In India, a new combination of health insurance and healthcare has been launched with the managed healthcare or integrated healthcare scheme announced by Narayana Health Insurance. It aims to address the incentive imbalance in traditional health insurance models and focuses on proactive diagnosis and treatment.
In India, a new combination of health insurance and healthcare has been launched with the managed healthcare or integrated healthcare scheme announced by Narayana Health Insurance. It aims to address the incentive imbalance in traditional health insurance models and focuses on proactive diagnosis and treatment.
The traditional health care insurance model pits health care providers against the insurance companies that pay for health care, creating conflicts at the expense of consumers/patients. The incentive for providers is to maximize claims, and the incentive for insurance companies is to minimize payments.
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The traditional health care insurance model pits health care providers against the insurance companies that pay for health care, creating conflicts at the expense of consumers/patients. The incentive for providers is to maximize claims, and the incentive for insurance companies is to minimize payments.
Empirically established that when patients have insurance, medical costs increase as investigations, consultations, procedures, and treatment plans accumulate. Only with strong co-pay models can insurance companies choose to deny some recommended tests and procedures, giving patients some degree of cost control. However, patients do not have the knowledge to discernably choose or decline some of the care that their health care providers recommend. Insurance companies end up picking up the tab.
At the same time, insurance companies seek to minimize costs by standardizing treatment protocols, regardless of the type of facility where treatment is provided. This again prevents patients from receiving the highest quality care, while the cost is covered by insurance companies.
A third problem with regular health insurance systems is that there is no focus on prevention and hospitals are encouraged to make money on curative treatments. Health insurance companies may try to persuade their insureds to undergo preventive health check-ups, but they have little success in India.
The managed care model turns all of this on its head. In this case, your health care provider will provide insurance. Because care providers and payers are part of the same organization, both the incentive to try to inflate costs and the incentive to reject them on suspicion of cost inflating disappear.
Additionally, health care providers have every incentive to proactively test insured individuals to detect the onset of disease early, treat it early, and avoid costly treatment later if the disease progresses. I am. Many cancers are now treatable if detected early. If the cancer is detected late and becomes malignant, treatment can be expensive and often ineffective.
In managed care systems, the health of a specific population is handed over to care providers who are paid upfront for their work. These insurance premiums must be collected to maintain the health of patients and pay for treatment when unavoidable.
In India, such a model is being trialled in the state of Rajasthan, for example. In that case, Glocal, a low-cost health care provider, assumed health care for a select population whose premiums were paid in advance by the state government. Before the system was fully stable, its benefits researched, and the model expanded, governments changed and the model was abandoned.
There are three types of risks in the managed care model. One is that for health care providers, it means withholding appropriate treatment because it increases expenses. This is addressed through regulation, competition from other managed care providers, and the potential for devastating reputational damage.
The second risk is selectively selling insurance only to young and healthy people. Regulations need to prevent this. Narayana suggests selling insurance to people with pre-existing conditions. While this is welcome, to ensure that new entrants receive similar policies, we need to ensure that motivated populations, including all demographics of age and income in close proximity to care providers, Regulations must be established so that the whole is subject to policy.
A third risk is that care/insurance providers misunderstand premiums and set premiums too low. This may result in the operation not being possible. The solution is to employ the best actuarial expertise available to set insurance prices.
The insurance regulator has given Narayana the go-ahead under a regulatory sandbox regime aimed at testing innovative approaches. This would require removing the constraints that tie insurance to specific health care providers, which makes sense in traditional health insurance but is at odds with managed care models.
Let's hope for more managed care insurance plans to reduce the cost of care and promote better health outcomes.
