The Need to Take Care of Old India

Who will bear the cost of healthcare for India‘s elderlies, including the most vulnerable? The first study on Publicly Funded Health Insurance (PFHI) – which is to be differentiated from direct provision of healthcare services through public healthcare hospitals – of the elderly, based on 2017-18 data (before the launch of PM-Jan Arogya Yojana (JAY) raises red flags.

In the context of ‘catastrophic health expenditure’ – health spending is considered catastrophic when it accounts for 25% or more of the total yearly consumption spend of a household – it reveals that PFHI was not effective in protecting the elderly financially. With limited income, out-of-pocket expenses can exacerbate financial insecurity, leading to non-adherence to medication and deterioration of healthcare access. The study blames poor regulation of private healthcare for the sorry state of affairs.

Financing and managing healthcare better, proper regulation of private healthcare services, and fixing the creaky public healthcare system should be the goals. In a traditional insurance scheme, where hospitals are paid for treating people, the incentives for care-providers and insurance companies are misaligned. Care-providers seek to exploit their take, pushing up expenditure on investigations and needless procedures while insurance seeks to lower its payout.

A better way to structure incentives would be to pay a care-provider a per capita fee to provide care to a defined population. Actuarial expertise can be used to estimate the cost it takes to keep a person healthy and treat her if she falls ill. This will minimise costs. Promoting homecare for the elderly, as is prevalent in Japan, is also a good idea and calls for augmenting healthcare manpower.


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