Health Insurance

Health Insurance

This article deals with ‘ Issues relating to development and management of Social Sector/Services relating to Health – Health Insurance.’ This is part of our series on ‘Governance’ which is important pillar of GS-2 syllabus . For more articles , you can click here

Models of Health Care & which method should India adopt?

There are two Models of Healthcare

Models of Healthcare

Model 1 : Japan , Switzerland etc Model (Free Market) = Private Sector + Insurance Model

  • Germany, Switzerland, South Korea, and Japan are free market economies and  do not  have the government as a provider of health Services. It relies on Insurance and Private Sector for Health services
  • But this doesn’t mean , government don’t have control over Health Sector. They all have a high degree of direct government control on the services that are offered; the pricing of health services, referral pathways, and treatment protocols that are followed.
  • Hence, if any country (including India) wants to promote Insurance and Private Sector as as Health Provider, Strict Regulation and Implementation of Regulation is the key.

Model 2 : Cuba Model

  • All Health Services are provided by Public Sector
  • Initially they invested heavily on their Medical Education and produced large number of doctors. These doctors are now working under government to provide health services to people.

So, should India adopt Insurance model or provide health services by public sector?

In India, since Public Health Infra is weak, is Insurance the way out 

  • No doubt, Insurance provides a simple way out but it isn’t sustainable way. Examples from  US, Netherland etc has shown that Simple solution at one time becomes a problem for  next generations .The U.S. tried to rely on private insurance, and the result was a politically empowered industry dedicated to preserving its business at the expense of better risk pooling, equality, more efficiency, and simpler administration.
  • Building strong Public Health care is the sustainable way to reach goal of providing Healthcare facilities to all. Countries such as Cuba has shown this to the world that inspite of their lower GDP , best and cheap health services can be provided to people if government has vision.
  • But since Public Healthcare cant be built in a day, we cant ignore Insurance altogether. There is need to provide Insurance cover to people as a cushion . But at the same time, we have to build a strong regulatory framework so that Insurance companies don’t charge  exorbitant rates  from vulnerable people. Government should try to stop Insurance companies from “actuarial” rate-setting 

Health Insurance : National  Health Protection Scheme (NHPS) 

Aim Provide medical cover up to Rs 5 lakh per year per household for secondary and tertiary health care.
Coverage – 10 crore households across the country, constituting 40% of total population .
On the basis of “deprivation and occupational criteria” as per Socio-Economic Caste Census (SECC) data, 2011.
Using JAM It would be a cashless and Aadhaar enabled for better targeting of beneficiary.
Funding Centrally Sponsored – Core Scheme
60: 40 ratio share between Centre and State
– 90: 10 ratio between Centre and Special Category States  
RSBY subsumed NHPS scheme will subsume Rashtriya Swasthiya Bima Yojana (RSBY) under it.
Implementing Agency National Health Agency (NHA) => It will be set up to manage NHPS.

Side Topic : Difference between Ayushman Bharat and NHPS

  • Ayushman Bharat programme has two components viz.
    • National Health Protection Scheme &
    • Health and Wellness Centre (envisioned under National Health Policy, 2017
Ayushman Bharat Scheme

Significance of NHPS

  • It is the world’s largest government funded health programme.
  • It will help in Consolidating Fragmented Healthcare Insurance facilities available in different states.
  • It  will help in achieving the goal of Universal Healthcare Coverage.
  • It will help in achieving equal distribution of patients in private and government hospitals as scheme will be delivered by a network of public and private hospitals
  • Answer to increasing Out of Pocket Expenditure => health challenge leading to poverty trap will be stopped


  • Ignoring Primary Healthcare – scheme might further promote unnecessary tertiarization of healthcare
  • Past experience (Evaluation of Rashtriya Swasthya Bima Yojana ) shows that India lacks the institutional expertise and capacity to implement public health insurance effectively.
  • International Experience has also shown that insurance-based health care provision, is an expensive model of financing health care for the government.
  • Against Federalism – It curtails states’ autonomy as Health falls under state list
  • Unethical medical practices/Will increase Provider Induced Demand through unnecessary hospitalization, extension of hospital stay, etc.

Way forward

  • Integrating primary healthcare into NHPS to make the scheme viable and sustainable.
  • Leveraging TechnologyBlockchain technology can be used to  prevent fraud and ensure accountability and traceability.  

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