Leveraging India’s Biometric Enabled National Identity System for Sustainable Micro Health Insurance in Sikkim, India

Pompy SridharJune 28, 2017

Agenda

The following will be discussed

–What is Aadhaar

–Rationale for the Micro Health Insurance scheme in Sikkim

–Challenges

–Product Features

–Progress so far

–Application of lessons in the Indian Context

What is Aadhaar?

• Unique Identification Number for every resident of India

• It captures biometrics and Iris

• De-duplicates any one input against the entire database of over 1 billion people in milliseconds.

• All residents of India are in the processes of being enrolled under Aadhaar

• Intended use

– Identification for the purpose of distribution of Government benefits like food and gas subsidies, insurance, financial inclusion etc.

– E- KYC( Know your customer)

– Other applications for Banking and Financial Institutions

What is unique about Aadhaar?

• Ability to authenticate that a person is in fact who he claims to be—all online, in seconds, using an inexpensive device of about $ 40.

• The team is building a number of layers on top of the Aadhaar system. These layers are all digital, open (as in others can work on the application programming interface, or API, to create services) and connected to each other. Think of it as a collection of digital goods. Its called the India Stack.

• It creates a digital infrastructure for presence-less (no need for physical authentication), paperless and cashless service delivery.

What is unique about Aadhaar?

• India Stack can potentially make financialservices more efficient, and bring down leakages.

• It can give a boost to the start-up ecosystem by providing an open digital infrastructure.

Five Elements of Aadhaar

1. e-KYC (know your customer)

2. Aadhaar Payments Bridge System, which essentially turns an Aadhaar number into the person’s financial address

3. eSign, a digital signature

4. Unified Payment Interface (UPI), which makes sending money as easy as sending an email or an SMS

5. A consent layer to share personal data (mark sheets, health records, financial transactions) with a bank, insurer, employer or university for a limited time for a specific purpose

Leveraging Aadhaar for Insurance

• Project explores the use of Aadhaar, and its inter-operable real time payment infrastructure to enhance efficiency and expand product and delivery options in the provision of financial services, in particular healthcare and insurance products

• Reliably verify customer identity, also support authentication of customer identity thus reducing business risk as well as build TRUST with the customer.

• Improve dramatically the viability of the supply side by offering sustainable business model at lower costs to the intermediary/providers of healthcare through captive volume .

The Terrain in Sikkim

• Hilly, Rainforest like, Pockets of dense population, Sparsely populated

The Challenge

9

Commercial viability of health insurance schemes is a challenge due to high distribution costs and entrenched frauds in provisioning of health services

Big Rocks…

Information Gap Growing Population

Illiterate Populace

Infrastructure

Foolproof IdentityFoolproof Identity

Reach & Accessibility

Illiterate Populace

Infrastructure

Poor Connectivity

Significant percentage is migratory

Lack of profiling of the population

Cultural Diversity

SKELETAL MEDICAL INFRASTRUCTURE

Only 1 Govt. Hospital / district

1 Private hospital in

the entire state

• Several Barriers to Access Healthcare ,FINANCIAL being the most critical

• Need for Health Micro Insurance?

Rationale for Introducing Health Insurance

• Scenario prior to introducing the health insurance scheme– Patients having to go through bureaucratic procedures to get financial

aid from Government or its schemes

– Most patients prefer to travel long distances out of the state to seek healthcare

– Vicious cycle of low demand and consequently poor supply of healthcare in the state

• Objective is to increase health seeking behavior in the state itself by removing the financial barrier and addressing supply side issues

• Key Feature:

– Contribution by people

– Increase Customer engagement

• Facilitate simple and easy transactions

Dilemma of Limited Resources, Unlimited Demands

• Government of Sikkim is supposed to provide free healthcare to all but this is far from reality

Market Economics – Demand Driven, Emphasizes the use of private sector mechanisms to pursue

public sector goals

Vs

Regulation- Has limited effect on delivery of Healthcare

12

•One the one hand, several factors prevent free market from performing

•On the Other hand, costs are fuelled by Insurance

•The trick is “Scale” and “Applicability of transaction cost economics”

•Efficient use of available resources is the key

•Insurance works as a demand side intervention as it creates the “PULL FACTOR”-

Concerns and Questions…

• Where are the people? Every body has some cover or the other

• The Government takes care of healthcare expenditure, has many schemes like the Chief Minister’s Fund, Sickness Fund

• The only private hospital also had concerns like

– Premium may not be recovered

– Paying patients may convert into subsidized

• The scheme may go bust in less than a year if over utilized

• People are not ready to pay in Sikkim

• List of people below poverty line not there

• Poor Internet and telephone connectivity

13

Rationale for Aadhaar Enabled HealthInsurance Pilot

• Joint effort by Manipal group which is also the healthcare provider in Sikkim and Reliance General Insurance Company.

Key objectives of the project are

• Jointly design/conceptualize proof of concept and cost effective models for Aadhaar enabled distribution and administration of health insurance.

• Identify and document costs, incentives, benefits of Aadhaar enablement for insurance administration.

• Identify the business case for scaling up and draft a blueprint for this.

• The

The Approach: Leveraging Aadhaar Platform

Claims

Technology

Enrolment

Break up of the Population of Sikkim:

Below Poverty Line (8-30%)

Government Employees

Private Insurance and Forces

Building & Construction Workers

Taxi Drivers

Contractual Workers

Fully

Su

bsi

dis

ed

Groups- Tea Plantations, Monasteries

Par

tial

ly S

ub

sid

ise

d/

No

n-S

ub

sid

ise

d

Top up Health Financing options will have to complement Government’s Effort

1.6 Lakhs

1.7 Lakhs

.5 Lakhs

3.5 Lakhs

Fully

Su

bsi

dis

ed

The Product

• Rs 1.5 lakhs ($2200) hospitalization cover per individual

or family covered under insurance

Hospital compensated at Package Rates

• OPD- Offered by Central Referral Hospital, Manipal– 5 free OP visits ( each visit =7 days)

– 2 Free specialist Visits

– 10% discount on Pharmacy

– 10%- 20%Discount on Lab and diagnostics

• Benefits of Outpatient add- on– Increase customer engagement

– At least 50 out of 100 people will get some benefit instead of 5 out of 100

– Encourage timely and appropriate health seeking behavior

– Improve sustainability of the Inpatient scheme

Distribution: Expanded geographically as operations streamlined and capacities built

• Phase I- East and South Sikkim

• Phase II- North and West Sikkim

• Capacity for outreach, capacity building and awareness

Distribution by

• NGOs

• Community Medicine

• Walk In

• Health camps

• Group mobilization

• Agents and Non teaching Staff

• Mom and Pop Stores

• Bank tie ups

• Door to Door

Encouraging Response, Cautious Start..

6/29/2017 19

Scheme Performance

Year I Year II Year IIIYear IV

(ongoing)

Gross Premium ( Rs. Mn) 25.50 59.70 82.00 100.00

No of lives enrolled 13,682 27,245 45,047 55,000

No of claims 1,610 3,207 5,376 6,500

incidence 11.80% 11.60% 11.8% 11%

Average patients per day 25 52 110 125

Total contribution of bed days 8,956 19,100 32,233 45,000

Insurance Claims (Rs. Mn) 23.00 51.0 79.23 Ongoing

Scheme P & L ( Rs. Mn) 5.70 8.50 11.0 Ongoing

District wise Enrollment Year on Year8

,15

8

2,2

92

1,7

93

1,4

39

0

13

,68

2

16

,68

9

4,5

55

3,7

20

2,2

00

81

27

,24

5

28

,60

3

7,6

57

8,1

64

3,3

62

54

9

48

,33

5

7,7

33

1,7

91

1,5

79

34

2

88

11

,53

3

E A S T S O U T H W E S T N O R T H O T H E R S T O T A L

YEAR I YEAR II YEAR III YEAR IV

Inpatient Claims Year on Year

0

4781

104123

165191

172131

150 157 161128

0

135

167

230

267

298291 299

289293

307330

254

0

302

340

472

492

588598

584

455456

360

407

0

200

400

600

800

1000

1200

Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

Year I Year II Year III

Phase I- East and South Sikkim

- since March 2014 -

Population: BPL Households

Reduce

Financial Barrier to access CRH,

East and South Sikkim, Non BPL,

Non Govt supported population

Services:

Hospitalization

covered

Direct costs:

Up to 1.5 lac Rs

per household

are covered

Population: Unorganised Sector *

Extend Coverage North

and West Sikkim as more

procedures start to be

conducted

* BPL households, MNREGA Workers, Construction Workers, Domestic Workers, Beedi Workers ...

Direct costs:

Up to 1.5 lac Rs

per household

are covered

Services:

Hospitalisation

covered

Phase II- North and West Sikkim

- since May 2014 -

Population: Unorganised Sector *

Extend Coverage to BPL

* BPL households, MNREGA Workers, Construction Workers, Domestic Workers, Beedi Workers ...

Direct costs:

Up to 1.5 lac Rs

per household

are covered

Services:

Hospitalisation

covered

Phase III-All districts, Other groups

- since Jan 2015 -

Services:

Hospitalisation

and

Superspecialist

care

Direct costs:

Above Rs 1.5

lacs covered per

household Cover super specialist

treatment above 1.5 lakhs

Population: Unorganised Sector *

* BPL households, MNREGA Workers, Construction Workers, Domestic Workers, Beedi Workers ...

Phase IV- Introducing Super Specialty Services- Since April 2015-

Road Map Ahead:

• Scheme to be supported with innovations in Aadhaar enabled applications for Over the Counter (OTC) sales at doorstep and servicing of claims

• Data to be mined for analytics on healthcare usage patterns in the state

• Aim to cover 80% of population under Insurance in 5 Years under an equitable , prepayment, contributory insurance scheme

• Complement whatever scheme Government comes up with in terms of access to drugs and referrals for higher care

• Expand Geographically to the un-served areas

• Expand to other groups- Phase out subsidies replace with partial prepayment plans- Cover Below Poverty Line families

• Expand to Above Poverty Line Families

Key facilitators

• Simplified cost effective processes

– Enrollment

– Claims Administration

– Audit

– Grievance Redressal

– Tracking Cash Flows and Utilization real time

• Incentives for all Stake Holders

– For the intermediary

– For the Insurance company

– For the hospitals and outreach clinics

Key Lessons and Takeaways

• Expanded Outreach: The ease in the enrolment processes is instrumental in product uptake

• Seamless administration of claims: Biometrics greatly help in

a) Identification of beneficiaries at the point of claim.

b) Real time intervention by the insurance company allows for instant authorization of claims upon admission to the hospital

• Implications for Business: Aadhaar drastically helped lower operating costs, makes the business sustainable

• Need for proportionate regulation

Implication for Health Insurance in India

• Government of India has recently decided to link its Financial inclusion initiative “Pradhan Mantri Jan Dhan Yojana, PMJDY) which is Aadhaar based with the revamped National Health Insurance Program to be launched shortly

• Administration of the new National health Insurance scheme will be linked to Aadhaar for distribution and authentication of the user as has been tried out in this experiment

• Aadhaar seeded database to be used for systematic planning by health departments

Recent Applications in India

• Government has made Aadhaar mandatory for crop insurance from April 2017

• Till the time Aadhaar is assigned to an individual, crop insurance under any of the government-run schemes -- Pradhan Mantri Fasal Bima Yojana (PMFBY) and Restructured Weather-based Crop Insurance (RWBCI) may be availed by farmers by furnishing documents such as bank passbook, Aadhaar enrolment ID slip, voter ID and MGNREGA job card

Application to the Private Sector

• Almost all insurance companies have on-boarded

• To begin with every insurance policy is being linked with an Aadhaar number

• Aadhaar number will be required for all insurance policies that have Government subsidy component

• Aadhaar number has to be quoted when filing a claim

• Increasingly Aadhaar is being used for enrollment

Implications for countries which do nothave a Biometric System

• Start with whatever identification is available

• A unique number can be generated offline for every transaction using basic apps

• Smart phones can be used to capture pictures and basic data for enrolment and also at the point of claim

• The data can be made available on the web and synchronized

• Even the best systems have an offline back up and business continuity plan

• Remember telephone connections are easier faster and cheaper

We are encouraged by

the response so far……

…..Thank You