Understanding public health insurance in India: A design perspective

It is broadly accepted that health policy is crucially affected by contextual conditions. Yet, little is known about how the context limits the effectiveness of public health insurance (PHI) programs and the extent to which these limitations could be overcome. The objective of the paper is to address these issues on the basis of the examination of 17 PHI schemes introduced by federal and state governments in India since independence. Faced with the challenge of simultaneously expanding insurance coverage while containing costs, governments have overwhelmingly favored the latter. At the same time, governments have lacked the capacity to monitor performance, which has led providers to compromise quality in return for low payment rates. While there have been modest improvements in recent years, reform efforts have been hindered by contextual conditions that constrain the use of measures to control profiteering by for-profit agencies. The paper argues that system-wide data on the quality of providers (system-level operational capacity) and the ability of public agencies to monitor quality and link it with payment (organizational-level operational capacity) critically determined the program effectiveness. We demonstrate the interaction between contextual variables, program design elements, and policy capacity linking to performance, arguing for a broader approach to understand PHI performance. We extend the present frameworks on PHI effectiveness that have narrowly focused on the design of health financing functions without factoring unfavorable context and limited policy capacity in developing countries. The paper contributes to improving PHI performance operating in unfavorable contextual conditions in India and elsewhere.