Is there a permanent solution except allowing private companies to milk money .. read on.

In the wake of Increasing Health Care Insurance Industry targeting the Bottom Of The Pyramid Structure ... Should we find a permanent solution which is self sustainable and regulatory ???

During the research of one of my projects in Microfinance industry for a Insurance Distribution Network called the D20 , headed by Mr. Mukut Deepak, I stumbled across some of the key alarming facts and solutions. One of them which has been around but have never been taken seriously by our government.

Health care financing in India is in a phrase of changing its page over. It can be considered almost unique in several respects.
One, the share of public financing in total health care financing in the country is considerably low--just around 1% of GDP compared to the average share of 2.8% in low and middle-income countries or even relative to India’s share in disease burden.
Two, the beneficiaries of this limited public health financing are not only the poor as one would expect in a limited public spending to be, but also the well-off section of the society.
Third, over 80% of the total health financing is private financing, much of which takes the form of out-of-pocket payments (i.e., user charges) and not any prepayment schemes.
Fourth, reliability on out-of-pocket payments is not only inefficient and less accountable than other methods of financing, it is also iniquitous to the poor on whom the disease burden falls disproportionately more, who are more susceptible to disease and who are much likely to be pushed into poverty trap.
The World Bank (2002) estimates that one-quarter of all Indians fall into poverty as a direct result of medical expenses in the event of hospitalisation.
Fifth, One of the important challenges facing the Indian health policy experts is: how to convert; While India contains one-sixth of the world population, its share in Disability-adjusted Life Years (a measure in which two-third weightage is given to mortality and one-third to morbidity, is used to quantify disease burden) make up 21 per cent of the global total. About one-quarter of world’s annual maternal deaths occur in India and 19% of total under five child mortality. The South Asia region contains the largest number of people living in poverty among developing regions, and faces a high burden of disease and under-nutrition associated with poverty. The largest country of this region, India, received negligible external assistance (0.7%) in 1990, unlike other countries of this region for whom external assistance is an important component of health spending, accounting for more than 10% of expenditures. In Sub-Saharan Africa as well external funding constitutes an important source of health financing.

Community based health insurance is more suited than alternate arrangements to providing health insurance to the low-income people living in developing countries.

Insurance sector reform can affect the poor through its effect on the provision of health services (i.e., cost, quality and access) used by the low-income people as well as through its access to financing of health care.

A significant proportion of government spending on health goes into supporting teritary care whose beneficiaries are mainly the non-poor. In the order of priority, public funding needs to be allocated primarily for promotive and preventive health care which benefits the poor the most. Another feature of public health spending is that total states’ spending on health, which accounts for three-fourth of the total public health spending, is more regressive than central government spending.
World Health Report (2000) estimates private spending in India to be 87% of total health spending. Of this, 84.6% is out-of-pocket expenditure, lower only to Cambodia, the Democratic Republic of Congo, Georgia, Myanmar and Sierra Leone.
The World Bank (2002) comes up with some other startling observations: that, on average, the poorest quintile of Indians is 2.6 times more likely than the richest to forego medical treatment in the event of illness; that more than 40 percent of individuals who are hospitalised in India in a year borrow money or sell assets to cover the cost of health care; that hospitalised Indians spend more than half of their total annual expenditure on health care.

Predominantly,private out-of-pocket spending into health insurance premium wherebythis amount is collected from a much larger group of insured individuals rather than from the limited number households affected by illness. Another important challenge is: how to provide health insurance to the people who cannot afford to pay (full) premium.
One of the unique solutions which seems to have started on its own is Community based health insurance because of its certain features like the, the voluntary participation of the people, not-for-profit objective in organising the scheme, scheme management by the community itself, and some degree of risk pooling, is more suited to insuring the poor.

We on one hand must applaud the new surge of capital, interest and participation by private companies and with the other must also make sure that the amount of money which can be milked by private companies in this field must be stunted b Govt. policies and schemes on the lines of Community Health Insurance Plan.

References Drawn from : World Bank Report,2000.
World Health Report,2002.
This is going to serve as a white paper for a detailed paper which i am planning to work on.Do mail me your feedback at avinash.aniket@gmail.com.