Dangers of privatising health insurance in Nepal

By handing over health insurance to the private sector, the government is abandoning its citizens

This year’s health budget kept the contribution to health insurance of the previous year's allocation of Rs7.5 billion. However, the plan to hand over the institutional management of health insurance programs to the private sector through the Ministry of Finance defeats the fundamental goal of the health security.

This is not entirely surprising, of course, because the Health Ministry had passed a narrow and poorly thought model of health security for Nepal, and there were already concerns that it would eventually be handed over to the private sector and traded as a commodity.

A private company can contribute to a health insurance program. But can they really contribute to national public health security, understand equity, expand access to the poorest and the most marginalised population, and negotiate with the government providers for quality services? Are they fundamentally designed to serve the poor?

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The private sector has a role in contributing to achieving Universal Health Coverage by mainly serving the affluent. The poor neither can afford private health insurance nor access expensive private hospitals. Even if they are admitted to hospitals, they have to bear catastrophic expenses pushing them into the vicious cycle of poverty.

The private insurance companies only pool the resource, they do not share the risk for those who cannot afford to pay the premium. It will be naïve to assume that such companies could be easily maneuvered to deliver services as a fair-price approach. There are around 20 registered private health insurance companies and 366 private hospitals in Nepal, and some are selling health insurance at exorbitant premiums many times higher than the current premium cap.

There are six national health security indexes: prevent, detect, response, health, norms, and risk. During the pandemic, insurance companies got richer by selling fake insurance schemes while the hospital profits bulged through expensive Covid treatment. Very few hospitals treated Covid patients with a humanitarian approach. None of their technical advancements helped effectively prevent, detect, and respond to the pandemic.

The current health insurance program has identified the elderly, completely disabled, leprosy, Multi-Drug Resistant TB patients, people living with HIV, and ultra-poor as target populations to waive their premium. Though not adequate, this is an equity approach.

But none of these target populations are eligible for private health insurance, or they will have to pay a much higher premium. It will be unwise to assume that these companies will change overnight and be equitable. They are powerful enough to influence government policy and have the power to bend them to suit their commercial interests.

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Instead, the government should strengthen the Health Insurance Board and explore ways to integrate health security with the broader social security scheme. In the short term, there are urgent but straightforward reforms like recruiting adequate and skilled human resources, strengthening the organisational systems, revising the design of service purchase strategy and equity, and gradually, having effective providers/purchasers split for better implementation.

Ultimately, the program will benefit by forming a broader and more robust social security structure, co-incidentally introduced at the same time by the government. It would be able to absorb costs by pooling tax-based health care contributions and merging subsidies given to the treatment of cancer, renal failure, and other chorionic diseases under one integrated umbrella.

But the current government does not appear serious about reforming health insurance, and simply does not understand the fundamental principles of health security. Health insurance is not just limited to providing health care, but is a part of broader health security.

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The idea that health security can be strengthened by passing the buck to the private sector amounts to abandoning the constitutional commitment to provide health care, not as a service but as a citizen's fundamental right. The Nepal government is a signatory to achieving the health targets of the Sustainable Development Goals.

As argued by Nepali Congress leader Gagan Thapa, who is one of the pioneers who pushed health insurance in Nepal, they contribute to strengthening the health system, strive for healthy populations, cushion the poor and provide them access to health services. It is a vehicle for mobilising adequate health resources, enhancing health security, and ultimately achieving Universal Health Coverage.

These goals cannot be met by trading the people's health as mere commodities.

Gaj Gurung has a PhD in public health from Chulalongkorn University and Sushil Koirala is a public health expert. Both are based in Bangkok.

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