TOPIC: General studies 2
- Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes; mechanisms, laws, institutions and Bodies constituted for the protection and betterment of these vulnerable sections.
- Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.
- Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Can Private Insurance ensure Equitable, Efficient, and Quality Health Care?
Concerns with Indian Healthcare System:
- High Out of Pocket Expenditures (OOP) – More than 75 per cent on average of all health expenditure is OOP
- Impoverished – Among those who get hospitalized, nearly 25% are pushed below poverty line by catastrophic impact of OOP healthcare expenditure
- Poor Investments and Public Expenditure
– Less than 2 per cent on average, despite economic growth rates, averaging 8-10 per cent per annum
– Investment in public healthcare is even lower than some countries of Sub-Saharan Africa
- High Treatment Costs – Demographic (ageing of population), epidemiological (rising spectrum of cost-intensive non-communicable diseases), and social (increased awareness and expectations of consumers of healthcare for technologically advanced care) transitions in health has spiraled the healthcare treatment costs multifold
- Major weaknesses in healthcare organization, financing, and provision of health services
All these concerns make it imperative for the need for risk pooling or Health Insurance.
What are the Problems with Health Insurance?
(Note: Before going to problems, it is important to understand the basics first)
- Insurance is fundamentally a form of risk-pooling. Each person pays a premium and when a negative health event occurs the company pays out money to cover the costs.
- It must be emphasised here – Premiums are set according to risk. Actuaries* will study health care costs and health care risks and will set the price. The higher the risk, the higher the cost.
(* Actuaries – a person who compiles and analyses statistics and uses them to calculate insurance risks and premiums)
Therefore, from above basics we can conclude that – “Greater enrolment of “bad risk,” i.e., those with higher probability of falling ill, leads to adverse selection and makes insurance unsustainable in private market”.
Hence, Insurance companies either raise premiums or indulge in “cream skimming.”
Unstable Risk Covering
Case I: Raising premiums leads to “death spiral”
- Raising premiums drives healthy people out of market whose marginal benefit of insurance underscores marginal cost.
- This leads to a situation, wherein most of the insured population is relatively unhealthy, which ultimately results in higher claim ratio, thereby raising cost to insurance company.
- Such a situation leads to a spiral whereby insurance companies raise premiums which drives out healthy population out of market and relatively sicker people insuring themselves, which further drives up premiums in following year. Ultimate outcome of this process is failure of insurance which is referred to as “death spiral.”
Case II: Cream skimming lead to inequality and Ex-ante moral hazard
- Cream skimming is a practice whereby the insurance companies selectively insure those who are healthy, i.e., lesser risk of falling ill and seeking treatment.
- Cream selection by insurer again contravenes the principle of equity as generally poor and elderly are ones at higher risk of disease and are excluded by insurer.
- There is also a probability of many parties changing their behavioral pattern when insured against a loss. (Ex-ante moral hazard)
- Even the healthy people who benefit will not continue to benefit, since insurance rates would spike after a diagnosis of diseases (arriving due to this moral hazard), or just go up with age.
Long turnaround time (TAT)
- The TAT for the payment of an insured patient’s treatment in an affiliated hospital is 20 days for cashless treatment. Mostinsurance companies fail to meet the deadline, due to the logistics involved in handling numerous hospitals and claims. Some hospitals become disgruntled with the delay and do not offer cashless treatment facilities.
Unethical practices of Hospitals
- If patient has a health cover, there is a 90 per cent chance that an empanelled hospital will charge him/her more. Higher tariffs for insured patients lead to a higher payout for the insurance companies which, in turn, lead to higher premiums. The increase is more than the rise in the cost of medical care.
- Another issue is the misuse of group insurance by hospitals and patients. Uninsured people are treated because the identity cards of many group insurance schemes do not have photographs.
- Also includes other issues due to nexus between Insurance companies and Hospitals
Unethical practices of Insurance salesmen
- To ward off pressure from their superiors and get incentives, salesmen mis-sell products. Sometimes, a wrong product is sold for a higher commission. As company Websites and brochures do not reveal all the terms of the plans, clients fall prey to the salesperson and do not buy the right policy.
Though private insurance markets offer what looks like a way out (from the Healthcare concerns), the above problems with insurance reflect that Insurance companies achieve stability by making healthcare less accessible to the people who need it most.
- It can be concluded that private, competitive insurance companies add instability, bureaucracy, inequality and regulatory trickery without contributing any value to the healthcare system.
- Even though there are many claims from insurance companies that these problems can be taken away through offering different packages of treatments, integrate care, etc.. The evidence that insurance companies improve health or healthcare just isn’t there.
- Evidence from developing countries such as Chile and Uruguay indicates inequity of actuarial Private Health Insurance (PHI).
- Evidence from India also points at inequitable impact. High administrative cost of PHI undermines its efficiency as against Social Health Insurance (SHI) schemes i.e., Employees State Insurance Scheme (ESIS) and Central Government Health Scheme (CGHS).
The way ahead:
- We can concede that universalizing the health insurance (especially through Private Insurance) is not the sole answer to India’s health system problems.
- It entails major revamping of governance and management capacity, infrastructure, management information system, and regulatory frameworks. Special efforts are needed to upgrade the MIS system, which will be critical to success of monitoring of insurance claims, setting premiums, and establishing risk pools. Unregulated private sector market with lack of quality accreditation requires attention.
- SHI schemes and PHI should be merged and should play a complimentary role in “Ensuring Equity, Efficiency, and Quality Health Care”
Connecting the dots
- Can private insurance ensure Equitable, Efficient and Quality Health Care in India? Critically examine.
- What are the problems with Health Insurance? Discuss how these problems can be solved to achieve qualitative and inclusive social security for all.
TOPIC: General studies 2
- Bilateral, regional, global groupings and agreement involving India and affecting its interest
- Effect of policies and politics of developed and developing countries on India’s interests, Indian Diaspora
Did India really get connected?
Neighborhood First: Improving connectivity— (Transportation & Energy)
- Support to neighbors: In the form of resources, equipment, and training
- Greater connectivity and integration: To improve the free flow of goods, people, energy, capital, and information
- Promotion of a model of India-led regionalism: Ensuring comfort and security in the neighbor’s mind
India and Pakistan should move forward with
- Most Favored Nation trade agreement—
- Non-tariff barrier imposed by Pakistan has been badly affecting bilateral trade—Pakistan does not allow movement of all importable items from India through Wagah (allows only 138 items)—thousands of Indian tariff lines is thus, routed through Karachi, raising costs, which also affects consumers in Pakistan
- The fact that Pakistan has not extended MFN status to India even after lapse of close to twenty years since India unilaterally did so, is not in keeping with WTO norms
Most-favored-nation (MFN): Treating other people equally
- Without discrimination
- Barriers to be no more post negotiations
- No arbitrary rising of trade barriers
- Unfair practices discouraged
- More beneficial for less developed countries
- Iran-Pakistan-India (IPI) gas pipeline from Iran—
- Building up of a $4.5 billion undersea gas pipeline from Iran to Indian west coast to carry 31.5 million standard cubic metres gas per day
- India has not taken part in the talks since 2007, citing security and commercial concerns
- 3. Revitalize and upgrade the railway connections between Delhi and Lahore, and Karachi and Mumbai (People-to-people contact)
- Road Connectivity:
- Resurrection of the ancient Grand Trunk (GT) Road from Kabul to Kolkata: to enable Indian commercial leadership across this high-growth region
- Pakistan should reconsider the side-lined Motor Vehicles Agreement (MVA)—signed by India along with Nepal, Bhutan and Bangladesh but backed out by Pakistan stating that it needed more time to consider the implications of this project
- Objective: For the regulation of passenger, personnel and cargo vehicular traffic among the four South Asian neighbours— pave the way for a seamless movement of people and goods across their borders for the benefit and integration of the region, thereby galvanizing economic development in South Asia (could increase inter-regional trade within South Asia by 60% and with the rest of the world by over 30%)
- Work on the Turkmenistan-Afghanistan-Pakistan-India Natural Gas Pipeline (TAPI) Project—
- Issues like political instability in Afghanistan, agreement over pipeline transit fees, consortium, huge cost in building the pipeline and the lack of a foreign commercial partner for the project have stalled the progress
- If implemented: lead to de-escalation of conflict between India and Pakistan
China in Pakistan—
China’s connectivity with Central and West Asia has already been strengthened by the Chinese-led Asian Infrastructure and Investment Bank—China-Pakistan Economic Corridor reaching Karachi and the port of Gwadar
- The Karakoram Highway (which links Islamabad to Xinjiang) will be extended southwards to the Gwadar Port in Balochistan
- Central Asian oil can be transported to Gwadar to be shipped for export
- Provide Pakistan access to resource rich countries of Central Asia
South-East Asia & India:
Despite the long border India shares with Myanmar, trade relations and airline connections are minimal— the main thrust areas in the connectivity between India & South-East Asia
- Governments should accelerate efforts to construct a gas pipeline stretching from Sittwe on the Bay of Bengal through India’s North-eastern states of Mizoram and Tripura and across central Bangladesh to Kolkata
- The BCIM (Bangladesh, China, India, and Myanmar) trade corridor along the old Stilwell Road should also be upgraded more rapidly in order to facilitate trade connectivity between India, Bangladesh, Myanmar and China, uplifting the neglected populations along the route.
- Completion of the India-Myanmar-Thailand Trilateral Highway and its further extension;
- Creation of soft infrastructure for utilising the Trilateral Highway and improving the surface connectivity through mechanisms to allow seamless movement of goods and traffic, in particular through an ASEAN India Transit Transport Agreement to be negotiated under an ASEAN-India Joint Working Group on Soft Infrastructure;
- A multimodal link-up with maritime ports in the region by working out necessary arrangements under the aegis of a Working Group on Maritime Connectivity;
- Leveraging geographic connectivity into corridors for economic cooperation to bring economic viability to the geographic corridors and make the connectivity more sustainable;
- Strengthening the backend linkages into India, particularly in the North East and along the eastern seaboard
Connectivity with China:
India and China are poised to play a significant, constructive role in 21st century and thus, further strengthening of bilateral economic ties with China is essential, and resolving challenges through ‘political acumen’ and ‘civilizational wisdom’ should take a front seat for both the countries
A nuanced understanding between India and China on the following issues is extremely important—
- Execution of CPEC-related projects: As the carrying out of construction activities in the PoK (based on the 1963 Boundary Agreement between China and Pakistan) has still not been acknowledged by India.
- The Indian viewpoint on POK must be reviewed as it closely linked to India’s sovereignty
- Beijing must undertake a careful reading of this Agreement in the current context of its CPEC project implementation
- China’s interest in the Indian Ocean is based on ‘freedom of navigation’; it cannot employ the dialogue of freedom of navigation selectively— China concedes the fact that the area is not entirely under the ‘sovereign’ control of Pakistan
- Enhanced political communication—
- To have an open and publicly clarified position (also, on the ‘One Belt, One Road’ Initiative)
- To address the issues that lead to hesitation and doubts, even distrust, in our relationship
- Remaining sensitive to mutual concerns— not causing new disruptions
- Taking care of the issues ranging from border to trade progressively
- Increase in youth-to-youth contacts (People-centric partnership)— festivals, sports meet, cinema, cultural exchanges and travel
- Collaboration of civil societies from both sides sharing a common approach for global issues
- Focus on nurturing global prosperity and diversity— India offering support to China for its ‘silk road’ diplomacy and the Chinese-led Asian Investment Infrastructure Bank (AIIB).
- Participation in various initiatives— In India’s Make in India
India’s Communication Aspect—
Huawei’s most recent 2016 Global Connectivity Index: India ranks 44th
With effective communication being cardinal to good governance as well as with both India and China representing the two largest online populations in the world, connectivity with the rest of the world cannot be taken for granted and the mechanism to stay connected should be worked upon diligently.
There exists a direct correlation between broadband connectivity and GDP growth where broadband would result in bringing best in class of healthcare, education and banking reaching rural masses which would help in elevating poverty and improving standard of livings in the rural India. Therefore, it is imperative that focused and persistent attention is given to each of its pillars so that the big program does not end up in as a failure.
- The Digital India initiative seeks to lay emphasis on e-governance and transform India into a digitally empowered society.
- India needs National Security Architecture to assess the nature of cyber threats and respond to them effectively
- India is riddled with a high digital access gap but also has a bigger digital capability gap
Connecting the Dots:
- As the world-powers are ready to get involved in the intense tug-of-war over global financial flows and industrial supply chains, which side do you think will India be—the fighters or the ‘oppressed’? Discuss
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