Govt can leverage Ayushman Bharat infra to expand coverage: Niti Aayog

The government can expand Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) coverage to the poorest segments of the missing middle population, and leverage the scheme’s infrastructure to offer a voluntary contributory enrolment, NITI Aayog, government’s policy think tank has recommended in a report released on Friday.

The report titled “Health Insurance for India’s Missing Middle”, brought out the gaps in the health insurance coverage across the Indian population and offers solutions to address the situation. The report highlights the need for designing a low-cost comprehensive health insurance product for the missing middle. It primarily recognizes the policy issue of low financial protection for health for the missing middle segment and highlights health insurance as a potential pathway in addressing that. In doing so, the report offers a starting point for broader discussions on solutions, and specific products, to improve insurance coverage for the missing middle.

The report noted that low government expenditure on health has constrained the capacity and quality of healthcare services in the public sector. It diverts the majority of individuals—about two-thirds—to seek treatment in the costlier private sector. However, low financial protection leads to high out-of-pocket expenditure (OOPE). India’s population is vulnerable to catastrophic spending, and impoverishment from expensive trips to hospitals and other health facilities. At least 30% of the population, or 400 million individuals—called the missing middle in this report—are devoid of any financial protection for health, the report said.

“The government can play several different roles—which facilitates and complements the expansion of the private voluntary market—to increase the uptake of health insurance and address some of the outlined challenges,” the report said. AB-PMJAY, launched in September 2018, and state government extension schemes, provide comprehensive hospitalization cover to the bottom 50% of the population—around 700 million individuals. Around 20% of the population—250 million individuals—are covered through social health insurance, and private voluntary health insurance. The remaining 30% of the population is devoid of health insurance.

The missing middle predominantly constitutes the self-employed (agriculture and non-agriculture) informal sector in rural areas, and a broad array of occupations—informal, semi-formal, and formal—in urban areas, the report noted.

The government can provide its data and infrastructure as a public good to reduce operational and distribution costs of insurers. For example, it can share government data (after taking consent) which aids identification and outreach to customers. It can also offer PMJAY’s IT platform and network to reduce operational costs. “Finally, and most directly, the government can partially finance or provide health insurance. It can expand PMJAY coverage to the poorest segments of the missing middle population, and/or leverage national health authority’s (NHA) PMJAY infrastructure to offer a voluntary contributory enrolment,” the report said.

A combination of implementation pathways—starting with commercial insurers and progressing to leveraging government risk-pooling schemes for voluntary insurance—phased in at different times, will ensure coverage for the missing middle population, it said.

This report recommended that the initial thrust and focus should be on expanding private voluntary contributory insurance through commercial insurers. The indicative product outlined in this report, can be scaled—through greater consumer awareness and focus on group enrolments—to build a large and diversified risk pool at low premiums.

The report noted that the catastrophic effect of healthcare spending is not limited to the poor—it impacts all segments of the population. Prepayment through health insurance emerges as an important tool for risk-pooling and safeguarding against catastrophic (and often impoverishing) expenditure from health shocks. Finally, prepaid pooled funds can also improve the efficiency of healthcare provision, it noted.

“Most health insurance schemes and products in the Indian market are not designed for the missing middle. Private voluntary health insurance is designed for high-income groups—it costs at least two to three times the affordable level for the missing middle,” the report said.

The report further said that in the medium term, once the supply-side and utilization of PMJAY and ESIC is strengthened, their infrastructure can be leveraged to allow voluntary contributions to a PMJAY-plus product offered by NHA, or to ESIC’s existing medical benefits.

The participation of NHA and ESIC will increase competition in the contributory voluntary insurance market, reducing premiums, and improving quality of care provided. In the long-term, once the low-cost, voluntary contributory health insurance market is developed, expansion of PMJAY to the remaining uncovered, poorer segments of the missing middle can be considered, it said.

“Private sector ingenuity and efficiency is required to reach the missing middle and offer compelling products. The government has an important role to play in increasing consumer awareness and confidence, modifying regulation for standardized product and consumer protection, and potentially offering a platform to improve operational efficiency,” said Dr V.K. Paul Niti Aayog member.