Is Narayana Health Insurance model a gamechanger for India’s healthcare system?

livemint.com:

A new combination of health insurance and healthcare has been launched in India, with the managed healthcare or integrated healthcare scheme announced by Narayana Health Insurance. It aims to do away with the misalignment of incentives in the traditional health insurance model, and lays emphasis on proactive diagnosis and treatment. In the traditional health insurance model, the healthcare provider and the payer of the healthcare, the insurer, find themselves at odds, the conflict taking place at the expense of the consumer/patient.

The incentive for the healthcare provider is to maximize the billing, while the incentive for the insurer is to minimize the payment. It has been empirically established that healthcare costs go up when the patient has insurance, as investigations, consultations, procedures and treatment protocols pile up. Only with a strong co-pay model can the insurance company get the patient to exercise some cost control by choosing to reject some of the recommended tests or procedures.

However, patients lack the knowledge to opt for or reject, with discernment, parts of the care recommended by the healthcare provider. The insurer ends up picking up the tab. At the same time, the insurer tries to minimize costs by standardizing treatment protocols, regardless of the kind of facility where it is delivered.

This, too, militates against the patient receiving the best quality care while the cost is borne by the insurer. A third problem with the regular health insurance scheme is that it lacks any focus on prevention, the hospital being incentivized to make money from curative treatment. The health insurer might try to persuade its insured population to carry out preventive check-ups, but is rarely successful