Is Narayana Health Insurance Model a Gamechanger for India’s Healthcare System?
Healthcare solutions in India have received a substantial facelift through one product that holds great promise for India’s medical insurance challenges. Owned by Devi Shetty, Narayana Health Insurance heralds a new era with its innovative combination of health insurance and healthcare. This article explores whether the Narayana Health Insurance model could be a gamechanger for India’s healthcare system.
Bridging the Gap: Health Insurance Meets Healthcare
Narayana Health Insurance offers an integrated healthcare scheme designed to dismantle the misaligned incentives that often mar traditional health insurance models. The chief goal of this model appears to be proactive diagnosis and treatment. Various elements within the traditional health insurance model often incite conflicts, predominantly at the expense of the consumer or patient. These conflicts arise due to a dichotomous incentive structure where healthcare providers seek to maximize billing, whereas insurers strive to minimize payments.
The Pitfalls of Traditional Health Insurance
The conventional health insurance model has its own set of challenges. One glaring problem is that healthcare costs tend to surge when the patient has insurance. This is usually due to an accumulation of investigations, consultations, procedures, and treatment protocols. The insurer can only enforce some cost control if they operate a strong co-pay model. This model forces the patient to make judicious choices by rejecting some of the suggested tests or procedures. Yet, general lack of medical knowledge can leave patients uncertain about which parts of the care they should accept or decline. Ultimately, the insurer has to foot the bill.
Additionally, insurers try to curtail costs by standardizing treatment protocols. This approach can negatively affect patients who are receiving the best quality care while the insurer bears the costs.
Moreover, traditional health insurance lacks any focus on prevention. Hospitals are often more focused on generating income from curative treatment rather than preventative care. Although health insurers frequently try to encourage insured individuals to undergo preventive check-ups, these initiatives are often unsuccessful in the Indian context.
Revolutionizing Health Care: Managed Care Model
The managed care model proposed by Narayana Health Insurance turns this situation on its head. In this model, the healthcare provider also becomes the insurer. This elimination of the separate identities of provider and payer removes the incentive to inflate costs or the need to reject costs based on suspicions of inflated costs.
Managed care providers are motivated to screen their insured community thoroughly. Early disease detection and prompt treatment can help avoid expensive treatment later when the disease has advanced. Many cancers today are treatable if detected early. Delayed detection can lead to aggressive and often ineffective high-cost treatments.
Managed Care in India: Trial and Potential
In a managed care system, the health of a given population is entrusted to a care provider. This provider is paid upfront to maintain the health of this population and cover treatment costs when necessary.
A similar model has had a preliminary trial in Rajasthan, India. Low-cost healthcare provider Glocal was entrusted with the health of a defined population, with the state government paying the premium in advance. Unfortunately, a government change meant the model was abandoned before the system could stabilize, and the benefits and potential expansion could be properly analyzed.
Managing Risks in the Managed Healthcare Model
There are certain risks embedded in the managed healthcare model. The provider could conceivably withhold appropriate treatment to save costs. However, regulatory measures, competition from other providers, and the potential of significant reputational damage effectively control this risk.
The next risk is the selective sale of insurance only to young and healthy individuals. Regulatory mechanisms should deter this. Narayana has commendably pledged to sell insurance even to individuals with pre-existing conditions. To ensure that new entrants follow a similar policy, regulations should cover willing populations involving all age and income demographics in the care provider’s vicinity.
The third risk presents the possibility of the care/insurance provider underestimating the premium, potentially rendering the operation unviable. Employing top-notch actuarial expertise to price the insurance appropriately acts as a solution here.
The insurance regulator has greenlit Narayana to go ahead under its regulatory sandbox scheme, an initiative designed to test innovative methods. This will entail doing away with the constraint barring the tying of insurance to a specific care provider, which makes sense in traditional health insurance but contradicts the managed care model.
So, could the Narayana Health Insurance model be that gamechanger in India’s healthcare system? As more managed healthcare schemes like this take off, they might fundamentally transform India’s health insurance landscape, result in reduced care costs, and foster better overall health outcomes.
