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A COMPARISON OF HEALTH INSURANCE SEGMENTINDIA VS. CHINA

Ravi Kant Sharma*

ABSTRACT
The paper is based on the secondary data which have been analysed and seeks to compare the health insurance aspects of both the economies India and Chin because of vast potential of health insurance in these economies while 45% worlds population living in this area. China and India have had a remarkable period of economic growth over the last quarter century, and as a result there have been a significant decline in mass poverty in these two large poor countries. But this impressive economic growth and decline of income poverty have not been adequately reflected in some general features in the lives of the poor, particularly in the crucial matter of health. There are some egregious failures of both market and government in the sphere of health services in all countries, but they have been particularly acute in China and India, for example, present public health system in China cannot provide effective primary health care services to the population and the consequence to faces a wide range of health challengesemerging and re-emerging infectious diseases and new non-infectious problems such as cardiovascular disease, diabetes, obesity, and cancer. Until recently, 90 percent of rural residents and 60 percent of urban residents in China did not have health insurance, the almost same situation have also exists in India. Apart from, Those who have been covered by some sort of health insurance are frequently confronted with high premiums and limited coverage in India and China despites these things china have little comparative advantage over India.

Key Words: Health Insurance, Population, Public Health System

* Asst. Professor, Raj Kumar Goel Engineering College, Ghaziabad (Affiliated to UPTU)

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IJRFM OBJECTIVES:

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1.To study growth of health insurance in both the emerging economies. 2. To study the factors affecting the service rendering in both the economies. METHODOLOGY: The information is in the form of numbers that can be quantified and summarized, (1) the mathematical process is the norm for analysing the numeric data and (2) the final result is expressed in statistical terminologies (Charles, 1995).In this regard, we have complied reliable ant trusted secondary data., and the information quantified in light of defined objectives.

INTRODUCTION--- HEALTH INSURANCE IN CHINA AND INDIA.

The spectacular economic growths in India and China at the turn of the millennium have left their medical care and health insurance systems struggling for better service for their public. These economies are characterized by a growing (but still relatively small) middle class and a large (but shrinking and mostly rural) near-subsistence population. The US spends 13.9% of its GDP on healthcare. Compare this with Korea at 5.9%, India at 5.2% and China at only 2.7%1.. Health insurance in China and India estimate that health insurance covers about 40 percent and 11 percent of the respective populations.2 In India, the amount of health insurance premiums collected has grown at an annual rate of 34 percent since 2004; in China, they have grown at an annual rate of 43 percent since 1999.3 Private health insurance have exhibited 77 percent growth in total premiums in India.4 The number of commercial health insurance companies and products have exhibited similarly remarkable growth in China.5

CHINA
According to WHO, Chinas Cooperative Medical Scheme (CMS) of the 1950s have been successful and achieved health insurance coverage for almost the entire urban and rural population in China and supported the funding and provision of primary health care by a network of village-based barefoot doctors and township physicians6. In the early 1980s, collapse of community financing institutions in rural areas that was obstacle for the dismantling of the CMS during market-oriented reforms, roughly 900 million rural citizens no longer had access to basic medical care.7 The Chinese Communist Party responded by returning to prepayment-based health care financing mechanisms through large-scale reforms in 1998 and 2002, which separately pool urban and rural segments of the population. The
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Govt. launched the Urban Employee Basic Medical Insurance (BMI), a social insurance scheme, in 1998. BMI covered approximately 160 million workers and retirees in 2006, and recent announcements by the govt. suggest expectations to extend coverage to all working and nonworking urban residents by the end of 2010.8 For rural segments of the population, the voluntary New Cooperative Medical Scheme (NCMS) covered approximately 406 million informal-sector workers and households as of September 2006 and is expected to cover most of the rural population by 2008.9 Employee coverage is jointly financed by central and local governments (40 yuan total per worker), and voluntary coverage is financed by households (10 yuan per person). Government and private health care providers under the NCMS and BMI are remunerated mostly through fee-for-service payments for most services.. Private health insurance had reintroduced during economic reforms of the early 1980s and is now regulated by the China Insurance Regulatory Commission (CIRC).10 In the past few years, at least eight commercial health insurers, led by Ping An and China Life, have introduced more than 700 health insurance products to the market, most as supplemental policies to BMI and the NCMS..11.Until recently, 90 percent of rural residents and 60 percent of urban residents in China did not have health insurance.12

INDIA
Coverage of health care in India have been limited to a small fraction of the population. State-sponsored social benefit schemes and large public-sector employers have been the responsibility for financing medical care benefits as a supplement to other social benefits. A mix of employer-funded financing schemesthe Central Government Health Scheme (CGHS); Employee State Insurance Scheme (ESIS); and schemes for govt. employees. Statesponsored insurance companiesthe General Insurance Corporation (GIC) and the Life Insurance Company (LIC) of Indiaalso offer voluntary health insurance through policies such as Mediclaim for individuals and Varishta Bima for senior citizens13.Community health insurance have proliferated in the past twenty years and is the most common form of health insurance in India. It have been somewhat effective in addressing financial burdens faced by workers in Indias informal sector. The Yeshasvini scheme in the state of Karnataka and the Arogyashri scheme in the state of Andhra Pradesh have enrolled more than a combined ten million rural poor Indians and offer coverage for both major and minor treatments. The Indian central government recently launched an extensive health insurance scheme to cover 300million people who are below the poverty level for a nominal premium of Rs 30

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(US$0.80) per person per year. The remaining premium of Rs 750 per year would be borne by the central and state governments14. The passage of the Insurance Regulatory and Develop-ent Authority (IRDA) Act in 1999 allowed entry of private entities into the insurance sector. At least twelve commercial health insurers, led by public-sector insurance companies, have launched health insurance products to the market. In the past five years, private-sector insurance companies have offered health insurance products. According to the Ministry of Health and Family Welfare, about 1.52.0 percent of the population has subscribed to private health insurance.15 This number is expected to grow at annual rates above 75 percent, although private health insurance accounts for a small portion of health spending today16.

COST OF SERVICE DELIVERIES

Health insurance. In developed and developing countries alike, the rising cost of health care poses major challenges to the sustainability of out-o fpocket spending. Because almost 80 percent of total health care spending in India and about 60 percent in China is financed out of pocket, emergency medical treatment or major hospitalization often means financial ruin for families, because the cost of such health care often far exceeds the average familys ability to pay or borrow .According to studies , families in India devoted 58 percent of their total annual household spending to health care when a family member was hospitalized, and, as a result, as many as 25 percent of families with a hospitalized member fell into bankruptcy after that hospitalization.17 The situation is similar in China, where studies have estimated that 44 percent of those now in poverty reportedly fell into poverty because of similar medical expenses.18 Health insurance can play an important role in addressing the societal burden of financial catastrophe that many face when obtaining health care in China and India. Neither China nor India has been able to achieve its stated or tacit goals of universal access and equity in health care.. Thus, additional mechanisms and sources of coverage such as private and community health insur- ance programs are called for.Policy experts and health care practitioners have noted the complementary roles that public and private insurers can play in facilitating affordable, broadened health care access in developing countries.19 According to the latest study of WHO,people who pay for their health care services suffer catastrophic cost. Moreover, between 20% and 40% of all health expenditure have gone wasted due to inefficiency (.WHO-2010)20. ----A study published in The Lancet in 2008

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revealed that out-of-pocket payments accounted for almost half of total medical costs in 2006.21

REGULATORY ENVIRONMENT
The China Insurance Regulatory Commission (CIRC) had established as the industry regulator in 1998. While (IRDA) had in 1999, supervises the Indian insurance industry. Both China and India have restrictions on foreign direct investment in life insurance companies. Currently, the Chinese regulator sets a limit of 50% and India puts 26% for joint venture insurance companies. The passage of the Insurance Regulatory and Development Authority (IRDA) Act in 1999 allowed entry of private entities into the insurance sector.

QUALITY OF CARE:
1 .CHINA Chinas health care system was developed in three tiers, i.e. village doctors and clinics, township health centres, and general hospitals in rural areas; and community health centres (stations), district hospitals, and tertiary hospitals in urban areas. health spending grew from 3 percent in 1978 to 4.67 percent in 2006 .Significant improvement has been achieved in health care quality, access to health resources, and number of qualified health workers *.The health system have gradually established a regulatory frame work to ensure a basic level of quality of service by village doctors. Most Chinese provinces have created a licensing system whereby doctors are required to take annual examination. Those who fail these examinations can lose their right to practices. Local health department carry out period campaigns to close down clinics run by unlicensed personnel. In many places, the the township hospital organize regular meetings of village doctors, and doctors from township facilities may visit to monitor their performance. Although these supervisory activities are included in the notational policy, the actual practises often limited by resource constraints.22

2. INDIA
In contrast, India after Independence never had any system of public health and sanitation on that scaleno systematic planning and delivery of public health services (as opposed to curative medical services) or sustained large-scale disease control. As Monica Das Gupta points out, India has The regulatory concern regarding the quality of care of front-line providers is conspicuously
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underrated in Indias health care system .Consequently, the inpatient care market experience unregulated growth in private providers. Which resulted in duplication of facilities in urban centre, variable quality of service in the effective licensing and accreditation , corrupt practices.23 This is even more problematic in the outpatient care market, where most providers are seen to have a poor knowledge base and tend to follow irrational .ineffective , and sometimes even harmful practices when treating minor ailment.24 The risk is further

aggravated when many people do not even know that many of these providers are not qualified as physicians.25 IRDA, have outlined an elaborated framework to regulate the operations of private insurance companies and third-party administration. The existing regulatory framework raises concern about the value for money spent on health insurance.

CONCLUSION
As Yip and Mahal point out, only about 15 percent of people in India have health insurance (primarily through their employers), and the share of out-of-pocket spending exceeds 70 percent of total health Spendinghigher than in China.26.Despite the different landscapes of health insurance in China and India, there is striking similarity in the coverage provided to current health insurance beneficiaries in each country. Both countries have been facing challenge from the chronic illnesses such as diabetes, heart disease, and hypertension and sustainable health care have the priority in their political agenda .For those have been covered by some form of health insurance, coverage is shallow and heterogeneous, and insurance plans payment terms have been similarly structured in China and India. State-sponsored or community health insurance plans (BMI and NCMS in China, CHGS and ESIS in India) provide coverage for inpatient primary care but limited secondary and tertiary care or outpatient care. Not surprisingly, inability to afford health insurance premiums is a primary barrier to insurance penetration in both countries. The lack of clarity to date in the governments insurance and health care regulatory policies have been a limiting effect on the growth of private health insurance in China and India. The governments in both countries are now beginning to take steps to clarify the pricing, coverage, and payment criteria of health insurance plans; encourage reductions in information asymmetries between beneficiaries and insurers and between providers and insurers; improve consumer protection; and strengthen administration of legislation complementary to health insurance such as provider accreditation and malpractice law. Insurance regulators have also begun to craft and enact regulations to

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account for the differences between health insurance products and property and casualty insurance products. Despite the progress that has been made to raise the level of health care access and financing, important gaps still remain. Both countries have yet to close gaps in access to secondary and tertiary inpatient and some outpatient care. Both countries must address gaps in product offerings across individual and group plans, where individual policies are predominantly critical illness plans and group policies are predominantly reimbursement plans. Gaps such as these are indicative of unmet requirements for a sustainable health insurance market structure. By the mid-1970s, China had rudimentary medical insurance (cooperative health services) covering the overwhelming majority of rural people, something that did not exist in India. But still India is way behind many fast developing countries such as China, Vietnam and Sri Lanka in health indicators (Satia et al 1999).

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REFERENCE
2. X. Ying, The Role of Private Health Insurance in Chinas Health Care Financing (Presentation at the Wharton Impact Conference, Philadelphia, Pennsylvania, March 2005); and G. Chaturvedi, Public Private Focus on Health Insurance (Presentation at the CII Health Insurance Summit, Mumbai, India, October 2007).

3. J. Chatagny, Global Trends in Healthcare Financing and Implications for India (Presentation at the CII Health Insurance Summit, Mumbai, India, October 2007).

4.. A. Singh, Health Insurance in India (Presentation at the FICCI Health Conference, New Delhi, India, January 2006).

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5.. Swiss Re, Reforming Chinese Healthcare through Public-Private Partnership (Zurich: Swiss Re, March 2007), 15.

6. D. Drechsler, Private Health Insurance in Low- and Middle-Income Countries (Paris: Organization for Economic and Cooperative Development, 2005), 23; and and K. Eggleston et al., From Plan to Market in the Health Sector? Chinas Experience (Unpublished paper, Tufts University, 2005), 9.

7. Yip and Hsiao, The Chinese Health System; and Z. Huanxin, Medicare System to Cover All Urbanites, China Daily, 16 August 2007.

8.. Huanxin, Medicare System to Cover All Urbanites; and Swiss Re, Reforming Chinese Healthcare.

5. D. Peters, Better Health Systems for Indias PoorFindings, Analysis, and Options(Washington:World Bank, 2002). 6. S. Gong et al., China: Health, Poverty, and Economic Development (Geneva:World Health Organization, December 2005).

7. See, for example, M.V. Pauly et al., Private Health Insurance in Developing Countries, Health Affairs 25, no. 2 (2006): 369379.

8. R. Gupta, A Healthier Future for India, McKinsey Quarterly (January 2008).

9.. A.Wagstaff, Extending Health Insurance to the Rural Population: An Impact Evaluation of Chinas New Cooperative Medical Scheme, World Bank Policy Research Working Paper no. 4150 (Washington:World Bank, March 2007).

10. A.Wang, Entry into China Health Insurance Market (Presentation at the Society of Actuaries meeting, Hollywood, Florida, June 2006).

11. Swiss Re, Reforming Chinese Healthcare, 27

12.Venessa Wong, Health and Wealth, Insight Magazine, April 3, 2007, p. 1.

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13. Oriental to Unveil Medical Insurance for Senior Citizens, Economic Times, October 2007.

14. Health Insurance Scheme for BPL Families, NIWire (New Delhi), 7 April 2008.

15. G. Chaturvedi, Public Private Focus on Health Insurance (Presentation at the CII Health Insurance Summit, Mumbai, India, October 2007

16. . Singh, Health Insurance in India.

17. D. Peters, Better Health Systems for Indias PoorFindings, Analysis, and Options (Washington:World Bank, 2002). 18. S. Gong et al., China: Health, Poverty, and Economic Development (Geneva:World Health Organization, December 2005).

19. R. Gupta, A Healthier Future for India, McKinsey Quarterly (January 2008).

20. The Times of India, dated-,

21. Shanlian Hu et al., Reform of How Health Care Is Paid for in China: Challenges and opportunities, The Lancet 372, issue 9652 (November 2008): 1849

22. Gerald Bloom,et al, Regulating Health Care Markets In China And India, [Health Affairs 27, no. 4 (2008): Ju l y/Au g u s t 2 0 0, 8952963;

23. . I.Radwan, IndiaPrivateHealth Services for the Poor:APolicy Note,Health,Nutrition, and Population Discussion Paper (Washington:World Bank, 2005).

24. 16. K.S. Rao,M.Nundy, and A.S. Dua, Delivery ofHealth Services in Private Sector, in Financing and Delivery of Health Care Services in India, NCMH Background Papers (New Delhi: National Commission of Macroeconomics and Health, 2005

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25. B. Kanjilal et al., Health, Equity, and Poverty: Exploring the Link inWest Bengal, India,Working Paper (Jaipur: Future Health Systems, 2007).

26. W. Yip and A. Mahal, Health Care Systems of China and India: Performance and Future Challenges,Health Affairs 27, no. 4 (2008): 921932.

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