Introduction
The World Health Organization (“WHO”) defines health as a “state of complete physical, mental and social well-being and not merely the absence of disease or infirmity.”[1] The provision of universal health insurance coverage as part of the provision of affordable healthcare is included in the Sustainable Development Goals (“SDGs”)[2] (SDG Target 3.8). In fact, the ‘Right to Healthy Life’ is enshrined as a fundamental right under Article 21 of the Indian Constitution.[3] The right to a healthy life is not only a legal mandate but also a reflection of the state’s responsibility towards its citizens. Ensuring a healthy life involves providing accessible healthcare, safeguarding environmental quality, and protecting individuals from occupational hazards. There is a gamut of judicial pronouncements that affirms the right to health as a fundamental aspect of the right to life, necessitating comprehensive measures by the state to uphold this right.[4] Health remains the most important asset for every individual as good health is prerequisite for a well-functioning and efficient human being at the micro-level and a productive workforce and nation at large at the macro level. Hence, it is imperative to ensure preventive measures and access to affordable healthcare facilities to every individual. However, the state of the health care system in the country is dismal.
Need for the Development of Health Insurance Sector in India
While the Indian Constitution enlists health as a state subject or the provision of health care facilities as the domain of the state or sub-national governments (primarily hospitals, public health, sanitation etc.),[5] it is the Union government that is vested with the responsibility of structuring the overarching legislative and executive framework for policies related to healthcare in the country spanning areas like medical education and training and financing and designing national healthcare programmes in the country. The government spending on healthcare, on an average, accounts for only about 1.5% of GDP which is among the lowest in the world.[6] Most Indians do not have access to decent healthcare facilities at reasonable costs with most families grappling with high medical expenditure and reeling into debt and destitution with just an episode of medical exigency. Based on National Sample Survey Office (“NSSO”) surveys, a study by Brookings India revealed that about 7% of the Indian population falls into poverty due to rising medical and healthcare costs.[7] While the public healthcare infrastructure is underfunded, inadequate and overburdened often offering substandard quality of healthcare services, the lacunae created by the public institutions was sought to be filled by the private sector which was out of reach of the vast majority because of the exorbitantly high charges.[8] As per the NSSO’s latest survey, i.e., the 75th Round Social Consumption of Health 2017-18, about 55.3% of the population sought healthcare facilities from the private sector.[9] The average annual medical expenditure for a rural household was Rs. 16,676 and Rs. 26,475 for an urban household.[10] Only 45.7% of the rural population availed treatment from government hospitals while the corresponding figures for the urban population stood at 35.3%.[11] This has given rise to the rapid growth and proliferation of the health insurance sector in the country. In fact, the objective of the health policy in the country has now shifted priorities from a comprehensive strategy of investing in public health care system to a myopic approach of universalizing health insurance that usually benefits the profiteering private sector. The NSSO’s 75th round exposes the grim state of affairs of healthcare in the country as about 80% of India’s population lies outside the ambit of any health insurance coverage (government and private insurance service providers) with the figures for the rural and urban population at 85.9% and 80.9% respectively.[12] The figures still remain dismal at about 50% even after accounting for the Pradhan Mantri Jan Arogya Yojana (“PMJAY”) Scheme.[13]
Exploring the Dynamics of Health Insurance in India
Health insurance was envisioned as a redressal mechanism to shield households from health shocks and to prevent impoverishment arising from sudden and unforeseen medical emergencies or prolonged illness. In general, a health insurance is a binding contract between two parties: the insurer, the one who provides the insurance claim, and the insured, the policy holder, wherein the former entity promises to bear the medical expenses of the policy holder in the event of sickness or accident on the fulfillment of the terms and conditions outlined in the contract. There are primarily three types of health insurances in India.
- Social Health Insurance: These policies are generally offered by the Central or the State government and are mandatory in nature to employees in the organized sector. These usually involve periodic contributions from both the employer and employee as premiums and are used for the provision of healthcare facilities to the employees. For instance, Rashtriya Swasthya Bima Yojana[14] and Employee’s State Insurance Scheme,[15] the Central Government Health Scheme,[16]
- Private Health Insurance: The private players entered the insurance sector in 1999 through the enactment of the Insurance Regulatory and Development Authority Act (“IRDA”). These schemes are usually contributory and voluntary in nature. The number of private insurance firms has increased to 67 in 2022 with 24 life insurers, 26 general insurers and 5 are stand-alone health insurers.[17]
- Community Health Insurance: These schemes chiefly target the poor and vulnerable sections of the society to provide them with some form of health security. For example, PMJAY of 2018.[18]
Some noteworthy programmes aimed at strengthening the healthcare system in the country include National Rural Health Mission (2005),[19] Andhra Pradesh government’s Rajiv Aarogyashri Scheme (2007),[20] Rashtriya Suraksha Bima Yojana (2008), Pradhan Mantri Jan Arogya Yojana (2018) etc. However, most of these schemes fall short of the outcomes that they set out to achieve. For instance, the Ayushmann Bharat Scheme doesn’t cover outpatient treatment which pushes people into hospitalization and subsequently burdens them with escalating medical bills. The COVID-19 pandemic has starkly exposed the vulnerabilities of India’s healthcare sector. Overwhelmed by a surge in cases, hospitals faced acute shortages of beds, oxygen, and essential medical equipment and supplies. The crisis highlighted systemic issues such as inadequate infrastructure, insufficient healthcare personnel, and limited access to quality care, especially in rural areas. The pandemic underscored the urgent need for directing substantial resources to developing healthcare infrastructure, better management of future health emergencies, and instituting a robust health insurance system to ensure comprehensive coverage and easy accessibility to all citizens.
A Paradigm Shift in Insurance Regulation: The Latest Developments
The insurance industry, today, faces considerable challenges. This sector plays a critical role in bridging the gap between the public and private healthcare services and hence a vast and growing majority of the population is reliant on this sector for healthcare coverage. Prior to 2013, there was a lack of legislation specifically aimed at regulating the insurance sector, resulting in unstructured governance.[21] To address this gap, in 2022, IRDAI launched the Bima Bharosa Portal (An Integrated Grievance Management System (earlier known as IGMS), a central repository and grievance redress monitoring tool.[22] Policyholders should first register complaints with the insurance company’s Grievance Redress Channel. If they cannot access the insurance company directly, the Bima Bharosa Portal provides an alternative to register complaints.[23] This online platform provides policyholders with a streamlined process for registering and resolving grievances, ensuring better accountability and service quality within the insurance industry. In a major regulatory overhaul,[24] the IRDAI had introduced eight principle-based consolidated regulations during its 125th Authority meeting on March 19, 2024. This landmark decision follows a comprehensive review aimed at modernizing the insurance sector’s regulatory framework. The new regulations address critical areas such as policyholder protection, rural and social sector obligations, and the establishment of a digital insurance marketplace through the Bima Sugam platform to promote transparency and accessibility. They also streamline procedures for the registration, capital structure, and amalgamation of insurers, establish robust corporate governance standards, and consolidate regulations for insurance products, foreign reinsurance branches, and actuarial and investment functions. Additionally, the regulations enhance mechanisms for grievance redressal and risk management practices. This initiative replaces 34 previous regulations with 6 new ones and introduces 2 additional regulations, reflecting IRDAI’s commitment to fostering innovation, competition, and sustainable growth in the insurance industry while working towards the vision of “Insurance for All by 2047”.[25]
Conclusion and Way Forward
In sum, the health insurance sector cannot be treated either as a panacea or a substitute to a robust government funded public health infrastructure. Thus, the Government should scale up public expenditure in the health sector, strengthen the public healthcare infrastructure and ensure easy access and affordability to health care. The health insurance sector needs to be adequately regulated and there needs to be some standardization of products and pricing. These measures need to be complemented with the extension of coverage to senior citizens and for ailments like hypertension, diabetes, HIV, dental issues, etc., and the reduction of bureaucratic delays in the processing of claims. Evidence suggests that the health insurance sector functions well with a well-functioning public healthcare system alongside government funded social health insurance schemes. A healthy population is a prerequisite for the overall development and prosperity of a nation and for reaping the benefits of the demographic dividend. The government’s commitment to strengthening the healthcare sector must go beyond mere rhetoric and be reflected in substantial policy actions and increased government spending. By addressing the multifaceted needs of the healthcare system through enhanced public expenditure, robust infrastructure, regulated health insurance, and inclusive policies, India can move towards achieving universal health coverage and ensuring the right to a healthy life for all its citizens.
This article is a part of the DNLU-SLJ (Guest Post) series, for submissions click here.
[1] World Health Organisation, ‘Constitution of the World Health Organisation’ (22 July 1946) <https://www.who.int/about/governance/constitution>accessed 10th July 2024.
[2] World Health Organisation, ‘The Global Health Obsevatory SDG Target 3.8, <https://www.who.int/data/gho/data/themes/topics/indicator-groups/indicator-group-details/GHO/sdg-target-3.8-achieve-universal-health-coverage-(uhc)-including-financial-risk-protection#:~:text=Indicator%20Groups-,SDG%20Target%203.8%20%7C%20Achieve%20universal%20health%20coverage%2C%20including%20financial%20risk,medicines%20and%20vaccines%20for%20all> accessed 10 July 2024.
[3] The Constitution of India, Art. 21.
[4] See Consumer Education and Research Centre v Union of India [1995] AIR 1995 SC 922; Paschim Banga Khet Mazdoor Samity v State of West Bengal [1996] AIR 1996 SC 2426; State of Punjab & Others v Mohinder Singh Chawla [1997] AIR 1997 SC 1225; P.G. Institute of Medical Education & Research v Union of India [1997] AIR 1997 SC 3687.
[5] The Constitution of India, sch. VII, list 2, entry no.6.
[6] Ministry of Finance, Government of India, ‘Share of Government Health Expenditure in Total Health Expenditure Increases from 28.6 percent to in FY14 to 40.6 percent in FY19’ <https://pib.gov.in/PressReleasePage.aspx?PRID=1894902,> accessed on 10 July 2024.
[7] Kumar Anurag and Sarwal Rakesh, Health Insurance for India’s Missing Middle (NITI Aayog, 2021) ch 2, 5.
[8] ibid.
[9] National Statistical Office, Ministry of Statistics and Programme Implementation, Key Indicators of Social Consumption in India: Health (2017-18) ch 3, 14.
[10] ibid.
[11] ibid.
[12] ibid, ch 3, 17.
[13] ibid, ch 3, 9.
[14] India.gov.in, National Portal of India ‘Rashtriya Swasthya Bima Yojana’ (Press Bureau Information, 4 July, 2016) <https://www.india.gov.in/spotlight/rashtriya-swasthya-bima-yojana> accessed on 10 July 2024.
[15] India.gov.in, National Portal of India ‘Employees State Insurance Scheme’ (Press Bureau Information, 22 October, 2018) <https://www.india.gov.in/spotlight/employees-state-insurance-scheme#tab=tab-1> accessed on 10 July 2024.
[16] Ministry of Health and Family Welfare, ‘Central Government Health Scheme’ (National Informatics Centre, 2 July 2024) <https://cghs.gov.in/CghsGovIn/faces/ViewPage.xhtml> accessed on 10 July 2024.
[17] Statista, ‘India: Registered Insurers by Type and Sector 2023’ <https://www.statista.com/statistics/655419/number-of-registered-insurers-by-type-india/> accessed 10 July 2024.
[18] National Health Authority, ‘Pradhan Mantri Jan Arogya Yojana (PM-JAY)’ <https://nha.gov.in/PM-JAY> accessed 10 July 2024.
[19] National Health Mission, ‘About National Rural Health Mission’ <https://nhm.gov.in/index1.php?lang=1&level=1&sublinkid=969&lid=49> accessed 10 July 2024.
[20] J Yellaiah, ‘Health Insurance in India: Rajiv Aarogyasri Health Insurance Scheme in Andhra Pradesh’ (2013) 8(1) IOSR Journal Of Humanities And Social Science (IOSR-JHSS) 7 <www.iosrjournals.org> accessed 10 July 2024.
[21]IRDAI, ‘Regulatory Revamp: A Paradigm Shift’(IRDAI Press Release, 22 March 2024), <https://irdai.gov.in/documents/37343/366347/Press+Note+on+Regulatory+Revamp.pdf/9ad7286a-b0a7-ea19-d51c-4c942bad43e1?version=3.0&t=1711121865505> accessed 11 July 2024.
[22] Insurance Regulatory and Development Authority of India, ‘Bima Bharosa – Integrated Grievance Management System <https://policyholder.gov.in/integrated-grievance-management-system> accessed 11 July 2024.
[23] ibid.
[24] ibid.
[25] ibid.
Author
Dr. Amit Randev is Consultant (Legal) at Centre for WTO Studies, Indian Institute of Foreign Trade, New Delhi, Ministry of Commerce & Industry, Government of India.
Dr. Akanksha Pratik Sonker is Associate (Economics) at Centre for WTO Studies, Indian Institute of Foreign Trade, New Delhi, Ministry of Commerce & Industry, Government of India.
