This is a multi-part series on the best practices followed by various states as the Modi government gets ready to launch its National Health Programme.
Undivided Andhra Pradesh’s Aarogyasri scheme was the first public health insurance scheme launched in the country.
In April 2007, the Y S Rajasekhara Reddy government launched the Rajiv Gandhi Aarogyasri Community Health Insurance scheme to enable those living below poverty line (BPL) to access quality medical care. The scheme sought to cover treatment costs of serious ailments such as cancer, kidney failure, heart diseases, neurological disorders, polytrauma and others, which entail prolonged hospitalisation and expensive surgical procedures. Until then, to meet the high costs, the options for the poor were to borrow money, sell assets and then falling into vicious cycles of indebtedness and poverty. Or they would approach the government for help. It was then decided to institutionalise the assistance and make it available to all, in all districts in the state. The scheme covered around 65 million people, out of a total of 76 million. The state already had a mechanism for defining, identifying, and enrolling BPL families through a `White Card’ (a ration card); the White Card is linked with the Civil Supplies Department database.
Aarogyasri is funded by the state’s general tax revenue; the state chose to fully cover the cost of the insurance premium as the administrative costs of collecting the premium would outweigh the total cost of the premium itself.
For the first phase of Aarogyasri, the premium was set at Rs 210 per household annually. The coverage amount for the services to the beneficiaries is up to Rs 1.50 lakh per family per annum, with Rs 50,000 as buffer. Under this scheme, all transactions are cashless. Hospital bills of the insured persons are paid by the insurance company; the premium of the insurance company is paid by the government. A BPL beneficiary can go to any hospital, public or private, and come out without making any payment, whether for procedures or even diagnostics if eventually she/he does not undergo surgery.
A four-tier administrative set-up ensured smooth implementation, and this comprised:
One, An Aarogyasri Health Care Trust, headed by an IAS officer, under the chairmanship of the Chief Minister. Apart from pricing, managing contracts with the insurer, approving claims and monitoring, the Trust assists the insurance company and beneficiaries, and coordinates with government departments, district-level functionaries, etc.
Two, The Insurance Company, manages all back-end insurance administration, including claims processing, reimbursements to providers, and oversight of hospitals. Also, holds health camps in villages to screen, diagnose, enroll and treat eligible beneficiaries, apart from creating awareness. Then chief minister, YSR Reddy, decided to go in for public-private partnership and involved an insurance company - Star Health and Allied Insurance Company - selected through a competitive bidding process.
Three, Network hospitals provide care to Aarogyasri beneficiaries.
Four, And, finally, patient advocates known as “Aarogya Mitras”, who assist Aarogyasri beneficiaries to navigate through the healthcare system. These were almost 3,500 in number and selected by the insurance company with help from zilla level officials and Self Help Groups.
Studies And Assessment
The insurance scheme achieved it intended objective to improve the poor’s access to healthcare. It covered 198.25 lakh families out of total across 229.11 lakh families (87 per cent) residing in 27,138 villages of the state in five phases. There are 380 network hospitals serving the patients. Totally 932 therapies in 29 specialties such as cancer, cardiology, poly trauma, etc, were covered. Till 20 January 2013, a total of 17 lakh surgeries and therapies had been performed.
Being one of the first schemes with coverage large enough to be of policy interest, the scheme generated interest among researchers. Some useful recommendations were made based on the observations of these research studies.
A need to spruce up the public healthcare system instead of depending on private hospitals.
A research study titled “Aarogyasri Scheme in Andhra Pradesh, India: Some Critical Reflections” was done by Jawaharlal Nehru University assistant professor Sunita Reddy and freelance researcher, Immaculate Mary. This paper criticised the scheme on account of its heavy dependence on the private sector hospitals, and the consequent heavy and burgeoning cost to the AP government. If we look at the numbers: of the total of 17 lakh surgeries and therapies performed, 4,41,591 were in government hospitals and 13,14,519 in private hospitals.
The authors cite the example of the cardiology wing of the Gandhi Hospital (a government hospital), which had a capacity to perform 1,000 surgeries per year, but had nevertheless, only managed to do 85 surgeries six months after its inauguration (Babu, 2009). In spite of possessing world-class operation-theatre facilities, the hospital wasn’t functioning to its full capacity for lack of a requisite pool of specialist doctors to conduct critical surgeries. The authors feel that correction of these systemic deficiencies is essential if healthcare is to reach the poor in the long term. This is because private healthcare institutions will extend their facilities to the poor only so long as the government support continues. Of the total Rs 4,729 crore claimed in the scheme, private hospitals’ share was almost 77.3 per cent at Rs 3,656 crore; the share of the government hospitals was only Rs 1,073 crore. This study also questioned the outreach of the scheme, as it found that the benefits did not reach the rural poor, and the overall number of screenings, hospitalisations and procedures were far less compared to the enrolment.
Criticism of the scheme came from other studies conducted. N Purendra Prasad and P Raghavendra (2012) said that the scheme is only the construction of a new system that supplants the severely underfunded state healthcare system. It is also a classic example of promoting the interests of the corporate health industry. Indeed, there was widespread perception about misuse of the scheme by super-specialty and corporate hospitals, who kept demanding their pound of flesh. Associations threatened to stop providing healthcare services and pulling out of the scheme unless payment rates were enhanced by 30 - if not 50 - per cent, to which the government finally agreed. This sent the government’s costs spiralling by Rs 300 crore.
Further, over-medicalisation and unnecessary surgeries also became the order of the day. The result was that the health insurance premium, initially estimated at Rs 279, went up to Rs 330 and then within two years, to Rs 439 per family. With the further likelihood of increase in the premium amount in the coming years, the cost escalation was putting questions over the sustainability of the scheme. The state turned to the Centre for financial assistance; the Planning Commission however, advised the Central government to refuse the state’s request, because they observed that these insurance schemes are turning out to be a ‘cash cow’ for corporate hospitals.
Is There Need for an insurance intermediary?
Further, research by Srikant Nagulapalli and Sudarsana Rao Rokkamin a paper titled “Should Governments engage health insurance intermediaries? A comparison of benefits with and without insurance intermediary in a large tax funded community health insurance scheme in the Indian state of Andhra Pradesh” in the journal BMC Health Services Research (2015) made a comparison of benefits with and without the presence of insurance intermediaries in a wholly government-funded health insurance scheme. The authors argue that though the insurance company does adequately bring in efficient operations, quality of care, manpower outsourcing and controlling moral hazard – all in an area of government inexperience, it nevertheless involves higher administrative costs, which means lower expenditure on patient benefits, given limited government resources. The benefit of having an insurance intermediary is further in doubt when we consider the reality of chances of collusion between the insurance company and private hospitals, which would result in increasing premium charged to the government, year after year. Also, the study found, that funds flows to government hospitals were reduced. The authors recommend therefore, that there be no engagement of insurance intermediaries for administering government-funded health insurance schemes; instead business process outsourcing agencies should be engaged in their place directly.
Need to include other health problems faced by the majority of the poor, like fever and gastrointestinal disorders, rather than only “catastrophic illness”
Mitchell et al., (2011) in their study provide evidence that poor patients continue to spend significantly on conditions that are not covered by the Aarogyasri. And therefore, Aarogyasri alone is not likely to reduce the financial burden of illness on the BPL population. Shukla, et al., (2011) pointed out that corporate hospitals handle the biggest share of the cases and there is no provision for outpatient treatment of everyday illnesses that affect the working capacity of the patient, especially given that it is difficult to monitor treatment of ailments that do not require hospitalisation. Thus, the focus on tertiary healthcare and exclusion of all other forms of medical assistance leads to an inadequate healthcare model with a low level of real impact on meeting the health needs of the population.
- It helps to have a Trust for overseeing, governance and further development of the scheme. The board must include representatives from ministries and healthcare providers.
- An insurance intermediary would add more to the cost than the benefits in a state-funded Insurance scheme, and is unnecessary.
- For empanelment of hospitals, hiring patient advocates and smooth roll-out of the scheme, a BPO may assist the Trust.
- AP already had in place white ration cards, linked with the Civil Supplies Database. Aadhar Cards will serve the same purpose.
- The local face of the scheme – the patient advocates – are a critical link between the healthcare system and the public. They act as counsellors for patients and spread awareness about the scheme.
- Public healthcare system must first be spruced up to include state-of-the-art technology, and by induction of specialist doctors at good salaries. This includes district hospitals.
- Preference must be given to treatment in public hospitals.
- Special consideration must be given to link rural poor with the scheme, to make sure the public healthcare programme has an outreach that is available to all. This makes it all the more necessary to work on improving the facilities of district hospitals.
- Other conditions other than catastrophic illness that add to out-of-pocket expenses of the poor, and these must be added to the list of therapies.
- A good IT base is critical for maintaining records, processing claims, payments and communicating with service providers. This includes running a call centre for the scheme.