The health insurance scheme in Budget 2018 doesn’t live up to the hype

After three years of struggling in vain to implement various national healthcare schemes, the Modi government has come up with a new idea aimed at achieving three objectives simultaneously. 1) Open the door wide to private insurance companies; 2) shift the responsibility of healthcare delivery to State governments; and 3) avoid any major financial commitment of the central government in current Budget.

In his Budget speech, the Finance Minister made sure that the announcement of the new scheme had the maximum impact. Departing from his written text, he said: “Madam, this is important”. The Speaker immediately sat up, and so did everybody else—all the Members of the House, those in the packed press and visitors galleries, and the vast TV audience.

“My government”, said Arun Jaitley, “has now decided to take healthcare protection to a new aspirational level”. Pausing for effect, he added: “This will be the world’s largest healthcare programme”.

He then outlined the proposal—the flagship programme would provide insurance cover to 10 crore families. This works out to 50 crore individual beneficiaries (more than one third of India’s population of 135 crore). Each family will get access to ₹5 lakh worth of secondary and tertiary care.

It was a stunning announcement. It is bigger than any pro-poor programme that has ever been thought of anywhere before in the history of mankind. Sonia Gandhi’s Rural Employment Guarantee scheme covers only 18 crore beneficiaries (15 per cent of India’s population). The Mid-day Meal programme feeds only 10 crore school children.

Even America’s much-talked-about but controversial Obamacare insurance scheme provides affordable healthcare to only 20 million (or 2 crore). Within minutes of the Finance Minister’s big bang Budget speech, the new scheme has been given similar nicknames—NaMoCare or Modicare. Confident predictions are already being made that it would give the Modi government a “pro-poor” image and hence the BJP would sweep the next Lok Sabha elections.

There are, however, several sobering truths. It is not a primary health scheme. It is, as Jaitley said, meant for secondary and tertiary health treatment. The country does not have adequate hospital facilities in the public sector. To cater to even 1 per cent of the intended number of insured persons, private hospitals will have to be roped in — in rural areas there is a woeful dearth. (Government data shows that out of 7,226 hospitals empanelled by the government for existing Rashtriya Swasthya Suraksha Yojana, more than half – 4,291 hospitals – were private, while only 2,935 were public hospitals).

Moreover, contrary to the impression being created, the proposed new health insurance scheme is still very much a proposal that is still in the thinking stage. There is no plan to implement it for another ten months at the earliest. It will probably be left to the next government at the Centre to work out the feasibility and modalities of carrying it forward.

In fact, even the concept and design has not yet been given shape. State governments will have to agree to participate. Insurance companies have not yet been consulted. Crucial financial issues like the amount of premium each family will have to pay have not been calculated.

Already experts are raising doubts of the wisdom and viability of the basic concept. For instance, former health secretary Keshav Desiraju has asked, “Why transfer funds to private hospitals?”

Some say the new proposal is actually just a renaming of other existing health schemes. The latest programme is in fact the fourth iteration of the Rashtriya Swasthya Bima Yojana (RSBY). In 2016-2017, RSBY was renamed the Rashtriya Swasthya Suraksha Yojana (RSSY) and in 2017-2018, this was renamed the National Health Protection Scheme (NHPS).

For the record, the NHPS had agreed to provide ₹1 lakh per family. The RSBY offered ₹30,000 to poor families. Jaitley has himself acknowledged the RSBY in his latest speech. The new announcement is significant mainly because of the gigantic scale of proposal. However, when far smaller programmes have not been able to be implemented, is something so huge even rational, ask health experts.

Another truth is that the NHPS announced in the last budget has been lying dormant with the Union Cabinet since November 2016. This plan had been announced in a big way by Prime Minister Narendra Modi himself in his 2016 Independence Day address from the ramparts of the Red Fort. But nothing came of it.

As for the latest scheme, there are certain key doubts that arise. The amount of ₹5 lakh per family is almost unbelievable. It is a massive hike from the existing fund of ₹1 lakh per family. This amount is 17 times bigger than the RSBY scheme and will cover 40 per cent of India’s population.

The government itself admitted just two months ago that the announcement from the last budget – the NHPS – was yet to be finalised. Also, the RSBY itself has been plagued with problems of transparency and efficiency. The fund allocations towards the RSBY had been dwindling over the last years of the UPA government, going from ₹1,001 crore in 2012-2013 to ₹550 crore in 2014-2015. The NDA government’s NHPS increased it somewhat, to ₹724 crore in 2016-17. The allocations were brought back to ₹1,000 crore last year.

In the last few years of the RSBY, both the amount of money released as well as utilised, fell considerably. The number of states participating also petered out, with only eight states utilising any of the money disbursed to them under RSBY.

The administrator of this scheme has also changed over time: RSBY used to be administered by the Ministry of Labour and Employment; this was shifted to the Ministry of Health and Family Welfare after renaming it RSSY.

Former finance secretary Arvind Mayaram as well as others weighed in on how this new scheme might be a gateway to a greater role given to private insurance providers and hospitals in healthcare delivery for the poorest.

In a social media post, Dr Mayaram said: “Universal health insurance through private hospitals has not worked for the poor anywhere. Biggest beneficiaries are the private hospitals and insurance companies. There is no substitute for public health care. More money should have been pumped to strengthen it”.

It looks and feels like just another announcement on paper, most probably meant for election speeches.