Despite the presence of medical insurance for over a decade, India has not made any progress in health insurance sector, an ICRA analysis has pointed out. Lack of affordability and restrictive policy conditions have been shown as the major reasons for this less penetration.
According to the study, only 0.5 per cent of Indian population has subscribed to Mediclaim policies. "A study which examined the willingness and ability of individuals to participate in private health insurance programmes showed that most low and middle income households found the premiums beyond their reach, while lower income households were wary of private schemes and trusted government schemes," says the ICRA report.
However, ICRA quotes studies conducted by Asian Health Services to project a formidable growth in health insurance sector in the coming years. "This rather low subscription base is a result of many factors, the most important of which are lack of affordability and restrictive policy conditions. Assuming private insurers will address the latter, the former will continue to be a constraint. However, other studies project an insured base of 30 million people by 2005 and 160 million by 2010," it stated.
The agency comments that the market may lie somewhere in between. The insured base that private insurers are able to build up will determine the influence they would have on the healthcare service delivery sector. The other factor that will determine the influence on supply is the type of insurance model adopted. International experience has shown that the incentives to "over-provide" care in the indemnity-based insurance, it said.
The medical care infrastructure in India includes over half a million doctors, more than 15,000 hospitals and over 900,000 beds. The government runs a multi-tiered, partially integrated medical care system. The private and voluntary sector is largely fragmented and is dominated by the nursing home segment. Despite a relatively extensive MCI in the public sector, its utilisation has declined over time and accounts for 43.8 per cent of all hospitalisation cases in rural India and 43.1 per cent in urban India.
The inadequacy of resources in government run medical institutions has been singled out as the reason for the severe under-utilisation of its facilities (as much as 50% in rural areas).
The key trends that are likely to alter the demand for medical care services include changing demographic profile (towards a higher proportion of the aged), epidemiological transition towards non-communicable diseases, and increasing concerns about the quality of care among users. On the supply side, quite a few investor-owned hospitals have come up, while the number of foreign alliances has increased, private health insurers are likely to enter the market and medical care providers are using information technology to improve the reach of their services.
The demand outlook for private medical care providers appears positive as the current scenario of demand exceeding supply is likely to continue at least over the next decade. The role of the private sector is likely to increase as the government is constrained by its fiscal position and the increasing preference for private medical care. The impact of the emergence of private insurers will depend on the number of insured but could cause structural changes amongst the providers.
ICRA's analysis shows that the emergence of managed care is usually followed by decreasing hospital profitability in the short term. Over the long term, the dynamics of managed care are known to have led to decreased utilisation of hospitals, both in terms of admissions and average length of hospital stay, and to a shift in demand towards outpatient care.