Health shocks adversely affect the ability to earn income, particularly in the more vulnerable sections of society. Therefore, the Ministry of Labour and Employment launched India’s first national health insurance scheme in April 2008. The scheme, called the Rashtriya Swasthya Bima Yojana (RSBY), is intended to benefit people below the poverty line (BPL), some unorganized workers and people registered under the National Rural Employment Guarantee Act.
Features of the scheme
The RSBY is implemented in districts through partnerships with health insurance companies. The insurer is selected through a bid process where the bidder quoting the lowest premium is awarded the contract.
As part of its obligations, the insurer is required to empanel public and private hospitals meeting the prescribed criteria and to enrol the beneficiaries. Each empanelled hospital provides services as per package rates determined by the government.
The package rates cover costs for approximately 1,000 medical and surgical procedures. Expenses incurred one day prior to hospitalization and five days after discharge are included in the package rates. Additionally, a beneficiary is entitled to a transportation allowance per hospitalization, subject to an annual cap. Pre-existing diseases are included in the coverage.
A total annual insurance cover of ₹30,000 (US$545) is available to each beneficiary family unit of not more than five people. Each beneficiary household pays ₹30 as registration fee towards the first instalment of the premium at the time of enrolment. The central government pays 75% of the remaining premium and the state government pays the balance, except in the northeastern states and Jammu & Kashmir, where the central government pays 90%.
The RSBY is highly reliant on technology, to ensure “cashless access” to healthcare. Beneficiary families are issued smart cards on enrolment, to be presented at the empanelled hospitals where they are swiped for the packages used. As the smart card and IT infrastructure follows a standardized format across the country, a beneficiary can be admitted to any RSBY empanelled hospital, ensuring that benefits are portable.
The scheme permits the state and central governments to add categories of beneficiaries. By doing this, a universal health insurance scheme could be implemented using the RSBY framework.
The state of Kerala has already extended the RSBY benefits to identified and willing households above poverty line (APL). Kerala has implemented a scheme targeting three categories – BPL (as under the RSBY), identified poor families and APL. The Kerala government pays the premium for the BPL (the central government making a 75% contribution) and identified poor families. APL families may opt to enrol under the scheme by paying the full premium themselves.
The RSBY is dependent on IT infrastructure. However, most villages in India still lack electricity, connectivity, and other basic infrastructure, which adds to the insurer’s costs of implementation as the government only pays an all-inclusive premium. So, insurers may forgo enrolment in areas with poor electricity supply or road accessibility as it would add to their costs.
Further, information asymmetry and lack of familiarity with the IT infrastructure reduces use of the benefits under the RSBY. Some states have addressed this through programmes for promoting RSBY enrolment and use.
Another issue of concern relates to the quality of health care services provided, as the insurance company is geared towards fraud control rather than health care quality. This issue can only be addressed by benchmarking quality of health care provided by empanelled hospitals for continuing empanelment.
Which way forward?
The High Level Expert Group constituted by the Planning Commission submitted its Report on Universal Health Coverage for India in November 2011. The report relates to the provision of universal health coverage (UHC) to all citizens of India.
The report has reviewed the financing mechanisms available for achieving UHC. Key recommendations include: (1) public spending on health care coverage should increase from 1.2% (2011) to 3% of GDP (2022); (2) most of the increased expenditure should be met out of higher taxation; and (3) purchase of health care should be made solely by the government through a combination of direct provision and contracting-in, as opposed to third-party purchase of health care (as under the RSBY).
The report states that while the RSBY has been beneficial, its long-term use will have adverse impacts on improvement of general health conditions and health care cost inflation, because of the insufficient focus on linkages with primary healthcare. The report also recommends using RSBY-led IT/technology infrastructure for promoting UHC.
It remains to be seen which approach – public purchase of health care or insurer-led purchase of health care services – will be taken for promoting UHC in India and whether significant success will be achieved.
Shruti Sahu is a counsel at Trilegal and Lzafeer Ahmad is an associate. Trilegal is a full-service law firm with offices in Delhi, Mumbai, Bangalore and Hyderabad.
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