My in-laws stay in a stand-alone constructing like many others in Kothrud, one of many older areas in Pune. Most of those stand-alone buildings have safety guards who both stay there by themselves or generally with their whole households. Cities like Pune provide higher employment alternatives with a chance of a way of life improve. Mahendra (title modified), safety guard at my in-laws’ constructing, signed up for this deal. He moved into the town together with his spouse and child a couple of 12 months again and was having fun with his life within the metropolis till someday I discovered him very tense. Usually an extrovert, I seen that Mahendra was nearly speaking to himself, apprehensive about one thing.
I requested ‘महेंद्र जी क्या बात है बड़े परेशान से लग रहे हो’ [What’s up Mahendra, you look worried]
He replied ‘परसो बीवी को अस्पताल ले जाना पड़ा’ [Had to take my wife to the hospital the other day]
Me : ‘क्यों क्या हुआ?’ [Why what happened ?]
Him : ‘सीने में बहुत दर्द था तो तुरंत ऑपरेशन करवाना पड़ा. सरकारी अस्पताल में भीड ज्यादा थी इसलिये निजी अस्पताल में ले जाना पड़ा’ [She experienced massive pain in the heart so had to be operated on immediately. Government hospital was packed so had to take her to a private one.]
Me : ‘अब सब कुछ ठीक है ना?’ [Everything okay now right ?]
Him : ‘ठीक तो है पर पूरी जमा पुंजी चली गई, महंगा अस्पाताल था’ [Kind of, because I had to spend all my savings given that it was an expensive hospital]
I later learnt that he had no insurance coverage and paid every part out-of-pocket for his spouse’s surgical procedure at a personal hospital. I by no means noticed him once more after that dialog. He was unable to maintain life within the metropolis with no matter little he had left and needed to transfer again to his village.
55 Million Indians have been pushed into poverty in 2011-2012.
Simply to place issues in context, that quantity equals whole inhabitants of Australia, Israel and Netherlands put collectively pushed into poverty in a single 12 months. Think about waking up someday and studying the entrance web page of your nationwide every day that claims
3 international locations pushed into poverty in a single 12 months.
That might alarm you proper ? Coming again to India, that quantity is roughly 6% of our inhabitants. So 6% of our whole inhabitants was pushed into poverty in a single 12 months as a consequence of their incapacity to bear medical bills. That is the best quantity (and probably the most official – kind of – extensively reported by media) that I’ve come throughout. Transferring the clock ahead, a 2022 Oxfam report titled ‘Inequality Kills’ means that 84% of the Indian households suffered from decline in revenue within the pandemic 12 months (March 2020 – Nov 2021). And simply in that timeframe, greater than 46 million Indians have fallen into excessive poverty. Whereas this report didn’t say it occurred due to healthcare associated bills, will probably be solely rational to imagine that these households are already hanging by a thread and will likely be unable to to bear even the smallest of medical bills. To make issues worse, Indian Specific reviews that India spent Rs. 70,000 crores ($10 Bb) out of pocket for COVID associated medical remedy.
Okay, so we are able to all agree that the state of affairs is unhealthy.
The query then turns into – Who ought to intervene ?
Sure, I hear you. However earlier than we are saying ‘In fact the federal government !’, you will need to attempt to perceive our societal construction in order that we are able to perceive the accountability inside that assemble.
Who’s downside is it anyway ?
There are 3 broad classes of establishments in our trendy societal framework.
The ‘particular person’ (you/me) regularly work together with these establishments to get by with our each day. The entire classes have roles to play and all of them have their strengths and weaknesses. I believe we are able to all agree that a person can’t clear up this mammoth of an issue. So we are able to rule out people. A group is nothing however an mixture of people with no coverage making powers so we are able to rule out group as nicely. Now relating to healthcare, personal markets endure from 2 market failures : data asymmetry and market energy. (Ajay Shah and Vijay Kelkar, In Service of the Republic)
Whenever you go to a health care provider, if the physician asks you to get a MRI or an X-ray completed, you get it completed proper ? Can we perceive sufficient to problem the advice ? The physician is aware of greater than you on the time of creating that call and thereby suggestion. That is data asymmetry.
You’ll have certainly learn horror reviews of how some hospitals managed to generate astronomical payments for COVID 19 hospitalizations. This specific report is about how a hospital charged 19 Lakhs. 19 Lakhs ! That is market energy. The truth that a hospital may cost 19 lakhs for hospitalization is an indicator of extreme market failure.
So allow us to partially strike out markets. Partial as a result of, as I clarify later, they undoubtedly have a job to play. What I’m making an attempt to convey proper now could be that they aren’t the first bearer of the accountability to handle the issue we’re speaking about. Additionally markets are inclined to strongly react to incentives. That’s what all free markets are supposed to do! There’s a very fascinating paper revealed within the Journal of American medical affiliation (JAMA) that argues that these incentives are on the centre of a number of administrative complexities inside healthcare. It means that ‘healthcare is sophisticated as a result of complexity is worthwhile’. So mainly healthcare is complicated as a consequence of incentives and it might probably turn out to be easy …. additionally as a consequence of incentives. However that matter in itself is a sequence of articles, so allow us to transfer previous it for now.
And that leaves us with just one stakeholder who can attempt to transfer the needle right here – the federal government.
So what may the federal government do ?
In Service of the Republic has some steering. It mainly means that at any time when the federal government decides to ‘do one thing’, it typically has 3 selections – Produce, Regulate, Finance. Every of those selections is (or ideally must be) a response to handle a number of market failures. Right here is a perfect means to consider how the federal government ought to intervene.
Produce – Public Items
Finance – Constructive Externalities
Regulate – Adverse Externalities, Uneven Info, Market Energy
So by concept – if we’re experiencing Uneven Info and Market Energy, the appropriate intervention is to manage. And regulation comes from coverage. So let’s discuss coverage.
PS : It’s not as simple because it sounds.
Coverage gambit and the challenges of it
The Financial Survey of 2020-2021 has a devoted chapter on Healthcare titled, and aptly so, ‘Healthcare takes Heart Stage, Lastly!’. It cites a WHO report from 2004 that states that rising life expectancy by 40% may increase the financial progress of a nation by 1.4% factors per 12 months. And life-expectancy may be elevated by spending extra on well being.
The survey additionally states that India’s out of pocket expenditure (OOPE) remains to be at ~60% which is the best as in comparison with different low-to-middle-income international locations (LMICs) and undoubtedly increased than the world common.
And a rise in public spending to 2.5 – 3 % can cut back the OOPE to 30%.
So if the federal government spends extra upfront, it might probably acquire a lot later. If we already know of such a coverage gambit, what then stops us from conceiving and implementing these coverage modifications shortly ?
Earlier than even we start to reply this query, we have to first perceive the complexity of the coverage making equipment. As you possibly can inform from the determine beneath, there are a number of entities that fall throughout the realm of healthcare coverage making in India. All entities have their very own accountability areas which make coverage formulation a troublesome train. Former union secretary of Ministry of Well being and Household Welfare Ok Sujatha Rao quotes (clearly based mostly on her first hand expertise) that ‘such a system blurs accountability, contributes to delays in decision-making, diffuses possession, and shifts accountability.’
Supply: Commonwealth fund
Now allow us to assume for a second that stars lastly align and this equipment is ready to agree on a coverage steering and the funds will get accredited, we now come across a ‘launch of funds and spending’ downside. In her e-book ‘Do We Care?’, Ok Sujatha Rao lays out 8 bottlenecks relating to the move of funds proper from the Finance ministry right down to the healthcare entity that truly makes use of these funds.
However simply because the coverage is complicated, we can’t surrender. In spite of everything this coverage resolution impacts 1/sixth of humanity and remains to be our greatest wager. So push we must always. And push we did.
Flashback : 12 months 2000.
Y2K and the start of demand aspect financing
Whereas the Tech world was falling aside due to the Y2K bug, the Insurance coverage Regulatory and Improvement Authority of India (IRDAI) was quietly included in 2000 as a response to a coverage suggestion from the Malhotra Committee report (1999). The important thing goals, as acknowledged on the IRDAI web site, have been to advertise competitors, improve shopper selection and decrease premium.
I believe we are able to all agree that it did a good job in guaranteeing that the panorama seems vibrant 20 years later. What do you say ?
Though seeding the business was its core job, business observers largely agree that the conception of IRDAI was primarily to spice up the demand aspect financing in healthcare. The evaluation right here was that supply-side financing like constructing main care facilities, secondary care facilities and so forth was not working so nicely. So the federal government needed to nudge the demand aspect. Which mainly meant that as a substitute of constructing all these hospitals and facilities, you place cash straight into the palms of the beneficiary and allow them to select the place would they need to search care from. They’ve the independence of selection. The independence of selection is highly effective as a result of it places stress on all gamers within the markets and because of this the general high quality of service will increase and cash spent by the federal government is used extra effectively. There are analysis papers explaining how demand aspect financing appears to work nicely in low-and-middle-income international locations (LMICs). As you might have guessed by now, Pradhan Mantri Jan Arogya Yojana (PM-JAY) occurs to be the most important demand-side financing initiative in India.
However what concerning the insurance coverage business general ? How are we doing ?
In accordance with IRDAI report, the general insurance coverage penetration (the ratio of premium underwritten in a 12 months compared to the GDP of that 12 months) within the nation as of 2019-2020 is 3.76% (Life – 2.82%, Non-life – 0.94%), the worldwide quantity right here is 7.4%. Ignorance and extra paperwork are counted as main causes for low penetration. The identical IRDAI report additionally notes that brokers (particular person/company) nonetheless dominate the insurance coverage gross sales (over 90%). The protection is about 37% all schemes put collectively. This consists of the poorest 100 million households (or roughly 500 million Indians) that the federal government funds the healthcare of. Then there’s a section that may afford to buy their very own medical insurance(very similar to those studying this text).
Okay, so the federal government takes care of the poorest and people wealthy sufficient to afford the premiums purchase their very own medical insurance. However what about these caught within the center ?
NITI Aayog, India’s coverage assume tank, lately shone a large highlight on what they’re calling as India’s ‘lacking center’. It is a large section, 400 million large, which is neither as poor to qualify for PM-JAY, nor wealthy sufficient to afford the costly healthcare. However they can pay nominal insurance coverage premiums. For this to occur, the bigger insurance coverage business must take part and work exhausting to deliver reasonably priced insurance coverage merchandise to the market. And all energy to PM-JAY however we have to amp up the efforts. As of ninth Feb 2022, solely 173.5 million (17.35 crore) playing cards have been issued whereas the eligibility is 500 million (50 crore). It is a traditional instance of how ‘in case you construct it, they are going to come’ doesn’t at all times work.
In case you construct it, you higher first inform everybody about it (in a language they perceive) and could also be then they are going to come. Proper, so it’s essential inform India first. However will it change how India thinks about medical insurance ?
COVID-19 appears to have modified how India thinks about medical insurance
In case you drive or experience round India, you recognize nicely that if the site visitors police stops you at any level, you higher be prepared to provide 4 paperwork – license, registration, Air pollution Beneath Management (PUC) certificates and automobile insurance coverage. Mainly it’s largely due to regulation (or the concern of it) that India buys motor insurance coverage. Medical health insurance is a distinct downside altogether. Nobody is stopping me to test my medical insurance. There isn’t any legislation mandating something like that. And though you certain can rely in your stars to maintain you out of hassle, you can not escape high-costs within the occasion you have been to get hospitalized for some motive. Major care doesn’t hit you as exhausting as secondary and tertiary care does. It actually modifications your monetary actuality.
Considered one of my family lately skilled a medical emergency which wanted extended high-cost medical care and sadly this individual was uninsured. My prolonged household needed to pool in some huge cash to get this individual out of the woods. It might have been a lot less complicated and cheaper to simply purchase a medical insurance, however that isn’t high of our thoughts, at-least not after we are wholesome proper ? This anecdotal proof can also be reflective of how India largely thinks of medical insurance. The ‘hum to abhi jawaan hai, hame kya ho sakta hai’ fallacy hits you exhausting. It’s common to not take into consideration medical insurance till emergency knocks at your door. When it does, it’s already too late.
However there’s a silver lining. Covid has modified this thought course of for good. A variety of our household and mates suffered from Covid and a small proportion of the lot wanted hospitalization. In uncommon instances, there have been additionally some fatalities as a consequence of extreme sickness. This has modified issues. I now see an elevated consciousness about time period insurance coverage and medical insurance.
These are all good indicators. However Insurance coverage business has a number of inherent issues. Antagonistic choice and most popular choice are these large elephants within the room. Antagonistic choice is the place the ‘prospect’ (later insured) doesn’t disclose details about underlying well being circumstances which makes them extra dangerous and costly to the insurer. The insurer usually solves this downside by asking the prospect undergo a sequence of lab checks which might be related for danger evaluation. This results in one other downside known as ‘most popular choice’ the place you find yourself choosing solely wholesome patrons and that truly defeats the entire concept of getting an insurance coverage.
NITI Aayog report means that a great way to work round this downside is to truly improve the pool. There’s statistical proof that in case you improve the pool, the usual deviation on proportion of claims really transfer nearer to zero. In layman phrases, this reduces deviation from what the insurance coverage corporations ‘predicted’ the variety of claims could be Vs what number of coverage holders really claimed.
Supply: NITI Aayog report
In Math we belief. It is a nice place to be proper ? What’s stopping us then ?
Consciousness to start with. Whereas coverage can play its position, know-how can assist pluck a few low hanging fruits to speed up this alteration.
Can know-how assist make that dent within the Well being Insurance coverage Universe ?
They are saying ‘To a person with hammer, every part seems like a nail’. Expertise will not be that hammer and I certain do not endure from any such delusion that know-how can clear up all issues, particularly in healthcare. However we stay in a world the place know-how is evolving as you learn this sentence. So it does have leverage in addressing a number of the ache factors.
Bear in mind Mahendra ? He was not even privy to PM-JAY or e-SHRAM or another such program when he was absolutely eligible for all of them. And this isn’t anecdotal, there’s knowledge from Nationwide Family survey revealed on PM-JAY web site indicating this as a explanation for concern.
So this clearly occurs to be the primary order of enterprise. Improve consciousness. Promote (Digital/ Radio/ Paper), leverage your native healthcare chief framework already in place (like ASHA, Anganwadi and so forth) to amplify consciousness. However hey your ‘lacking center’ section ain’t dwelling rural and is neither within the cities, this has been the most important downside. That is in-fact the first downside why distribution prices are so excessive. So as a substitute of looking for them, attempt to discover one thing that’s with them you could promote on. Did I hear you say Telephones ? YES – they carry telephones! The programmatic promoting know-how is so subtle now you could just about goal your viewers wherever they’re with wonderful specificity. So here’s what is high of my thoughts on how tech can assist improve consciousness.
- Ringtones – All through the pandemic timeframe at any time when I known as anybody, as a rule I heard some message or the opposite about how vaccines work and why one ought to get vaccinated. It labored like magic. Tech can assist extrapolate this mannequin for creating consciousness about medical insurance !
- Nationwide icons on nationwide channels in nationwide languages – No not MTV, not SONY, particularly not SONY LIV assume Doordarshan (DD) and assume non-English and assume Amitabh Bachchan . I don’t learn about you guys however anytime I hear the person say something in his baritone voice, I immediately need to imagine it. DD could be very underrated. The attain it has and the belief it instructions is unparalleled. Put Amitabh Bachchan on DD and half your job is finished.
- Deliver within the large weapons in AdTech – Your smartphone/pill/laptop computer junta is everywhere in the web and so are the advertisers and publishers. The federal government/ personal entities can have interaction with high expertise from AdTech to make sure that this channel is used successfully. It is vitally highly effective if you recognize what you might be doing.
- Piggyback on to current workflows – Assume PayTm, assume IRCTC, assume UPI, assume Uber, assume Tata Sky (oh sorry Tata Play), assume Adhaar workflows and so many others that India already makes use of and is comfy with – use them to create consciousness
Automate/ semi-automate underwriting workflow
Underwriting is a largely handbook workflow in the meanwhile since underwriting relies on understanding the ‘paper information’ coming in from the labs into the insurers underwriting division – so to automate this, both the incoming information have to be digital in nature (lengthy pull) or the insurance coverage corporations want to make use of a mix of Pure Language Processing/ Synthetic Intelligence / Machine Studying to devour paper information and ‘help’ a human make the choice quicker. One factor that will not be very obvious proper now, however will quickly be, is the sheer worth that Ayushman Bharat Digital Mission (ABDM) goes so as to add to the information technology panorama of the nation. If you wish to perceive extra about ABDM, I’ve written an in depth article right here. One factor is definite, the digital knowledge panorama with different rising applied sciences can actually carry the burden off this workflow and make it extra environment friendly.
Automate/ semi-automate claims processing
NITI Aayog report on the ‘lacking center’ additionally states that standalone well being insurers have operational expense as excessive as 25% of the premiums collected. A variety of it goes into processing claims. Invert this and it turns into the bottom hanging fruit, we are able to make premiums 25% cheaper by taking this large chunk of expense away. Like proper now. Similar report states ‘higher use of analytics, standardized codecs for simpler knowledge flows, and different digital device to drive effectivity, and reaching economies of scale via increased volumes can cut back operational prices.’ Now earlier than the skeptics say – certain allow us to throw all of the buzzwords like AI, ML, NLP and see what sticks (sure, somebody non-technical really mentioned this to me as soon as) – let me categorically state that these will not be “buzzwords” – this tech really works.
Digital-first, (very) usable workflows
If we are able to make it simple to purchase insurance coverage digitally, ideally piggyback on different workflows, we might be able to transfer the needle on penetration. It’s the best lever to drag. You may have the India stack eco-system to piggy again on for verifying id, and most significantly it cuts the center males. The potential is big right here (~90% of insurance coverage sale remains to be agent pushed). Brokers take fee, tech stacks don’t. Along with that – we have to obsess over usability – Is the web site/ cellular app simple to navigate ? Can your entire cost course of be accomplished on-line? Can Aadhaar be used for KYC ? Can Chatbots be deployed successfully ? Can insurers incentivize self-service over every part else ?
Use alternate indicators of Well being to decrease entry barrier
A good friend of mine had his Time period Plan rejected by a well-liked insurance coverage firm as a result of he transparently offered particulars of one of many hospitalizations that occurred a decade in the past. Insurer mentioned ‘present detailed documentation of the hospitalization’, good friend mentioned ‘but it surely occurred a decade in the past’. Do you maintain onto your hospitalization information and receipts for over a decade ? Precisely. However the Insurer denied him coverage protection. Was there a chance of collect different ‘indicators of well being’ within the latest previous and assess the danger rating ? In fact there was however that didn’t occur. It is a individual in his late thirties, completely wholesome and will have added to the ‘pool’ and would have absolutely paid the premiums and really extremely seemingly not claimed for a foreseeable future, however is now not noted. Sure I hear what you might be considering, antagonistic choice is the issue that the insurer was making an attempt to keep away from. However this defeats the entire objective of insurance coverage within the first place, proper ? Once more, this can be a market failure and therefore wants some kind of regulation from the federal government to make sure antagonistic choice and most popular choice are averted.
Use the Web of (so many) issues to push the value down additional
India’s wristables market crossed over 3800 Cr in 2020 which signifies there’s a number of curiosity from the client aspect on this area, this mixed with different wearable know-how can be utilized to generate a number of good high quality knowledge that clients can voluntarily submit and get decrease premiums as incentive. That is very a lot potential right this moment. The tech is there, all it wants is a few corporations to attach the dots and go to market with merchandise that assist.
Customized pricing based mostly on ‘good alerts’
Does the prospect have a great credit standing? Have they got a great driving report ? Tax cost historical past/ Different such alerts that issue into the pricing. Is there some kind of a danger rating or a by-product based mostly off of some knowledge factors ? All these questions may probably issue into the underwriting workflow impacting the ultimate value of insurance coverage.
Don’t forget the characteristic telephones
It is vitally necessary to concentrate to this ecosystem since there are 400 Mn potential clients in the meanwhile and though logic dictates they might change over to smartphones someday within the close to future, it isn’t simple to foretell if that might occur within the subsequent 5 yrs/ 10 yrs/ 15 yrs. It might be secure to imagine that it’ll take someday for a vital mass to modify over from characteristic telephones to smartphones. Additionally the UPI based mostly eco-system may be designed in a means the place it’s API heavy and performance can simply cater to a Smartphone based mostly apps at any time when the switchover occurs.
Cater to Social Determinants of Well being
Social determinants of well being is a vital (however typically missed) space the place a number of the western world is closely focussed. Social determinants of well being as an idea is non-existent within the Indian insurance coverage area in the meanwhile from what I perceive. Tech is a giant a part of having the ability to assess these social determinants of well being. The report hyperlinked above means that ‘your general well being is set by particular person behaviour (40 %), genetics (30 %), social circumstance (15 %), environmental elements (5 %), and healthcare (10 %)’. As you possibly can inform, every part from geo-spatial knowledge to genetics is used throughout the social determinants of well being universe and know-how is on the centre of this universe.
So know-how can assist, however what would assist probably the most is that if we may make it cheaper to purchase the insurance coverage. That in my thoughts is actually the most important nudge. How a lot ever cliched it sounds, India is a value delicate nation. A latest article in The Indian Specific lined how Insurers are pushing precisely for this – for a discount in GST on medical insurance insurance policies. Medical health insurance has already surpassed motor insurance coverage throughout pandemic. However the GST of 18% is steep. The advice is to contemplate the bottom slab of 5%. That might undoubtedly be an enormous saving. Additionally improve tax deduction restrict below 80D to offer an extra nudge. However how precisely will we execute on that is means above my pay grade (and out of doors of the premise of this text).
Lastly, we can’t let good turn out to be the enemy of fine. We have to take an knowledgeable view of issues and begin someplace. Tech evolves and can make a bunch of those issues even less complicated and cheaper to resolve within the coming years. And though medical insurance remains to be an rising area relating to India, there are a number of begin ups like Qube Well being, loop well being, Clinikk, Navi and the likes who’ve already jumped in and are working exhausting to make a dent by doing every part from making Insurance coverage simple, reasonably priced and comprehensible to ‘constructing India’s first managed care mannequin’. Extra energy to them. However allow us to not neglect that we’re at base camp and trying to climb Mt. Everest right here. We’re 8000 ft away from conquering the summit with sub-zero temperatures and harmful terrain that lies forward of us.
Allow us to additionally not neglect that there are nonetheless many extra Mahendras on the market who’re one medical occasion away from being pushed into poverty. And it’ll take a concerted effort from people, societies, markets and the federal government to alter this. Even 1 individual pushed into poverty as a consequence of medical bills is 1 individual too many. However I’m an everlasting optimist and am eagerly ready to see what comes out of every part that’s in movement proper now between coverage and tech.
For starters, I’d like to see many extra such headlines.
This might very nicely have been Mahendra’s household ….