Medical Insurance and the Welfare State

R Jayaraman

Author: R Jayaraman

Date: Tue, 2016-11-22 15:23

This is a topic that is currently bugging the middle classes in India. Unlike life insurance which has long term implications and hence not considered a suitable topic for discussion in everyday parlance, medical insurance has the potential for discussions and occupying time which otherwise may be passed in slumber.

The concept of medical insurance is a part of the welfare state concept. Like so many modern concepts, it is also a product of the western way of life, suiting their unique needs and mental satisfaction of the capitalists who rule the roost, as a salve to their collective conscience. It is the natural outcome of the dominance of the industrial way of life in western societies. Having blocked the government from interfering in industrial activities, the industry owners had to find some way of keeping governments occupied, so that future interferences are avoided.

The leader of the western society, the USA government, chose two fields of activities to maintain its relevance – creating a welfare state and politicking in the international arena where their acceptability is easy to obtain, given the wealth and dominance created by the industrialists. This way there is a legitimate role, acceptable to both the indigenous and outside world. The outside world really has no say in the matter, have you ever heard of a lessee permanently outing the landlord?

One field which western governments fully and continuously arrogate to their active role playing is medicine. The wellbeing of a subject is a matter close to the hearts and minds of the ruled and nary will raise a negative peep. People are often happy that Big Brother is caring for them and will foot the bill. Duh!

Footing the bill is where the nexus between the industry and government strengthens. The bill is prepared by the industry (pharma and chemical industry largely, in this case) and is paid by the government, without questions. With no oversight of the insurance process – simply because, NONE of the stakeholders has any interest in doing so, on the contrary, each of the stakeholders wants to maximise his benefits – it is a situation designed for complete disaster in the long run. Cultural and monetary. Milking the milch cow scenario. But, even Kamadhenu can get tired in kaliyuga.

When the going is good, why complain? But when the going gets tough, the government and industry get going leaving the hapless insured in limbo. The government, because it has no funds to continue the largesse and the industry because it has no interest in any activity that does not earn a daily profit.

Medical insurance is a total misconception. A better concept, which has been found acceptable and working successfully in the Indian medical field, is “borrowing from Peter to pay Paul.” In other words, institutions like the Aravind Hospitals have found an essentially socially acceptable, sustainable, equitable model which enables them to charge those who can afford to pay a little more, and use the excess funds to subsidise the cost for those who cannot afford. The good thing about this methodology is that it leaves huge scope for changes that happen in society. As the middle class keeps increasing the overcharging per customer can come down, while, simultaneously, those needing subsidies will also go down as the general economic conditions improve. What can be a better, market regulated, free market phenomenon? But then, we will always like to be led by western practices without a thought to the applicability, the ease of designing and implementing an alternative – and in this case, a better solution – in preference to blindly following.

Where does this leave the common citizen and the Indian government? The common citizen is often compelled to become a part of the insurance policy funded medical expenses framework while the government is compelled to find alternative ways to introduce insurance policies for the poor, like the Rs 11 premium per month. Such efforts will continue, for after all, who can forget the comment by Rahul Gandhi: this is a government of suits and boots ( suit-boot ki sarkar). I find that the Modi Sarkar has completely changed its vocabulary to sing praises of the poor man and farmer and denigrating the rich and wealthy. This is unfortunate and not helping anyone.

I think in the long run it may be better to let the market do the arbitraging, if at all. With increasing wealth, and a good supply of doctors, the cost of medicines should not increase sharply in India, as there is still a large percentage of the population which has not entered the medicine purchasing market. The government should intervene from time to time to set limits on the prices, which overall is a simpler, less bureaucratic and least expensive process for all concerned. It enables the country to get some medicines at low costs (hopefully these are the ones which are commonly demanded) and the others at higher costs, which is a burden which one needs to bear once or twice in a lifetime.


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I have a different viewpoint from the author. In India we follow a healthcare system where the public & private institutions coexists. The rich are serviced by the private healthcare(almost completely) & the poor takes refuge in the public institutions. But when we take stock of our ability to take care of our citizens, we find that we are grossly understaffed, unprepared for treating the entire country. We face an issue where we don’t have the adequate infrastructure in public institution to provide healthcare for the poor & the private hospitals are too costly to afford. The Indian government spends almost 2% of GDP(Indian GDP-2Trillion $) on healthcare while in advanced countries in ranges as high as 12%(in USA- GDP of 18Trillion $). Moreover we see gross inefficiencies in the implementation & administration of the government. We need to consider the private sector as a partner to bring in efficiency, effectiveness & comprehensiveness to our healthcare administration. As our economy develops, per capita earnings increases & technological support, I believe we can create systems to service our growing populations. The issue of overview & monitoring of the system can be undertaken effectively. The important aspect is that it addresses the major issue of providing universal basic healthcare. One of the state that scores highly in Human development index in Kerala. Kerala scores high on infant mortality rates, life expectancies, female fertility rates, sex ratio & geriatrics & averages fall within the range of some of the Western European countries. In Kerala we see a synergy between the public & private institutions. Basic & primary health centres & steady supply of health care professionals are provided by the government & high end & advanced healthcare is provided by the private sector. Here the price of services are reasonable & sustained at such levels by competition between private players & higher number of healthcare professionals. Such models are possible in our country.

“The wellbeing of a subject is a matter close to the hearts and minds of the ruled and nary will raise a negative peep”. Saying this, the author has well-articulated the essence of rationale behind the success of western-introduced model of medical insurance in our country. In the era of rampant capitalism, a country not only freely exchange goods and services with outside world but ideas and policies too. The pitfall of this is that many a times we adopt policies of outside world without fully understanding our own context. The result is instead of getting the desired outcome of helping the masses the policy benefits few at the cost to society. While in principle, I agree with the author’s proposed socially acceptable, sustainable, equitable model towards achieving the objective of medical insurance we should also look at whether we as a country are ready to adopt such model. Taking one more step towards socialism, where rich are paying for the poor, the scale of inequality is frightening. While the needing poor ridiculously outnumber rich, the rich are already overburdened by the share of income that government takes from them. In a sense, the bearers may not feel equal after all! Now let us look whether we have adequate infrastructure to support this model. We have yet not been able to pass the law which guarantees genic drugs at cheaper rates, availability of basic minimum medicines is a challenge, affordable hospitals are overburdened and quality of healthcare is still a distant dream. The problem is further deepened by the growing complexity of ailments that are advancing at pace faster than the evolution of the medicine. If the pharma companies have no incentive to research due to intervention on prices front by the government we can never reach to the preventive healthcare. To conclude, while welfare state is a noble notion may be our state is just not ready as of now.

Medical Insurance is certainly an issue which, despite being of the utmost importance, has remained neglected in India, either willingly or unwillingly. Certainly not to forget the success achieved by the Polio Eradication Drive, or T.B. eradication, or eradication of some other diseases, implemented by the Govt., from time to time. Still, I would like to say, with due respect to the concerned authorities, that, the level of efforts taken on improving the health conditions, or, the accessibility to the better medical facilities, to the common man in India, has been a lacklustre performance. As being done in the Western Countries, providing free medical facilities like, Insurance, medicines, treatment, etc., to the poor people in India is an arduous task, due to the quantum of the population in this category. Again, following the western practices without applying the required analysis, is not feasible for the Indian Economy. Political parties, in the past, or even today, have probably looked at it as a measure of deriving political advantage, with no real concern for the hardship of the needy people. Now, for argument sake, if we agree that these facilities should be provided free of cost to the needy poor people, considering the fact, that, there are examples of the BPL ration cards being issued to ineligible people, what is the guarantee that the benefits would percolate down to the real needy people? Also, not to overlook the typical human tendency of treating any facility extended as a “Birth-right”, as, in case of Reservation, which was supposed to be there for a limited period, but still has continued, again with the purpose of getting political advantage. It is agreed that, lot of charitable trusts & Hospitals have been playing commendable role by providing free medical facilities to the needy people. But, again with due respect, need to mention that, there is no monitoring by any statutory authority in this area. The current Govt. has definitely put in some efforts by introducing certain low-cost Insurance schemes, viz., PMSBY, PMJJBY, APY, etc., but, again, these schemes are in the Life Insurance or Retirement benefit space & not in the medical or health insurance field. I personally feel, in order, to secure more authenticity, the concerned authorities should publish the details of premium collected & facilities / claims granted to the people, under these schemes. Even in the field of Medical facilities, the Govt., has started the ‘Rashtriya Arogya Nidhi’ scheme for BPL people. Lot of efforts are being taken by the Govt. agencies like BPPI, to promote the Generic medicines, through the Doctors. This effort of the GOI, has been well acknowledged by even WHO. However, the real success of the generic medicines depend upon the Medical fraternity in India, and how the sector comes out of the so-called clutches of MNCs. This is more so, considering the fact, that, GOI has allowed 100% FDI in the Medicines, which probably is dominated by the MNCs. Further, the GOI has granted some relief to some of the critical medicines by levying lower rate of GST, thereby allowing the rates to reduce. In nutshell, I would like to acknowledge the message given by the above blog, but can not restrain myself from stating that, free medical facilities for Indian public is a distant dream, and, the success of any concessional facilities or other measures adopted by the GOI, would depend upon the contribution by the Govt., Medical field & largely on Indian Public.

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