Family health and financial health: are they related?

Amartya Sen’s Capabilities Approach to poverty says, “Poverty is not just a lack of money, it is not having the capability to realize one’s full potential as a human being.”

By this definition then we can understand poverty as being caused by a lack of quality educational opportunities, poor quality and access to healthcare services, inequitable distribution of wealth, gender inequities, social inequities, etc. since these deter an individual’s growth and are impediments to the overall development of a country.


So, not just those in absolute poverty as defined by the poverty line but even those who are above but close to the poverty line can slip into poverty with just one catastrophic incident.

They are known as the vulnerable section of the population who are at a high risk being pushed into poverty due to catastrophic expenses arising from prolonged illness or hospitalization of a family member, natural calamity, fire accidents, etc.

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India like many developing countries does have a large section of the population that living in poverty or those in the vulnerable category; statistics suggest 34% of India’s population fall within these two categories.

If we look around us, we will find many such families who have been completely impoverished due to the prolonged illness or hospitalization of a family member, being forced to sell off their limited assets and taking hefty loans from local moneylenders to pay the hospital bills and other medical expenses.

At the end of it, the family has probably lost its assets and is pushed into a vicious debt trap.

The situation gets even more complicated if the primary breadwinner of the family is the one who is hospitalized. So, family health and financial health are very closely related especially for the poor and vulnerable sections of the population.

Why is it so? I believe the main reasons for this are a lack of savings or medical insurance that these people can fall back on coupled with lack of sufficient access to quality and affordable healthcare services especially, at the secondary and tertiary level.

People may still go to a primary healthcare provider if they have some health issues and get some medication. But they seldom go back for reviews or go to a secondary/ tertiary healthcare provider considering the big medical bills that may have to foot since they do not have any insurance coverage.

Even when they have some insurance coverage, they will still have to bear heavy out-of-pocket expenses on medication, etc. The other impediments in the way of getting healthcare services are the expenses they will incur in reaching say a district Government hospital or a super-speciality Government hospital that may be located in the nearest city or in the state capital and there will also be a loss of income for the days they spend taking their family member to such a hospital.

Most private hospitals are out-of-bounds for the poor and vulnerable sections since these are not affordable even if they are accessible.

This is where the latest Ayushman Bharat scheme comes in. I strongly believe that Ayushman Bharat is one of the most potent and powerful Government schemes in the healthcare sector so far in India.

This is because it focuses on family health and provides medical insurance to families belonging to the poor and vulnerable sections of India in secondary and tertiary care.

Like I mentioned earlier, there are several families that slip into further poverty or from vulnerability to poverty and a debt trap with the hospitalization of a family member.

It combines several of the existing central government schemes such as the National Rural Health Mission, National Health Insurance Scheme, etc. into one holistic scheme and addressing some of the problems with these schemes too.

For instance, the earlier insurance scheme had a cap on the number of family members who could avail the benefits of the insurance. Only the head of the family, the spouse and three dependents could avail the benefits, and this translated to women, girls and the elderly being left out. With the Ayushman Bharat scheme, there is no cap on the number of family members or age or gender.

The second reason I believe it is a potent scheme is that technology plays an important part in the implementation of the scheme. For starters, it gives poor and vulnerable families cashless and paperless access to quality healthcare.

They can choose to go to public or empanelled private healthcare providers and avail the treatment without paying any money and by bringing with them any of the prescribed IDs.

So, there is no hassle of paperwork or specific smart cards, etc. The list of beneficiaries is put down in the database based on the SECC data and predefined eligibility criteria. This ensures national portability for beneficiaries who can avail the free medical services anywhere in the country.

The hospitals are prohibited by the scheme to charge any additional fees and there are 24×7 helplines that can be reached for information, grievances and assistance.

To ensure efficiency and consistency of care, the scheme requires all partner hospitals to adopt standardized guidelines for treatment. This, in turn, will lead to an increase in evidence-based treatment, uniform billing and ensure there is no overcharging patients.

The scheme also looks to collect data from the implementation and use it to further strengthen the scheme. I believe Ayushman Bharat will lead to the development and strengthening of IT infrastructure in the healthcare sector. From experience, I can vouch that this strengthening of IT infrastructure in hospitals will translate into a reduction in costs and increased efficiency in operations.

There are similar medical insurance schemes that are being implemented successfully in a few states with variations in the insurance coverage, ailments, procedures and disease coverage, implementation method, number of beneficiaries covered, etc.

The CM’s Comprehensive Health Insurance Scheme of Tamil Nadu is one of the earliest such programmes which has consistently evolved over the years to increase the coverage from Rs.1 lakh to Rs.2 lakhs, including more procedures and treatments (including cochlear implants, surgical oncology, etc.) and attempting to extend the scheme to migrant workers and undocumented orphans.

What is interesting is that the state has focussed even before this scheme on providing health assurance and has been offering free treatment for several ailments and procedures at Government hospitals and this, in turn, has led to its success because the insurance has served as an added benefit.

The other interesting point is that the scheme here has a focus on district-wise coverage of hospitals to ensure that life-saving treatment is not only located in the state capital or a select few districts.

The major drawback noted with the scheme has been a lack of clarity and awareness among the beneficiaries and service providers.

Another drawback from the service provider’s point-of-view is that the lower rates for certain procedures which do not sufficiently include technician charges, Operation Theatre charges, etc.

The Arogyashree Scheme (VAS) of Karnataka is another success story when it comes to cashless treatment and health insurance schemes. It has a wide coverage of ailments and procedures used a state-run trust model to roll out the scheme.

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One of the noteworthy points about this scheme is that it did not have the pre-existing disease barrier and patients could not be rejected on these grounds.

Another interesting feature is that the service providers were incentivised under this scheme to reach out to and provide treatment to people with cardiac and oncological conditions.

The major drawback that studies have pointed out is that owing to the lower rates for some treatments and procedures, private players were skewed disproportionately towards procedures and diseases that were ‘lucrative’.

Despite their drawbacks, both these and few other state-level schemes have been successful in reducing the mortality and morbidity rates in their respective states.

Studies also show that the percentage of people seeking diagnostic services and treatments for life-threatening diseases has gone up considerably.

Based on the lessons from similar schemes, I believe one of the possible bottlenecks that we, service providers (hospitals), may face in the implementation of Ayushman Bharat will be the rates fixed for procedures.

The Indian Medical Association in June had responded to the draft tender of the scheme by expressing concerns about the package rates being too low and that in the course of implementation hospitals may start to compromise on the quality of care, which will only expose the patients to unnecessary risks and put them in danger.

Since all hospitals do not use the uniform kind and quality of technology, the package rates may not be justified.

The other bottleneck I think would be getting compensation from insurance companies or state-run trusts (the scheme offers states a choice to pick either model).

With insurance company model, it has been found that the rejection rates are high even though the claims are pre-approved since the companies tend to nit-pick problems after the treatment has been given and find grounds to reject legitimate claims.

With the state-run trust models, there could be administrative hold-ups and delays due to red tapes and inefficiencies. Experts, however, think that the trust model is relatively more efficient.

If these bottlenecks are addressed, I believe Ayushman Bharat will see a high success rate and more participation from private players too.

Effective implementation and proper awareness creation among the beneficiaries about the scheme are crucial for the success of the scheme. The beneficiaries and the healthcare partners must be fully aware and clear about the services included and the terms and conditions applicable.

The pilots and similar schemes in certain states have been successful and have helped many families meet their unmet needs of quality and accessible healthcare and in turn, keep their financial health intact.

Once Ayushman Bharat is rolled out in September, it will only be a matter of 2-3 years for the scheme to stabilize and maximize its benefits to the people. Once the scheme stabilizes, Ayushman Bharat will create a healthy and wealthy India!

Bizztor Editors

Bizztor Editors.


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