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India’s New National Health Protection Scheme: How Feasible Is It?

India’s newly announced National Health Protection Scheme (NHPS) of providing Rs. 5 lakh health insurance cover to the 10 crore poor families for secondary and tertiary medical care, is going to be the world’s largest health protection programme. Announced during the Union Budget presentation for fiscal year 2019 on February 1, it is obviously an ambitious programme seeing its coverage of population and the amount of fiscal burden it can impose on the government’s treasury. The NHPS programme, intends to provide critical medical and surgical care for secondary and tertiary health problems of poor and low-income segments of the population, is aiming to cover about 50 crore people assuming an average family size of five. The announcement, however, does not fix any ceiling on family size, thus, it will cover any family size from the identified beneficiaries. Moreover, as the scheme was hurriedly announced, the sources of the fund and funding patterns or even the overall cost burden on the government’s Budget was also not elaborated.

The NHPS is clearly an initiative to further expand the health insurance coverage for poor families though it is not clarified in the Budget announcement whether BPL families are to be covered exclusively.

Requirement of health programmes in India especially for the poor and low-income groups cannot be discounted. Exorbitant levels of health spending, particularly the out-of-pocket expenses, is an important cause of poverty in India. In fact, India’s health statistics are a bleak reality of its gloomy health care system. Presently, India hosts one of the worst basic health services in the world as its public health system rank 112 among 190 countries by WHO. India’s spending on health is globally one of the lowest at 1.2% of GDP compared to 3% in China and 8.3% in US against the global average level of 5.4% in 2015 (World Health Statistics, WHO). And the result is that India had world’s highest number of women’s death during childbirth and world’s highest level of under-5 child mortality in 2015. India has consistently neglected investing much on health care resources and basic health infrastructure and, thus, in 2015 it had only 1 doctor for 1,700 people and continues to bear 21% of the world’s burden of disease. (Economic Times, Oct 31, 2015)

In 2016, the National Sample Survey Organisation (NSSO) released the report ‘Key Indicators of Social Consumption in India: Health’ based on its 71st  round survey (2014) whereby, more than 80% of Indians were not covered under any health insurance scheme. About 18% of urban population (12%, under public schemes) and 14% of rural population (13%, under public schemes) had any kind of health insurance. In 2014-15, total health insurance premium was put at Rs.20, 440 crores. As per 2014 estimate by Insurance Regulatory and Development Authority (IRDA) only 17% Indians (only 21.62 crore people) had health insurance cover from public or private sponsorship. This, however, was significantly lower than the World Bank estimate of 30 crore (about 25% population) in 2010 including 18 crore BPL people, as per its 2012 Report ‘Government-Sponsored Health Insurance in India: Are You Covered?’. Nevertheless, there is substantial progress in health insurance coverage from only 5.5 crore people in 2003-04. (The Hindu, December 22, 2014)

Whether the states governments will be convinced to abandon their schemes to adopt NHPS…is another issue…If the states decide to continue with their schemes, then NHPS will be additional burden on the states and they have to compete with NHPS- which makes no sense.

Source: IRDA Estimates as reported in The Hindu (Dec. 22, 2014)

The NHPS is clearly an initiative to further expand the health insurance coverage for poor families though it is not clarified in the Budget announcement whether BPL families are to be covered exclusively. The cost of the programme is going to be colossal. The Indian government has started the consultation with the regional governments of states and union territories on NHPS. From the preliminary round of discussions, the cost of the programme has been pegged at Rs. 10, 820 crore as per the consultation of NITI Aayog with the actuary firms. This is arrived by assuming a family size of four and initial estimation of per family premium at Rs. 1, 082. The initial assumption by NITI Aayog seems to be 60:40 sharing of costs by the centre and states respectively and assumed utilization rate of 1.8% to 2.3%. In that case, Centre’s burden is estimated to be about Rs. 6, 490 crore and States’ share at Rs. 4, 330 crore (Indian Express, Feb.9, 2018). This scenario is, however, changing now as discussion and consultation is progressing further. The insurers are now estimating the cost per family premium at Rs. 2, 500 citing sustainability and feasibility of the scheme (Indian Express, March 13, 2018) and in that case, the cost of the programme can be a whopping Rs. 20, 000 to Rs. 25,000 crore.

Now, coming to the budgetary provisions of the programme it can reiterated that funding for the NHPS scheme was not mentioned during the Budget announcement. As there is no budgetary provisioning and in the absence of any sovereign bond issue against the scheme, it may be funded through borrowing. Already Indian government estimates that its fiscal deficit could touch 5.3 per cent of GDP this fiscal, which is way above the targeted norm of 3.2%. Thus, an additional burden of Rs. 11, 000 crore to Rs. 20,000 crore- in any conservative estimate- is going to be a stifling burden on the government coffer. Given the scenario of subdued tax collection, higher allocation for subsidies, and uncertainty on disinvestments, it is going to be a challenging task for the government even to limit fiscal deficit to this higher target of 5.3 per cent of GDP.

Besides the fiscal strains, there are other issues involved before rolling out the scheme in 2019. Indian government already has two central health insurance scheme- the Rashtriya Swasthya Bima Yojana (RSBY) and Universal Health Insurance Scheme (UHIS). As on 31st March 2017,  under RBSY the number of active Smart Cards was about 3.64 crore and total hospitalization cases were about 1.41 crore. RSBY provides Rs. 30 thousand insurance coverage for hospitalization and medical expenses to the BPL families for secondary medical care. Likewise, UHIS provides Rs.30 thousand insurance per family with maximum Rs.15 thousand limit on a single illness. UHIS is available to the BPL as well as APL families. Besides these, it provisions Rs.2, 500/- for normal childbirth and Rs.5, 000/- for caesarean delivery within the overall coverage limit of Rs.30 thousand. Additionally, a Personal Accident Insurance of Rs. 25 thousand is available to the earning head of the beneficiary family under UHIS. These schemes’ coverage were, however, very limited and minimal and highly insufficient for secondary care.

…operationalization of NHPS to create the world’s largest health care protection programme can be fiscally heavily burdensome on both the national and regional governments… Rather…it appears to be a much more sensible strategy for the government to devote available (scarce) public resources for creating basic health infrastructure especially in the rural areas.

Upgrading these schemes to the next level will not be smooth, as smart cards for 10 crore families are to be created. As RSBY and UHIS have to be merged with NHPS. So, existing smart cards may not be valid. In that case fresh cards are to be made needing fresh enrolment. In that case massive enrolment of 50 crore people will be required. But if the government decides to upgrade existing smart cards as per NHPS norms then administrative hassles may be less. Besides these another problem has to be sorted out, namely clubbing of HNPS with state-level schemes.

Better and popular programmes are available at the regional level from the various state governments, like: Rajiv Aarogyasri, Andhra Pradesh; Aarogyasri, Telengana; Mukhyamantari Amrutam, Gujarat; Chief Minister’s Comprehensive Health Insurance Scheme, Tamil Nadu; Biju Krushak Kalyan Yojana, Odisha; Mahatma Jyotiba Phule Jan-Arogya Yojana, Maharashtra; Arogya Karnataka and so on. These programmes already provides health coverage of upto Rs.1 to 2 lakhs and are immensely popular due to effective tie-ups with private hospitals, better implementation, and hundreds of treatment and procedures available under the secondary and tertiary care. BPL, APL, farmers and other low-income groups are already covered under these schemes. Whether the states governments will be convinced to abandon their schemes to adopt NHPS wherein a state contribute 40 per cent is another issue that will come up now. If the states decide to continue with their schemes, then NHPS will be additional burden on the states and they have to compete with NHPS- which makes no sense.

To summarize the above arguments, the operationalization of NHPS to create the world’s largest health care protection programme can be fiscally heavily burdensome on both the national and regional governments in India. Rather, given the presently poor health statistics and dismal health expenditure, it appears to be a much more sensible strategy for the government to devote available (scarce) public resources for creating basic health infrastructure especially in the rural areas. These public investments will result in expansion of real health infrastructure meant for taking care of public health in the future. Health insurance protection model can only benefit the private sector and firms providing insurance services and may ultimately will lead to inflated hospital bills and overall health care costs escalation in the country. Indian government and state governments should guard against these rising tendencies to seek private route for ensuring health safety needs of the population.

 

The AuthorShri Manoj Kumar Sahoo is a Faculty of Economics, School of Liberal Studies, Pandit Deendayal Petroleum University, E-mail: sahoomanoj1@rediffmail.com

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