Context: Recently, NITI Aayog has released a comprehensive report titled Health Insurance for India’s Missing Middle. The report aims for a credible pathway to universal health coverage (UHC) for India.

• Covering the left out segment of the population, commonly termed the ‘missing middle’ sandwiched between the poor and the affluent, has been discussed by the Government recently. 

Key points of the report

• At least 30 percent of the population called the ‘missing middle’ – are devoid of any financial protection for health.
  • The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) launched in September 2018, and State Government extension schemes, provide comprehensive hospitalization cover to the bottom 50% of the population. 
    • PMJAY offers a sum insured of Rs. 5 lakh per family for secondary care as well as tertiary care . For the beneficiaries, this is a free scheme.
  • Around 20% of the population are covered through social health insurance, and private voluntary health insurance. 
  • The remaining 30% of the population is devoid of health insurance; the actual uncovered population is higher due to existing coverage gaps in PMJAY and overlap between schemes.”
• The report proposes voluntary, contributory health insurance dispensed mainly by private commercial health insurers as the prime instrument for extending health insurance to the ‘missing middle’. 
• The Pradhan Mantri Jan Arogya Yojana (PMJAY) scheme should be extended to cover a section of people without health insurance.
• Government subsidies will be reserved for the very poor within the ‘missing middle’ and only at a later stage of development of voluntary contributory insurance. 
• The report has recommended three models for increasing the health insurance coverage in the country. 
• The first model focuses on increasing consumer awareness of health insurance, while the second model is about “developing a modified, standardized health insurance product” like ‘Aarogya Sanjeevani’.
  • The “Aarogya Sanjeevani Insurance Policy” guidelines was basically launched to cover the hospitalisation expenses of the COVID-19 patients. The policy is not brought by GoI rather instructed by GoI. 
  • It is a standardised health insurance product launched by the Insurance Regulatory Development Authority of India (IRDAI) in April 2020.
• The third model expands government subsidized health insurance through the PMJAY scheme to a wider set of beneficiaries. 
  • This model can be utilized for segments of the missing middle which remain uncovered, due to limited ability to pay for the voluntary contributory models outlined above. 
• A combination of the three models, phased in at different times, can ensure coverage for the missing middle population.
• In the medium-term, once the supply-side and utilization of PMJAY and ESIC is strengthened, their infrastructure can be leveraged to allow voluntary contributions to a PMJAY plus product.
• Sharing government databases such as National Food Security Act (NFSA), Pradhan Mantri Suraksha Bima Yojana, or the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) for agricultural households with private insurers after taking consent from these households.

• The report proposes an OPD insurance with an insured sum of ₹5,000 per family per annum, and again uses average per capita OPD spending to justify the ability to pay.

  • The out-patient department (OPD) care insurance coverage includes doctor consultations, diagnostics, medicines, etc. 

  • The report acknowledges that OPD expenses comprise the largest share of out-of-pocket expenditure on health care. They have a greater role in impoverishment of families due to health-care expenses. 

Concerns with the report

A high-level expert group on UHC had expressed reservations about such a health insurance model as the instrument of UHC and advocated a largely tax-financed health system with private sector participation.

• In-patient care: For hospitalisation insurance, the report proposes a model similar to the Arogya Sanjeevani scheme with lower projected premiums of around ₹4,000-₹6,000 per family per annum (for a sum insured of ₹5 lakh for a family of five). 

  • This model is similar to commercial private insurance, except lower premiums. 
  • These low premiums are achieved by reducing administrative costs of insurers through an array of measures, including private use of government infrastructure.
  • Low premiums are not achieved on account of government subsidies or regulation. 
  • This model is vulnerable to profit making greed of conventional private insurance.
  • It is important to remember that even free-of-cost government health insurance for the poor has little penetration in the country. The possible destiny of contributory private health insurance for the Middle class is not well.

• The NITI report ignores the fundamental concepts like significant levels of government subsidy to schemes; not-for-profit mode of operation; and some important guarantees for health. 

• Lacking checks and balances: In Switzerland which has predominantly private insurers and a competitive model of insurance, certain important checks and balances exist: 
  • benefits are mentioned in legislation; 
  • basic insurance is mandatory and not-for-profit; 
  • cream-skimming and risk-discrimination are prohibited. 
  • Such checks and balances have not been discussed in the NITI report.

• Out-patient care: The OPD insurance is envisaged on a subscription basis, which means that insured families would need to pay nearly the entire insured sum in advance to obtain the benefits. 

  • Clearly, this route is unlikely to result in any significant reduction of out-of-pocket expenditure on OPD care, which beats the whole purpose of providing insurance. 

• Wrong path towards UHC:  Universal health coverage means that all people have access to the health services they need, when and where they need them, without financial hardship.

  • No country has ever achieved UHC by relying predominantly on private sources of financing health care. 

  • Evidence shows that in developing countries such as India, with a big informal sector, contributory health insurance is filled with problems. 

  • Rather than plot a pathway for UHC in India, the report is more about expanding the footprints and penetration of the private health insurance sector.

  • The report looks to attain the UHC with few or no fiscal implications for the Government, which is an absurd idea in the aftermath of COVID-19. 

The National Health Policy 2017 envisaged increasing public health spending to 2.5% of GDP by 2025. Let us not contradict ourselves so early and at this crucial juncture of an unprecedented pandemic.

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