information and monitoring and evaluation.

"The new generation of health insurance schemes from the government has pioneered many innovative features. They hold the potential to spearhead reforms in the public delivery system by strengthening accountability by linking financing to outputs. However, the current coverage is far from comprehensive and the schemes face many challenges,” said Gerard La Forgia, World Bank’s Lead Health Specialist and Somil Nagpal, World Bank’s Health Specialist and authors of the book.  “In the book, we have outlined recommendations to address these design and operational challenges, and based on the current configuration of the country’s health system, we have also outlined a pragmatic pathway towards achieving universal health coverage,” they added.

Key recommendations

The study recommends increasing health insurance coverage for both outpatient and in-patient care to include all poor and near-poor patients. It suggests a balanced approach, building upon the public infrastructure already available, augmenting it with accessible private capacity and utilizing the lessons learned from the GSHISs. The study also recommends how GSHISs can improve the performance of primary care centers and their linkages with secondary and tertiary facilities.

[1] The central schemes studied are: Employees State Insurance Scheme (ESIS), Rashtriya Swasthya Bima Yojana (RSBY), and Central Government Health Scheme (CGHS). The state level schemes are: Rajiv Arogyashri (Andhra Pradesh), Yeshasvini (Karnataka), Vajpayee Arogyashri (Karnataka), Chief Minister Kalaignar’s Scheme (Tamil Nadu)*, RSBY Plus (Himachal Pradesh), and the proposed Apka Swasthya Bima Yojana (Delhi). *In 2011–12, the Tamil Nadu scheme was modified to include additional procedures and re-launched as the Chief Minister’s Comprehensive Health Insurance Scheme.

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