Health insurance coverpolicybazaar.com

Finance Minister recently announced the largest health care program to be funded by the Government of India. This flagship National Health Protection Scheme will cover more than 10 crore underprivileged and vulnerable families in India. As per the government's decision to take healthcare in India to a more aspirational level, new initiatives are being taken to reinforce healthcare reforms in the country. This scheme will have approx. 50 core people benefiting from it and up to Rs. 5 lakh cover will be provided to each family every year for tertiary and secondary hospitalizations. He also assured that sufficient funds will be provided for smooth execution of this program. Impressive and radical as it appears, but there are various apprehensions, which health economists have put across pertaining to huge targets that the government has set under the Ayushman Bharat program.

What does that mean?

To make healthcare accessible and affordable to millions of needy - the health insurance cover (that was of Rs. 30,000 previously) has now been increased in an exponential manner. The question of the hour is "how is this mega scheme going to be funded by the government?" As per the speculation on it viability by health economists - a funding of Rs. 8,000 crores might be required to initiate the program.

Why is that?

Undoubtedly, the government needs a strong funding engine if they want to cover 10 core families in India under the ambitious scheme. Taken as a whole, the spending on healthcare has risen only 11.5% this year, adding around Rs. 5,447 crores to the entire healthcare expenditure. On the other hand, in comparison to last year, the budget valuation for RashtriyaSwasthyaBimaYojna (RSBY) has increased merely by Rs. 1,000 crores.

A closely evaluation of the insurance premiums shows a huge disparity between the funds that may be required to support the government program. Taking into consideration a government-owned health insurance policy of Rs. 5 lakh, its insurance premium comes to around Rs. 14,000 (exclusive of taxes). Adhering to this, the government will need approximately Rs. 1, 25,000 crores at the minimum to assure coverage of Rs. 5 lakh to 10 crore Indian families. Bearing this in mind, instead of a direct funding option, the government may consider several other options to see this through. Plus, it may consider combining its schemes with the current state government schemes. Also, it may look at floating commercial papers like bonds.

Dr Ravi Wankhedkar, President, IMA said that if we consider the government collaborations in this regard, the scheme will require a minimum of Rs. 10,000 crores of funds.

Because of the extensive health insurance coverage provided to the low-income families, Dr. SakthivelSelvaraj, Health Economist, highlighted the need to be vigilant of any ethical hazards that may arise due to pointless hospitalizations and excessive prescriptions by them.

A per the research report from Bank of America Merrill Lynch - Even if 5% of recipients claim half the proposed amount, then the total cost will be around 20 billion dollars – and the amount seems unlikely to be provided by the government in this budget. Clearly, the impact of the scheme is subject to the details of its execution.

The positive side

D. G. Shah, secretary general, Indian Pharmaceutical Alliance, said that the expansion of the health insurance coverage is likely to increase the demand in the pharmaceutical industry. The new budget proposes infrastructure development, improved healthcare schemes and new medical colleges, which will lead to more doctors prescribing medicines. He added that these initiatives move the nation closer to the objective of providing global healthcare and a large segment of the population will be able to buy medicines at affordable costs.

He further added that the scheme will make oncology and cardiac treatment affordable to these 10 crore families.He also pointed towards the irregularities in the current pricing policy, which may lead to disparities between increasing demand and corresponding supply of these medicines.

To sum up!

In spite of the concerns raised on the execution of the scheme, the gigantic scale of the scheme is likely to increase demand and businesses in rural areas. This increase in health insurance coverage will encourage private players to infiltrate rural sector of India. Earlier, the healthcare providers were least motivated to cater to rural population, as it was difficult to do surgeries in such a small amount of coverage.