‘Free’ Health Insurance for school-goers? Channelling public funds for private profit...

On August 22, 2017, the Cabinet approved a proposal submitted by the Minister of Education to introduce an insurance scheme for all school-goers between the ages of 5 and 19 years. The proposed insurance scheme, from last November’s budget proposals, is expected to cover 4.5 million students from all schools, including government, private (non-aided and aided), pirivena, and international schools, at an annual cost of Rs.2,700 million to the government.  

The insurance scheme would be implemented through the Sri Lanka Insurance Corporation (SLIC), subject to an annual premium of Rs. 2,348 million. Benefits will include a maximum of Rs. 100,000 for hospitalization; a maximum of Rs.10,000 for outpatient care, Rs.100,000 for the “sudden death of a pupil,” Rs.75,000 for the “sudden death of a parent,” Rs.100,000 for “total disability” and Rs.50,000 to 100,000 for “partial disability” (Official Government News Portal of Sri Lanka 2017). In addition, and according to a recent national newspaper report, children with critical illnesses would have coverage extended to Rs.100 million for a range of diseases and procedures.   

This means that the govt would pay premiums to SLIC to cover a population that is less likely to make claims on insurance. The health insurance industry is notorious for ‘cherry picking’ users for coverage, as reflected in the proposed insurance plan

The insurance scheme, which promises to eat up a substantial proportion of the education budget, is being embarked upon with little or no public consultation, and raises questions at multiple levels.  

Do we need a health insurance plan for schoolchildren?  

Most striking is that this insurance plan is aimed at the most healthy population across the life cycle. Apart from the minority of school-goers who may suffer from chronic and/or critical conditions, the rest will need little inpatient and outpatient care.This means that the government would pay premiums to SLIC to cover a population that is less likely to make claims on insurance. The health insurance industry is notorious for ‘cherry picking’ users for coverage, as reflected in the proposed 
insurance plan.  

Are there better ways to promote health among schoolchildren?  

Rather than wasting colossal amounts on an insurance scheme, the government could invest these funds in the School Health Programme (SHP) implemented by the Ministry of Health in collaboration with the Ministry of Education. The programme addresses primary prevention and seeks to promote health among school-goers. Most children, apart from a section of (privileged) children in international schools, are ‘covered’ by the programme. Among its objectives are: promoting a healthy and safe school environment to facilitate learning; protecting children from communicable and non-communicable diseases; screening children for early detection and correction of health problems; improving the nutritional status of schoolchildren; and enhancing community participation in the promotion of school health activities (Ministry of Health 2016).   

There is already an effective system in place to implement the programme, albeit under resource constraints. As a whole, the preventive sector receives a paltry allocation from the budget. According to data from the Institute for Health Policy (2015), the share of total health expenditure spent on the preventive health sector, which encompasses the School Health Programme, declined from 10% to 5% between 1990 and 2014. Although the allocation for the proposed insurance scheme is to be drawn from the education budget, it will channel scarce funds from the public sector to private healthcare companies.  

Rather than wasting colossal amounts on an insurance scheme, the govt could invest these funds in the School Health Programme (SHP) implemented by Health Ministry in collaboration with the Ministry of Education

Do we agree with principles of health insurance?  

Health insurance has its basis in separating the purchasing and providing functions of a health system (or the ‘purchaser-provider split’). Drawing on neo-classical economics, this separation is thought to make health systems more cost-efficient as healthcare providers compete for service provision, keeping quality high and costs low. However, information asymmetries and ‘market failures’ result in just the opposite - high cost services of questionable quality.  

The ‘purchaser-provider split’ converts healthcare into a commodity that could be bought and sold in the market. In this instance, the user (school-goer) will access a private provider whose services would be paid for by the government through the SLIC. The entrance of an insurance company to administer government-funds means that users will be made vulnerable to the vagaries of the health insurance market.  

Health insurance schemes almost always involve some level of spending on the part of users in the form of premiums (regular payments to be paid for an insurance contract), co-payments (a fixed amount to be paid for a covered service) or deductibles (part of the claim that is to be paid by the user). These payments are thought to prevent users from ‘abusing’ the service.   

Sri Lanka’s publicly-financed and-delivered ‘free’ health system is the antithesis of the health insurance model. The government is both the ‘purchaser’ and the ‘provider’ and there are no user-charges at points of delivery. One may argue that the public health system is far from ‘free.’ Indeed, users do pay out-of-pocket for private services owing to deficits in the public system, a direct consequence of the government’s failure to invest in the system.   

The proposed health insurance scheme may cover some of the deficit services in the private sector. However, unlike our ‘free’ health system, health insurance schemes dictate which services will be covered, to what extent, and for which populations. 

The entrance of a private insurance company to administer government-financed insurance means that users will be made vulnerable to the vagaries of the health insurance market 

As an example, if a child enters a public facility with dengue haemorrhagic fever and then requires intensive care, the parents may need to pay, at most, for tests in the private sector. However, under the health insurance model, when a child enters a private facility, the company will reimburse claims for specified benefits, which may not cover all aspects of care.   

Private health insurance companies are well-known for finding loopholes to reject claims from users. Moreover, as we see in the proposed insurance scheme, there are caps on claims. Further, we are not informed about the co-payments and deductibles that may apply. Even if the scheme extends the limit for critical illnesses, it may cover only specified conditions.  

Do the experiences of poor countries support introducing private health insurance?  

Health insurance has had some success in resource-poor settings where the purchasing function has remained in the hands of government (e.g. Thailand). However, outsourcing administration of the purchasing function to the health insurance industry, as the Sri Lankan government intends to do, will result in rising healthcare costs for the government.  

The Maldivian government introduced a health insurance scheme in 2008 to about a quarter of its population and followed this up in 2012 with a comprehensive government-financed health insurance scheme extended to the entire population in the form of a ‘public-private partnership.’ Per capita expenditure on health increased from an already high US$ 710 in 2012 to US$ 1996 in 2014 as compared with US$ 369 in Sri Lanka in 2014 (WHO 2013; WHO 2016). The World Bank, which supported health insurance expansion in the Maldives, now designates the Maldivian government’s healthcare financing strategy as fiscally unsustainable (World Bank 2014).   

Where governments have established multiple pooled-funds to cover different populations, for example, India, Nigeria, and numerous Latin American countries, inequitable access has been a major concern. State-subsidized insurances packages for economically disadvantaged users often lack comprehensiveness, leaving swathes of the population uncovered for some conditions. On the other hand, wealthier formal sector workers receive superior health insurance benefits while contributing substantially to their plans.The proposed insurance scheme for school-goers in Sri Lanka may look good on paper, but the government would not be as willing to cover premiums for other populations, which will certainly cost more.  

Why the push for health insurance?  

Health insurance has been a key element of the health sector reforms backed by the World Bank since the 1980s. At present, the World Bank, World Health Organization, and the United Nations support health insurance as a financing strategy under the‘Universal Health Coverage’ framework. Notably, the latter – now a mantra in global health – elides the question of public or private provision, and confers on governments the limited role of ensuring‘coverage.’   

In Sri Lanka, successive governments of all party hues have supported the introduction of insurance in recent times. The Mahinda Chinthanaya vision for the future anticipated all citizens to be “covered by at least one health insurance programme, sponsored by different stakeholders including private employers, government insurance schemes and commercial insurances” (Department of National Planning 2010:150-3). The National Health Development Plan 2013-2017, put together when President Sirisena was Minister of Health, contained plans to introduce government-financed health insurance by 2017.  

The promotion of health insurance has little to do with advancing access, whether at global or national level. In Sri Lanka, state-supported expansion of private healthcare continues with the health sector identified as a key area for foreign investment. Under pressures of debt-servicing and a balance of payment crisis, the government is keen to please the World Bank and IMF who would like to curb public expenditure. Indeed, the shift toward insurance in domestic policy has run in parallel with two World Bank-supported health sector development projects.  

Health insurance receives support from business elites who anticipate a killing if national health insurance is extended to the entire population. Evidently, SLIC embarked upon this venture as part of its “corporate social responsibility” efforts. However, we all know that CSR projects always go hand in hand with efforts to expand markets for private accumulation. As SLIC  Chairperson Hemaka Amarasuriya noted in an interview with a newspaper (August 25), the company is looking to expand this scheme, based on its success, to a nationwide health insurance scheme.  

As the health insurance industry gains a foothold, healthcare costs for the government would rise, diverting more funds from the resource-starved public system. As healthcare becomes increasingly commodified, the (manufactured) demand for health services would increase, expanding markets for the multinational healthcare/insurance industry

Dangers ahead  

Governments in Sri Lanka have thus far displayed reluctance to undertake outright privatization of the health sector as ‘free health’ holds wide public appeal. Instead they have (rhetorically) supported the ‘free health’ policy while adopting an insidious strategy of privatization by investing insufficiently in the public system and providing massive fiscal incentives for private healthcare expansion. Despite these efforts, the out-of-pocket spending associated with private healthcare has restricted private healthcare expansion to rural and remote areas. The introduction of health insurance would remove existing impediments by providing (limited) ‘financial risk protection’ to those who cannot afford to pay for private healthcare.  

As the private sector expands, companies will entice healthcare workers away from the public system, a trend that has already begun in Colombo. As the private health insurance industry gains a foothold, healthcare costs for the government would rise, diverting more funds from the resource-starved public system to the private healthcare/insurance industry. As healthcare becomes increasingly commodified, the (manufactured) demand for health services would increase, expanding markets for the multinational healthcare/insurance industry.  

It is clear who stands to gain and lose from this health insurance scheme. Its introduction and the government’s broader privatization agenda must be resisted to protect ‘free health’ and ensure comprehensive healthcare access for coming generations.  

(The writer is attached to the Department of Community and Family Medicine, Faculty of Medicine, University of Jaffna)