Driven by cost containment concerns, the United States embraced MCOs in the 1970s. MCOs combined insurance and provision of care, emphasizing prevention, early management, and cost control under a fixed premium system. They have since evolved into various forms and have become deeply ingrained in the US health insurance landscape. While evidence on their impact on health outcomes and preventive care remains limited, MCOs have been credited with reducing costly hospitalizations and associated expenses.
In contrast, India’s health insurance journey has focused heavily on indemnity insurance and hospitalization coverage, despite the substantial market for outpatient consultations. Innovation in health insurance has been scarce, and operating costs have often been unsustainable. Unlike the US, India lacks natural incentives for consumer-driven cost control in its health insurance landscape.
Despite these challenges, the introduction of MCOs by well-established healthcare brands with loyal patient bases and financial resources could bring about some positive changes. However, the potential for MCOs to become significant contributors to UHC through private initiatives alone is limited.
A more promising approach could involve cautious and incremental public support for managed care. With the average Indian seeking three consultations per year and the limited insurance coverage for outpatient care, substantial cost savings could be achieved through early interventions provided by comprehensive outpatient care coverage. The NITI Aayog report in 2021 proposed an outpatient care insurance scheme that could generate savings through better care integration.
Incentives similar to those offered under the Ayushman Bharat Mission for opening hospitals in underserved areas could be extended to MCOs to cater to PMJAY beneficiaries and private paying clients. This would increase awareness and expand the reach of MCOs over time as the self-paying pool grows and demand expands.
It is important to acknowledge that UHC is a complex issue with no single solution. MCOs alone cannot solve all the challenges, but they can be part of a comprehensive strategy to improve healthcare access and affordability in India.
