The cost of insurance-based funding

Source: This post is created based on the article “The cost of insurance-based funding”, published in The Hindu on 27^th Feb 2023.

Syllabus: GS 2, Issues associated with Health

Context: The article discusses the features of Tamil Nadu public health model that made it successful.

In comparison to all India average, Tamil Nadu has achieved significant improvements in maternal and infant mortality and universal immunisation coverage, and a low total fertility rate.

Its health infrastructure is far better compared to all India average.

Therefore, there is a need to analyse the TN health model, its pros and cons.

How is TN health infrastructure financed?

The funding for the health infra comes from the National Health Mission to the Chief Minister’s Comprehensive Health Insurance Scheme (CMCHIS).

The union government and state governments are bearing the health burden of the state in a 60:40 ratio. The State government bears the insurance premium of the remaining 60 lakh families out of total. The indirect funding through the insurance companies have made it possible for the state government, but it also has its own implications:

First, it led to decentralisation of medical and healthcare administration. Now, heads of the department are empowered to purchase drugs. Now, individual departments can prioritise their needs and hasten decisions in patient care.

Second, as every department in the medical college has become an individual establishment, they compete with one another to maximise profit and minimise losses. Now, the secondary and tertiary healthcare systems look at the patient’s ailment from the view of indemnity.

Insurance companies are delaying the payments due to administrative reasons. So, the overworked hospital staff also need to focus on the negotiations with the insurance companies.

Cost cutting has led to hiring of high number of contractual staff.

Third, Doctors in the primary health centres are functioning like managers rather than clinicians. They focus has been shifted to implementation of Union government schemes using available finances.

Fourth, creation of district health societies is making the system complicated. These societies recruit doctors on a 11-month contract with a consolidated monthly emolument of ₹60,000, nurses for ₹15,000 and health workers for ₹8,500. These contractual employment for doctors is discouraging for 10,725 MBBS passing out every year.

Fifth, between 2012 and 2021, ₹7,783 crore was allotted in the CMCHIS to insurance companies in Tamil Nadu. Of this amount, majority has been claimed by private sector. It will lead to shrinking space for public hospitals.

Sixth, India has achieved good health results by ensuring doctors came from different socio-economic strata and by empowering them with good pay and providing opportunities for post-graduation and super specialisation.

Therefore, the profit-loss calculation and treatment of public health as a health industry will lead to loss of empathy for patients among health professionals.