Health insurance has come to be the buzzword in India's policy discourse ever since the Union government announced the National Health Protection Scheme (NHPS).

The health scheme that aims to provide financial protection of up to Rs 5 lakh for secondary and tertiary care to a mammoth 100 million households has found resonance at the state level too.

It is well known that health insurance is a payment mechanism, which provides financial risk protection during hospitalisation, and the cost of hospitalisation is borne by the insurer. Health care can also be financed from tax revenue, where government provides health care free of cost as is the case in India.

Another method of health financing is that people incur expenses from their pocket to purchase health care services, known as out of pocket payments (OOP). Further, there are social health insurance models, as is the case in Germany, where the individuals or employees enter into a contract by law or legislation to have health insurance.

India has experience in implementing social health insurance programmes such as the Employers State Health Insurance (ESI) scheme and Central Government Health Scheme (CGHS).

The ESI is managed by the ESI Corporation, introduced mainly to provide social security to workers engaged in small businesses and enterprises. The corporation has clearly laid down guidelines for this scheme and currently, around 3.94 crore workers and their families are insured under this scheme.

Rashtriya Swasthya Bima Yojana

Apart from these two schemes, the Union government since 2008 has been implementing the Rashtriya Swasthya Bima Yojana (RSBY), which was initially introduced for workers in the unorganized sector, has now been extended to BPL households.

Since, in the case of publicly financed insurance schemes, the coverage is large and involves huge public resources, the management of these programmes assumes significance. Therefore, in the context of NHPS, the option of a Trust model vis-a-vis Third party Administration (TPA) is widely debated.

The public health system especially in the rural areas is plagued by the shortage of manpower, inadequate supply of drugs and diagnostics services. The doctor to population ratio in the country level is woefully low at 1:1,655 against the World Health Organization (WHO) norm of 1:1,000 and there are huge urban-rural divide.

The state of health infrastructure in many parts of the country is dismal, though, it shows marginal improvement especially after the introduction of the national health mission.

Public health facilities

Several of these causes along with long waiting hours in the public health facilities and quality-related concerns as suggested by a national level survey, have led to low utilisation of public health facility.

The larger point is how to build up the service delivery mechanism for creating access to the most helpless on the social ladder. Within the country, efforts vary across states, some southern states — Tamil Nadu and Karnataka have made noticeable progress with not so high public health investment, which are distinctly different from other states.

Finally, insurance will to some extent look after the persistent problems associated with health financing systems in India. The constraints related to other pillars of health care — workforce, governance, service delivery — if not adequately improved on a sustained basis, will always operate less than optimally.