Data from the NSSO
on actual hospitalisation rates and average expenditure on each case of hospitalisation suggests that the government’s estimate of being able to cover these costs with an annual insurance premium of just Rs 1,000 to Rs 1,200 per family may be too optimistic. Calculations show that it might need about twice that amount or more.
According to the last NSSO survey on expenditure on health done in 2014, the average expenditure on hospitalisation for the poorest 40% of the population — the segment that the proposed National Health Protection Scheme is to cover — was about Rs 12,500. The NSSO data showed a hospitalisation rate of around 40 per thousand people, or 4% each year.
For every 1,000 persons covered, going by the hospitalisation rate of 4% (a rate that has been steadily rising as shown by surveys since 1995-96), about 40 persons will require hospitalisation each year.
At an average expenditure of around Rs 12,500 per hospitalisation, that would work out to a total expenditure of Rs 5 lakh. To meet this claim, the premium paid by the government per family would have to be at least Rs 2,500, since 1,000 people is roughly 200 families.
For 10 crore families, that would be a whopping Rs 25,000 crore. This is without taking into account the costs of running the system or profits for the insurers, if any.
The actual numbers might be higher. The 2014 NSSO report noted that the rate of hospitalisation has been going up, from 2% to over 4% in urban India and from 1.3% to 3.5% in rural India between 1995-96 and 2014. So the rate of hospitalisation could only have inched up further since the 2014 survey.
Similarly, the proportion of those using private hospitals has been steadily going up, especially in the urban areas. Over the same period, it rose from 57% to 68% in urban areas and from 56% to 58% in rural areas. By now, this share would have gone up even further.
This becomes relevant as the average medical expenditure per hospitalisation case in public hospitals was Rs 5,512 for rural and Rs 7,592 for urban. In private sector it was Rs 21,726 in rural and Rs 32,375 in urban areas.
The cost of hospitalisation in the private sector was about four times the cost in a public hospital.
Thus, the average cost per hospitalisation could be a lot more than Rs 12,500 estimated in 2014 and steadily rising as private hospitals push the government to increase the rates fixed for various procedures.
Even if the government is able and willing to bear the high costs, the absence of quality control or regulation of procedure charges in the private healthcare sector is a reason for worry.
This could be a recipe for disastrously high health expenditure for irrational or unnecessary medical care for the poorest in whose name the private sector could look to maximise profits.