Pauly, Blavin and Meghan (2009), narrates the feasibility of low –cost family income based insurance plans for the developing countries.  The author in the very first line explains the critical effect of the developing countries which is spending out of pocket for health care (Pauly, Blavin & Meghan, 2009).  I would most likely pick India for the discussion as it is one of the developing countries and I belong from there.

Pauly et al (2009), states that there are potential benefits for making insurance available in such developing countries due to risk-averse consumers and the inability of the government to finance such insurance. I agree to this point made by the author, however, I would like to add one more point to the above mention statement. The reason the government is unable to provide insurance to the developing countries like India is due to over-population. Countries like India and China faces the crisis of healthcare and basic needs due to over-population, increase in the cost of living and low per annual income.

If low-cost family based insurance plan are provided in countries like India the chances are rare for its success. This is due to large-equipped government hospitals. Furthermore, if the low-income families have to pay a negligible amount from their annual income for health care, they would still prefer not to pay that because of free-direct hospital care given to them through the government hospitals. The government hospitals from the place where I come from are undoubtedly large (more than 2000 bedded) and have ongoing residents and doctors practicing in the hospitals. This kind of hospitals treats the low-income or middle-income based families for free or for negligible cost. Recently the maid in our house back in India got a complete cardiac surgery with 100% success and that also completely free at one of the government hospital. So the concept of providing health care insurance to low-income based families might succeed to an extent if government hospitals stops providing free of cost treatments which is unlikely to happen in the near future.

Most of the patients at the government hospitals are treated by final year residents who are then supervised by rotating doctors and surgeons. So that does not make sense to pay for something when it is available for free.  I wouldn’t say here that developing countries are the one providing free of cost health care because healthcare is also free in countries like United Kingdom (NHS). My husband told me that National Health Services provides  cardiac/major surgeries free of cost.

The other aspect that I consider for the failure of low-income family based plan is lack of negligence of the private hospitals. A private hospital that charges thousands and millions of rupees for the surgery always gets high paying customers. Even if the low-income families are given insurance at a lower-rate they still won’t be treated at the five-star hospitals due to high cost which the insurance might not be able to cover.  

India classifies its population based on lower-class, middle-class, upper-middle class, business class and high class. So the lower-class people have extremely low life-styles and this is enormously different from the people of high class or upper middle class.  The other thing that I have recently noticed in India is the increase in the cost of living. The cost of living have recently skied the limits and it is very difficult for the people of middle class and sometimes one income upper middle class to survive. In this case people will first give the preference to get their basic needs and then think about the insurance as it is not mandatory.

Do you think insurance is necessary in countries where government hospitals provide free health care?

Thanks,

Sweta

Reference:

Pauly, M.V., Blavin, F.E., & Meghan, S., (2009). How Private, Voluntary Health Insurance Can Work in Developing Countries. Health Affairs; 28(6): 1779-1787.