India’s ageing population is crying for a new health insurance model
. A study on publicly-funded health insurance (PFHI) for the elderly has been reported to have raised concerns over rising out-of-pocket expenses for the poor. The key limitation of the PFHI policy, it appears, is the over-reliance on a poorly regulated private sector.
The remedy then inescapably is to strengthen regulation and enforce it strictly. This is especially so when the quality of public health services remains poor. While the government must leverage the private sector for tertiary care, and use digital platforms, technology and data and processes for improving overall outcomes, there’s no alternative to a well-run public health system.
Second, there are flaws in purely traditional insurance models owing to well-known conflicts of incentives: Private hospitals invariably try to inflate costs, such as by pushing patients into avoidable and unnecessary surgeries, procedures and investigations, while insurers would naturally like to minimize their payout. To align the incentives of the insurer, healthcare provider and the patient, a new model must be introduced in which healthcare providers will agree to provide expert care to a group for whom they would receive an upfront per-capita fee. That fee can be worked out by actuaries used by insurers.
These care providers, in turn, would be monitored on the insured individuals’ health parameters and treatment administered in case of illnesses. In such a model, there would be no incentive really for the care provider to jack up costs, as the per-capita premium would be disbursed to them directly by the insurance buyer. For the poor, the government should foot this bill.
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