The New Idea

Mukti, along with Nimish Parekh, has designed a novel health insurance program that addresses the financial and health needs of India’s rural poor. In the process, she has created a rating system for hospitals and health care providers that will help them improve the services they provide.

Mukti’s organization, Healing Fields Foundation (HFF), provides administrative services for the delivery and financing of health care; networking opportunities for health care providers, insurers, and government agencies; health management services; and training for partner citizen organizations (COs) in preventive, promotive, and curative aspects of health care. HFF specializes in providing fast and accurate claims administration services. In addition, the organization negotiates bulk rates and provides direct settlement payments to health providers, which means patients pay no out-of-pocket fees up front, as such fees often prevent the poor from seeking treatment. Once patients are admitted, facilitators guide them first to an HFF panel of doctors for second opinions, and then through medical and post-treatment procedures. The model is flexible and cost-effective and gives patients and health care providers a considerable amount of choice. HFF’s product, designed with HDFC, Parivar Suraksha Bima (Family Insurance Scheme), is designed especially for the rural sector and is implemented in partnership with existing COs already familiar with the communities where they work.

The Problem

Over 90 percent of India’s population lacks access to health care financing. The problem is particularly acute for people who live in villages or are impoverished. Of the many problems facing India’s poor, illness is the most expensive, accounting for the largest costs and the greatest loss of income. It often forces people to sell assets, take on debt, and even become indentured laborers. According to the World Bank, about a quarter of Indians hospitalized fall below the poverty line as a direct result of their medical expenses. For the poor, losing even a day’s wages while in the hospital can be devastating. As a result, many people do not seek health care when they are sick.

Because health insurance is so rare in India and poverty so widespread, there is an enormous need for both health care access and financing. Government health services are designed to fill these roles. At least on paper, India has one of the best public health systems in the world, beginning with village level health centers. However, the system is antiquated, insufficient, and woefully underfunded: Only 3 percent of India’s annual budget is allocated to health care.

Government health services fail clients in two key ways: Lack of quality, and lack of accountability. Despite the extensiveness of the network, many villagers still live quite far from the closest government health facility. When patients do get treatment, it is often of poor quality. Equipment at many government hospitals does not work, so diagnostics are often done at paid centers. While medicines are supposed to be provided free of cost, a lack of adequate supplies forces poor patients to buy them at market rates, which they can ill afford. Corruption, too, is rampant. A study found that the average cost of visiting a public facility was Rs. 77 (US$1.50), not much cheaper than visiting a private facility (Rs. 84 or US$1.65). Since public facilities are supposed to be free, the only explanation is that doctors and nurses receive bribes. In addition, there is a serious absenteeism problem among hospital staff, a problem shared by other developing countries.

For years, the poor were considered uninsurable, both because they face so many risks and because they were believed to be unwilling or unable to pay for disasters in advance. But a recent report on micro health insurance shows that the poor are in fact willing to pay an average of Rs. 600 (US$12) per year, or a little over 1 percent of their income, to buy insurance for their families. While insurance can certainly help the poor become more resilient, it can succeed only if products are designed for them. Insurance products can be tailored by linking premiums to cash flow, to local costs, and to local mortality and morbidity rates, by finding appropriate and efficient delivery channels, and by implementing effective controls. To date, downsized middle-class insurance products have not proven particularly effective as a model for low-income insurance products. Low-income people are a different market than middle-class people and they need risk management products that work specifically for them.

Currently, there are around twenty-five micro health insurance schemes across India, mainly in rural areas. Most of these programs are run by microfinance institutions and insure between 5 and 10 million people. However, many microfinance institutions are overburdened, and lack the expertise to develop insurance programs that adequately address the needs of the poor. For example, one program in Karnataka covers only surgery, not routine medical care. Others require copayments, which can discourage participants from seeking medical care. The Insurance Regulatory Development Authority of India has only begun to map out a plan for bringing health insurance to rural India. If the government aims to lessen poor people’s debt burden and to reduce poverty, then it must go further—it must provide insurance that covers the common illnesses for which people take loans. A special committee within the Authority will study ways to create public-private partnerships for micro health insurance, including products specifically designed for rural areas, strategies that encourage large-scale enrollment of rural populations in health insurance programs, and elimination of the various obstacles to providing efficient care.

The Strategy

Healing Fields Health Insurance Scheme is a partnership between Mukti’s HFF and HDFC ERGO General Insurance Company. Since last year, the plan has covered approximately 25,000 people in Andhra Pradesh state. Mukti launched her health care financing delivery project after conducting two years of research to understand the health needs and health care use patterns of people living in rural areas. After completing the survey, HFF drew up disease profiles for different areas and came up with a list of forty-three common conditions. It then determined what local hospitals charged to treat those conditions. This helped Mukti develop a Diagnostic Related Group (DRG) Model: A payment system based on the diagnosis of the patient, which proved to be a useful method to control health care costs. The provider is paid a fixed amount for a diagnosis regardless of the actual expenses incurred or length of stay. For easy processing, HFF network hospitals follow the DRG model at the time of a patient’s admission.

Unlike other insurance plans, HFF covers treatment whether or not it requires hospitalization. This insures that people with diarrhea or a fracture can seek treatment without losing wages and saves both the hospital and the insurer money. The HFF plan also covers pregnancy and childbirth. It requires pregnant women to have four prenatal checkups, improving maternal and fetal health and minimizing risks for the insurer and the pregnant mother and child.

To prevent the need of the poor to take loans to meet health care expenditures and thereby increase their poverty, Mukti uses a cashless system, rather than the more common reimbursement model. Members pay Rs. 285 (US$5.60) a year for health insurance benefits of up to Rs. 20,000 (US$391) for a family of five and Rs. 35 (US$.79) for accident insurance up to Rs. 25,000 (US$490). In case of a hospitalization, patients have a copayment of up to 25 percent at the time of discharge. The stakeholders, insurer, CO partners, and the hospital work together to create a customized payment plan.

HFF has a three-fold mechanism for controlling false claims and unnecessary procedures. The first is an HFF-appointed facilitator who is trained in insurance procedures, dissemination of information on health, in both prevention and treatment of disease. Since most rural clients are illiterate and poor, a facilitator, stationed at each network hospital, helps patients secure admission to the hospital, obtain his/her medical history, and manage documentation and claims management. The facilitator also ensures the legitimacy of the insured members before extending the service by verifying identification and authorizing service. Equipped with a mobile phone, so that s/he can be contacted at any time, the facilitator also visits communities to provide health education and prevent policies from lapsing. The 25 percent copayment helps contain costs and discourages unnecessary care. Finally, the medical management team at Healing Fields provides second opinions, which provides a check against misdiagnoses and incorrect treatment. Mukti stresses preventative care to keep claims low. HFF has come up with a rating scale for private hospitals (since policy holders prefer private health care providers), based on criteria like hygiene, the qualifications of doctors and nurses, prices, and equipment, thus ensuring that providers meet certain minimum standards before they become part of her network. HFF also organizes workshops for participating hospitals, COs, and insurers to increase communication between these groups.

Mukti constantly improves on the products HFF offers. For example, she has introduced a wage compensation package that defrays the cost of hospitalization beyond three days. Those in remote tribal areas can buy insurance covering the cost of travel to health care facilities. There is also coverage for female children, aimed at covering educational needs, marriage, and accidents. Mukti plans to introduce policies designed to meet the needs of the physically challenged and mentally ill.

According to Mukti, in areas where HFF has penetrated considerably, people take out fewer microcredit loans for health care. The renewal rate of policies has also climbed to 72 percent. Throughout the area served by the program, HFF constantly monitors community health patterns—too many similar cases signal the beginning of epidemics—and passes the information on to health departments, government agencies, and hospitals.

The Person

Mukti grew up around medical professionals. Her father was an eye doctor and her mother a community health nurse. As a child Mukti accompanied them to eye camps in remote villages and remembers being showered with affection by the villagers.

In 1965, Mukti’s parents decided to move to Tamil Nadu because the political situation in the state of Andhra Pradesh, where they were living, was deteriorating. Her father set up a clinic in Ranipet, near Vellore, a small town best known for its medical hospital, and her mother joined the Christian Medical College (CMC) as a community health nurse.

Mukti studied occupational therapy at the CMC. During her student years, she spent a lot of time in villages sharing medical information with the underprivileged. During her internship period, she was stationed at a short-staffed mental health department, where she promoted a community rehabilitation approach. Mukti felt that reaching out to patients’ families, employers, and co-workers was essential. She began holding training programs on mental health issues for businesses in and around Vellore, and introduced internship programs for recovered patients.

Mukti continued these efforts in Bangalore, where she worked for the Spastics Society of India, one of India’s leading disability organizations. She encouraged companies to hire patients as trainees and created a customized support program to help them settle into their work environment. The Spastics Society soon institutionalized her program by creating a formal job development center. In 1991, Mukti organized a Spastics Society retreat for forty adult professionals and twenty-five children, all with varying degrees of disability. At first, her colleagues were apprehensive, but after the initial period of awkwardness, it was clear that both groups would return enriched by the experience. To this day, the Spastics Society continues to hold annual retreats.

In 1997, Mukti completed her master’s degree in health management and began to crystallize her vision for improving health care and health insurance for the poor. She started working in the sector in 1999.

Mukti lives in Hyderabad with her husband and two children.