Paying To Be Treated Well

Kala Bai, 22, worked as an agricultural labourer and basket weaver in Ganiyari, Chattisgarh, until the severe back pains started in July 2010. The Jan Swasthya Sanyog (JSS) doctor diagnosed her with tuberculosis of the spine, called Pott’s disease (something that has vanished elsewhere except rural India).  The disease meant over 9 months of drug […]


Kala Bai, weighs just 32 kgs due to her condition. Seen with her infant. Pic: JSS

Kala Bai, 22, worked as an agricultural labourer and basket weaver in Ganiyari, Chattisgarh, until the severe back pains started in July 2010. The Jan Swasthya Sanyog (JSS) doctor diagnosed her with tuberculosis of the spine, called Pott’s disease (something that has vanished elsewhere except rural India).  The disease meant over 9 months of drug therapy, something unaffordable for the family that survived on the combined daily income of Rs. 100 that she and her husband brought. The disease has become so advanced, she is even unable to lift or feed her infant. And a few months back, 4-month old Ritu fell into the fire and sustained extensive burns on her arms.

Stories of health-induced penury abound in India.

In a country where more than 80% of health expenditure is an out-of-pocket expense, ill-health directly translates to lack of wealth.  Less than 10% of India holds any insurance or health financing option, thus a health shock could either mean a financial catastrophe, a fall back below the poverty line for those just above it, or a deepening of existing poverty, as a Standford University Asia health Policy Program paper by Prof. Soumitro Ghosh suggests. The Government spending on health climbed up only recently to 1.05% of the GDP, one of the lowest spends on health in a country.

Affordable health insurance is perhaps the most critical social security need for the poor in India.

But, does health insurance, as it is administered and implemented today, provide access to quality healthcare for the poor?

We take the case of Karnataka, where 3 insurance schemes – GOI’s RSBY, and Karnataka state’s Vajpayee ArogyaSri and Yashasvini -are currently being run, to get a detailed look.

Rashtriya Swasthya Bhima Yojana (RSBY)

“RSBY has focused on the poorer rural districts (6 of them) in Karnataka, which is commendable. Almost 75% of secondary health gets covered with the scheme. Enrollment done in every village has also been very good”, says Anaka Aiyar, public policy researcher at Centre for Budget and Policy Studies (CBPS), Bangalore.

In less than a year, Karnataka has managed to enrol 157,450 households and 179 hospitals, 63% of them private, an impressive feat in comparison with dismal figures in some other parts of India. It is after that the problems have started to crop up.  A ground survey evaluation of the scheme in Shimoga district by Aiyar threw up reports of smart cards not being distributed even after 3 months after enrollment; among those who possessed a card, biometrics did not match during hospitals visits, the technology system did not work and sometimes power was completely absent, leading to a poor claims utilisation.

Misinformation was a huge factor in people being unable to access the system; even the name “RSBY” had poor brand recall in the Dakshina Kannada district, says Aiyar. “People landed up calling it the “health card”, unable to distinguish which scheme they were part of. Everyone agrees that RSBY works but it would be very useful if it indeed started working.”

A Karnataka study done by Institute for Social and Economic Change (ISEC) between June and Aug 2010 complements Aiyar’s findings.  ISEC found that although 85% of the people profiled knew about RSBY (high awareness), only 68% had enrolled, 42% had even received the card 6 months after scheme rollout; a mere 0.4% of them had claims of any sort. The study also quoted instances of those polled being charged more than Rs. 30 as registration. The hospitals on their part complained about the great delay in claim settlements and reimbursements, many of them threatened to withdraw if this continued.

Vajpayee Arogyasri (VAS)

Designed to provide access to tertiary care through insurance for expensive surgeries and procedures for the Below Poverty Line (BPL) population, VAS has been operational in 6 districts of Gulbarga division and 2 districts of Belgaum division, with an overall 30 lakh BPL population. With 114 network hospitals (79% of them private), VAS has about 402 listed procedures, providing a cover of Rs. 1.5 lakhs to Rs. 2 lakhs per insured family of 5 members, completely free.  Since tertiary care is referral-based, network hospitals are required to run 2-3 health camps a week in the villages. Each hospital pays Rs. 10000 per year to be a part of the program.

Hardly a year old in the State, as of April 1, 2011, VAS has authorised over 46 crores already in claims to 8971 patients, with cardio vascular diseases forming a major portion of claims.

The scheme banks heavily on the accuracy of the state BPL list and suffers from false positives and inclusion errors (the Food and Civil Supplies BPL list of Karnataka is going through a complete re-authentication exercise due to inflated numbers).  The insurance company wins due to erroneous lists, as the premium is pre-paid by the Govt. for all the households in the BPL list. Hospitals have also requested for cost revisions for some of the procedures, the procedures themselves are being updated.


Conceived by Dr. Devi Shetty of Narayana Hrudayalaya, the State’s oldest and biggest insurance scheme for providing tertiary care, Yashasvini, has grown immensely – it collected over 41 cr from its 30 lakh members, received a Govt. grant of 30 cr, and disbursed over 40cr to its 452 network hospitals in 2010-2011. The scheme provides a cover of upto Rs. 2 lakhs for surgical care, against a yearly premium of Rs. 150 for an individual co-operative member.

Being one of the largest and most quoted self-funded micro-insurance schemes in the country, the modus operandi has been well documented – network of high quality pvt. hospitals providing access to surgical procedures, a huge reach due to political will and full-fledged support from the Govt. co-operatives, a scheme that earned money in the first year itself thanks to huge enrolment vis-a-vis small less need for any expensive procedure.

“Yashasvini has mostly reached middle class and lower middle class farming population. Access to healthcare has not increased in comparison to similar schemes”, says Dr. Devadasan, Director of the Institute of Public Health, and acknowledged expert in the area of health financing, health management and community empowerment. Also of concern is the fact that empanelled hospitals are mostly in the district centres and large towns; the average distance that a scheme member needs to travel for treatment is 40 kms.

“Since only the individual is insured, there is great encouragement for adverse selection. People who have a disease join in the first year, get themselves cured and then withdraw”, says Dr. Devadasan, an observation seconded by an ILO study of Yashasvini. The scheme itself seems to be thinking along these lines, unable to be profitable 8 years after inception, and seeking re-insurance as the only option to manage its own risk.

The bigger picture

“Insurance per se is a very complex concept. Culturally, Indian society works on reciprocity – I will give you something, you will give me something back. Solidarity – I will give you something because you need it, is an alien concept for our social and cultural milieu”, comments Dr. Devadasan.

In all 3 schemes, one of the biggest problems is hospital fraud. The ISEC study spoke of ceilings being imposed on hospitals for RSBY patients. VAS and Yashaswini have many instances of sub-optimal surgeries. Yashaswini even has a reported disturbing high number of hysterectomies being performed. “Doctors are gaming the system. They produce fictitious bills, claiming for surgeries that haven’t been performed or are unnecessary. There are few checks and balances” , cautions Dr. Devadasan.

The large scale proliferation of private partnership in Govt. schemes is also a matter of concern, says researcher D. Narayana from the Centre of Development Studies (CDS), Kerala, who in his independent evaluation of RSBY highlights large variations in the way RSBY has worked in India. “Earlier, cost of private hospitalisation was more than the public. After RSBY, it is the reverse. Since rates are fixed for every procedure, it makes business sense for private players to do the ordinary procedures and push higher and more complicated operations to the public hospitals”, he says.

Could customization and smaller community instruments work? Dr. Devadasan explains: “There are more than 100 insurance companies in India today. IRDA is ok with it as long as these small providers don’t create problems. Without regulation, it could go the micro-finance way – fly by night operators collecting premiums and then disappearing. Ideally, insurance companies should tweak their product to meet the needs of the local people. But with the large customer base already provided by schemes like RSBY, insurers have no incentives to do so.”

The Govt. machinery thinks it is too early to critique or conclude anything about the schemes. “We are making changes based on our 1-year pilot. In RSBY, for example, we are looking at penalizing insurers for false claims, incentivizing ASHAs to bring more people to the hospitals and so on. Scheme integration of all 3 at different levels is also being discussed”, re-assures Ravishankar, Labour Commissioner, Govt. of Karnataka. The Labour Dept. is in charge of RSBY implementation in the State.  The Suvarna Suraksha Yojana Trust that runs VAS also concurs. “We need to increase awareness for the VAS scheme. We are looking at ways to incentivize ASHAs to bring more people in for treatment”, says Dr. Anitha, Joint Director, VAS.

Reducing OOP expense and include those critically in need of care like Kala Bai is but a first step. Questions of design, administration and accountability still loom large, amplified, in the wake of an entire country like the US becoming unable to afford any healthcare.

Aarti Mohan is the Chief editor of The Alternative. more


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