Health Protection Scheme (HPS)

• The Health Protection Scheme (HPS) was announced in the Union Budget 2016 .
• With this, the government has announced its plans to roll out a health protection scheme, which will offer a cover of up to INR 1 lakh per family to cover medical treatment costs. For senior citizens (either gender, of age 60 years and above) eligible for this cover benefits, the government will offer an additional top-up package up to INR 30,000.
• One of the key challenges to obtaining proper health care and treatment is obtaining quality medicines at affordable prices. To counter this concern, the government will also be opening up 3,000 medicine stores across the country (in 2016-17). Generic drugs will be made available in these stores under Prime Minister’s Jan Aushadhi Yojana.
• The specifics of this health protection scheme are yet to be announced but it is likely that it will replace the existing Rashtriya Swasthya Bima Yojana (RSBY) scheme which works on a center-state partnership model and provides a cover of INR 30,000 for a family of 5 members.

Analysis:

• HPS is finalized after considering possible distortions in medical insurance schemes and looking at models that have worked.
• There are two main reasons why competitive market do not form for health insurance.
• The first is the problem of “adverse selection”, or individuals who have better information about their personal health status, leading to the healthier persons opting out of insurance and the less healthy opting in. This will not arise in a group insurance scheme where all those who are eligible are mandatorily enrolled.
• The second is the problem of “moral hazard”, i.e. doctors have better information about a patient’s treatment needs than the patient, and also have a financial interest in providing excessive treatment.
• This policy can be executed in more better way by knowing in depth about the best health policy in world, National health policy of UK.

About NHS(National Health Service)

• U.K.’s National Health Service in 2015, was rated among the best health-care systems in the world in terms of ease of access, efficiency, and cost-to-patient. Main reasons behind this was:
• First, in this model, all persons, irrespective of their health or economic status, are enrolled in the NHS.
• Second, health service providers, who have the competence to provide the entire range of primary, secondary, and tertiary health care in medical conditions covered by the NHS, and are willing to provide their services in terms of the NHS financial package, are accredited.
• Third, the NHS notifies standard treatment protocols for the full range of health conditions covered by the programme, and works out the normative costs of each protocol.
• Fourth, it works out the statistical incidence of each covered health condition in each region , and combining the statistical incidence and normative costs for treatment of each condition, arrives at a per-capita health premium for each region, payable as subsidy by the state.
• Fifth, the NHS card holder is entitled to care and treatment for the full range of conditions covered. The NHS incentivises health-care providers to observe and provide a high quality of care at all times, as the beneficiary will happily migrate to another accredited provider (by enrolling in a fresh registry) in the event of dissatisfaction.
• Finally, accredited health-care providers must comply with treatment protocols and guidelines emanating from the National Institute for Health and Care Excellence (NICE).
• So, this system guards against “moral hazard” since the health-care provider’s revenue is determined only with reference to the standard treatment protocol and the statistical incidence, and not actual manifestation in each family of covered health conditions. Excess tests/treatment are not paid by the NHS. The incentive to provide preventive health measures helps ensure that the burden of morbidity in a given region falls over time, leading to reduced aggregate costs of treatment.
• The NHS model can fit different models of financing, i.e. fully public, part public, and fully private, and also for scaling co-payments (if part privately funded) as per the economic status of the beneficiary. The range of conditions covered, as well as standard treatment protocols and normative costs, can be changed over time.

By: Vishal