Integrating Managed Care Organizations (MCOs) into India’s healthcare system

Source: The post integrating Managed Care Organizations (MCOs) into India’s healthcare system has been created, based on the article “India and the ‘managed care’ promise” published in “The Hindu” on 31st May 2024.

UPSC Syllabus Topic: GS Paper 2- governance-Issues relating to development and management of Social Sector/Services relating to Health

Context: The article discusses how health insurance and healthcare provision are merging into managed care organizations (MCOs) in India, similar to the U.S., and explores whether this model can help extend universal health care in India.

For detailed information on India’s healthcare system read Article 1, Article 2, Article 3

What is the current trend in Indian health policy?

1. Indian health policy is increasingly integrating health insurance and healthcare services under one roof, similar to managed care organizations (MCOs) seen in the United States.
2. This approach aims to control costs and improve health outcomes. For example, a large healthcare chain in South India recently started offering comprehensive health insurance alongside its healthcare services.

How did MCOs develop in the U.S.?

1. Managed Care Organizations in the U.S. began as a response to rising healthcare costs in the 1970s.
2. They combine insurance and healthcare provision, focus on preventative care, and aim to control costs with a fixed premium for enrollees.

What are the challenges and prospects for MCOs in India?

Challenges for MCOs in India

Target Market Limitations: Indian health insurance primarily targets the urban, wealthier population, which limits the broader applicability necessary for effective MCOs.

Lack of Standard Protocols: There is a widespread absence of accepted clinical protocols in outpatient practices, which complicates the integration and standardization essential for MCOs.

Unsustainable Operations: High operational costs and unaffordable premiums are common, making it difficult for MCOs to sustain themselves financially without significant systemic changes.

Prospects for MCOs in India

Outpatient Care Potential: With a nearly $26 billion market for outpatient consultations, there is substantial scope for MCOs to reduce healthcare costs through comprehensive outpatient care.

Government Support: Initiatives like the Ayushman Bharat Mission provide a framework within which MCOs could potentially thrive, especially if similar incentives are extended to include MCOs under schemes like PMJAY.

What does the NITI Aayog report suggest?

Outpatient Care Scheme: The NITI Aayog’s 2021 report endorses an outpatient care insurance scheme based on a subscription model.

Cost Savings: This model is projected to generate cost savings by better integrating care services.

Consolidation of Practices: It promotes the consolidation of dispersed healthcare practices and streamlining management protocols.

Preventive Care Focus: The scheme aims to embed a much-needed preventive care focus within the private sector, suggesting a sustainable solution to outpatient care issues over the long term.

How could MCOs fit into broader health initiatives?

Pilot Basis Integration: MCOs could be integrated into broader health initiatives starting on a small scale and on a pilot basis to assess effectiveness.

Support from Ayushman Bharat Mission: The Ayushman Bharat Mission incentivizes the establishment of hospitals in underserved areas. Similar incentives could be extended to MCOs, allowing them to serve beneficiaries of the Pradhan Mantri Jan Arogya Yojana (PMJAY) and a private clientele.

Expanding Coverage: As the self-paying client base grows, MCOs could increase awareness and reach, potentially expanding demand for managed care and contributing to the broad objectives of universal health coverage.

Question for practice:

Evaluate the feasibility of integrating Managed Care Organizations (MCOs) into India’s healthcare system.