58
Government-Sponsored Health Insurance in India
treatment package). There were similar claims for hernia combined with appendectomy to maximize revenues from the scheme. Monitoring data from Aarogyasri (AP) also suggests that certain procedures (e.g., appendectomy, hysterectomy, laminectomy/discectomy, and renal stone lithotripsy) were experiencing provider induced demand. The scheme introduced additional checks and guidelines to address this situation (such as the requirement to upload the video of a counseling session for every hysterectomy recommended for a patient). Officials from one GSHIS pointed to evidence of hospitals’ converting outpatient care to inpatient care to seek reimbursement. This substitution was also reported in hospitalization products covered by PHI which led private health insurers to incorporate exclusions such as “unwarranted hospitalization” or “hospitalization only for observation with no active treatment” which exist in PHI products. Finally, anecdotal evidence suggests that some schemes may also induce overinvestment in tertiary care and expensive technologies (e.g., CT scanners and cardiac catheterization units) at the expense of investments in ambulatory care, prevention, and coordinated networks. Health care in India is inexpensive when compared with costs in countries in the Organization for Economic Co-operation and Development (OECD). Nevertheless, care is probably not inexpensive in relation to the income of the vast majority of its citizenry, but if insurance drives a hospital-based system, costs will escalate beyond what the country can afford. To summarize, insurance coverage is resulting in higher utilization among beneficiaries. Adverse selection does not appear to be a major problem for the new wave of GSHISs because most are free (or at a negligible cost) and often automatically cover all eligible beneficiaries. However, moral hazard and early signs of unnecessary care and substitution of inpatient for outpatient services are worrisome, and will require tough control measures. Of equal concern is the emerging data of unequal utilization patterns that suggest that more effort should be devoted to facilitating access for beneficiaries residing in remote localities or far from empaneled facilities.
Expenditures and Costs Health insurance is assuming an increasingly important role in India’s health financing system. Some observers promote GSHISs as a future conduit for additional government spending33 while others question the