Modicare: Will it work?
On February 1, about 41 minutes into his Budget 2018 speech, Union finance minister Arun Jaitley delivered the piece de resistance: "Madam speaker, my government has now decided to take health protection to a more aspirational level." With cabinet colleagues cheering him on, he outlined the National Health Protection Scheme (NHPS), offering hospitalisation coverage of Rs 5 lakh a year to 100 million poor and vulnerable families, or 500 million Indians. "This will be the world's largest government-funded healthcare programme," he promised-a nod towards 'New India 2022', and 'universal healthcare'. A smile creased Prime Minister Narendra Modi's usually inscrutable demeanour as he thumped the table in robust approval.
Modi knows how to capture the magical power of dreams. In his last 44 months in power, the premier of the world's largest democracy has announced a raft of "world's largest" schemes: Aadhaar to Jan Dhan Yojana, Pahal to Swachh Bharat, Digital Saksharta to Pradhan Mantri Awas Yojana, Sahaj Bijli Har Ghar Yojana to GST. Now comes the NHPS, under the Ayushman Bharat Yojana. "A constant worry in poor people's lives is how to treat illness. Will free them from this big worry," the PM tweeted.
With assembly elections in eight states and Lok Sabha polls due in the next 14 months, what can be more evocative than politics in the time of sickness and health? The success or failure of the plan will either mark his Waterloo moment or his finest hour.
WILL IT WORK?
Never before has healthcare hit such a sweet spot in the grim business of budget-making. "If we can make this successful, then the world will know whether Obamacare was successful or not, Modicare was," Jaitley told reporters. #Modicare is trending, along with BJP national president Amit Shah's #NaMoCare. Opposition leaders are chanting jumla-the sceptre of "empty promises" that haunts the Modi government. "What worries me is that the fiscal arithmetic is at fault," says former prime minister Manmohan Singh. "There's no money provided in the budget for it," scoffs former finance minister P. Chidambaram. A "big bluff", scoffs West Bengal chief minister Mamata Banerjee.
Commentators are locking horns, pelting out a storm of questions: will this intervention really work? Is this old wine in new bottles? A feelgood political tidbit? Do the numbers tally? Where will the money come from? And, finally, will it be enough to dissociate healthcare from affluence? A week later, the debate continues. To Nobel laureate Amartya Sen, "basic healthcare for all can be provided at very low cost if society, including the political and intellectual leadership, can get its act together". Dr K.S. Reddy, chairman, Public Health Foundation, says, "The amount allocated will not be adequate for the huge hike in coverage unless the government starts merging the state-funded insurance schemes." At his press meet on February 2, Union health minister Jagat Prakash Nadda asked everyone to trust the government. "It's much more than just a health insurance scheme," he said. "And money won't be an issue. Everything is in place, we have done our homework. We will announce the details as and when we are ready to implement it." The buzz is: D-day could be August 15, or October 2, Mahatma Gandhi's birthday.
WORLD'S BIGGEST MESS
The new scheme has put Modi at the forefront of the world's largest challenge: Indian healthcare. India ranks 154 out of 195 countries in terms of access to healthcare, worse than Bangladesh, Nepal, Ghana and Liberia. India's government expenditure on healthcare (1.15 per cent of the GDP) is among the lowest in the world. India faces a desperate shortage in health infrastructure and manpower: there are 0.7 hospital beds per 1,000 Indians (should be 1:1,000) and 0.6 doctors per 1,000 Indians (should be 1:1,000). There is 1 nurse per 2,500 Indians, compared to 1 for every 150-200 in richer countries. There is close to a 40 per cent shortage of medical teachers in its 472 medical colleges. India needs 65 million surgeries a year, but only 26 million are carried out. The country has the world's highest disease burden-700 Million DALY (Disability-Adjusted Life Year) units (or years lost due to premature death, disability, poor quality of life) and a WHO estimate says India's economic burden just from non-communicable diseases will be $6.2 trillion between 2012 and 2030.
What's more, India has the highest burden of infectious as well as killer lifestyle diseases. It is not just the diabetes and heart disease capital of the world, it also tops in HIV-AIDS and tuberculosis. Between 2004 and 2014, average medical expenditure per hospitalisation per urban patient rose by 176 per cent and 160 per cent per rural patient. No wonder, over 60 per cent of health expenditure is out-of-pocket, amongst the highest in the world. Around 60-70 million people fall into a crushing debt cycle and poverty each year due to "catastrophic" medical expenses (see graphic).
If this sounds challenging, consider the world's largest mess: healthcare in rural India. It is estimated that 32 per cent of rural patients are forced to travel over five kilometres to access healthcare. The 150,000 sub-centres or the smallest level of basic healthcare facilities in every village, catering to 1 for every 5,000 population-exist mostly on paper-and offer only maternal and child healthcare services. For OPD, emergency or basic lab services, one has to go to one of the 25,000-plus primary health centres, while for more serious ailments, the options are far-flung community health centres, taluka hospitals or district hospitals, which work with a severe shortfall of 81 per cent specialists and just 12 per cent MBBS doctors (see graphic).
NUTS AND BOLTS AAYOG
The swanky premise of the government's premier think-tank, NITI Aayog, on Delhi's Sansad Marg is all abuzz. No surprises there. It's the NITI Aayog experts who conceived the scheme, carried the team and convinced the prime minister about the importance of adopting it. Four key people in the government have been the drivers of this scheme which has gone through several iterations in the past one year: Amitabh Kant, the chief executive officer of NITI Aayog, Dr Vinod Kumar Paul, former professor and chair of paediatrics at the AIIMS and now member (health and nutrition) at the NITI Aayog, health minister Nadda and health secretary Preeti Sudan. The NITI Aayog team made a series of presentations to the PM, who asked "searching questions", on grassroots healthcare implementation, regulation and technology, on the success of similar schemes elsewhere and more, before finally giving his approval.
"This is the first time the social sector has been brought to the centre stage," says Kant. It's a world-class scheme and the challenge is not of resources, but of rolling it effectively, he adds. "The idea is to be able to harness the power of 50 crore Indians to bring down the premiums."
In many ways, the scheme will be a "game changer", say members of the NITI Aayog. The Ayushman Bharat scheme rests on two interlinked pillars: first, strengthening the primary healthcare foundation and, second, financial health protection of vulnerable citizens. The idea is to convert the sub-centres into wellness centres, equipped to diagnose and treat common ailments like hypertension, diabetes, chronic bronchitis, undertake screening for common cancers, apart from mental health and elder-care. "The target is to roll out the 150,000 health and wellness centres across India by December 31, 2022," says Kant. Architects have been hired, district collectors have been roped in to incentivise doctors to come and work in rural areas, salaries upto Rs 30 lakh a year are being offered, along with multi-skilled, bridge courses with tele-medicine facilities in the pipeline to upgrade the skills of healthcare professionals.
STATES TO THE FORE
The financial health protection scheme is about funding hospitalisation expenses, with beneficiaries identified according to the parameters of the Social Economic Caste Census, 2011. The scheme, according to Kant, will be "cashless, paperless and portable-that'll discourage profiteering by the private sector". As health is a state subject, it will be implemented with 60:40 Centre and state share. "A National Health Authority of India will be set up for the implementation of the scheme," says Kant. Taking the spirit of cooperative federalism forward, the states will be given the option to decide their model of implementation, he explains. States may choose an intermediary such as an insurance company, based on the premise that the government pays the insurance company premium on behalf of the beneficiary. Or states may try a trust-funded model, in which an autonomous entity will be set up to receive funds from the Centre, to be processed by the state to settle claims of hospitals providing healthcare services to people below the poverty line.
The model a state chooses will depend on the governance style of the state. Every state scheme that offers health insurance was studied in detail before the NHPS was announced. States such as Kerala, Himachal Pradesh, Telangana, Maharashtra, Tamil Nadu and Rajasthan have similar programmes running, but with an average cover of Rs 1 to 1.5 lakh. As per the preliminary calculations by the government, initial premium per family per year will be between Rs 1,000 and Rs 1,200. The government expects premiums will begin to fall as and when the scheme widens its base. Initial estimates by the government show that the scheme will cost between Rs 10,000 and Rs 11,000 crore. Kant gives the analogy of the telecom revolution: call rates dropped significantly as more people became a part of it. The scheme is most likely to be an Aadhaar-linked programme, but the officials working on the nuances of it are quick to point out that it will not be exclusionary. As soon as the states are ready with a fraud-proof information system, beneficiary identification, hospital empanelment and strategic purchase from the private hospitals, the scheme will be rolled out, say NITI Aayog members.
SHOW ME THE MONEY
The devil lies in the details. The general insurance players are waiting to see the fine print of Modicare to work out an acceptable premium rate. For them, the new scheme has to be attractive enough to underwrite it. Clearly, they are looking at a market-linked premium like the Fasal Bima Yojana by taking into account the costs, risks and profit margins.
First, consider what the NITI Aayog members say: they have projected a premium of Rs 1,000 to Rs 1,200 per family per annum for the Rs 5 lakh health cover. To cover 100 million households, the total outlay for the government (both central and states) works out to be a maximum of Rs 12,000 crore. With a 60:40 ratio split, the central government's contribution will be Rs 7,200 crore per annum. The Union budget of 2018 has allocated only Rs 2,000 crore, and so there will be only a partial implementation of the scheme in 2018-19.
The math just doesn't add up. Currently, a health insurance cover for a family of five costs anywhere between Rs 12,000 and Rs 24,000 per annum. Private sector Universal Sompo Health Insurance offers one of the cheapest health covers of Rs 5 lakh for a family of five for Rs 12,800 per annum. This includes pre- and post-hospitalisation and critical illnesses, among other benefits. Thus, a Rs 12,000 per annum premium takes the cost for covering 100 million households to a staggering Rs 1.2 lakh crore annually. Given the size and scale of Modicare, general insurance players are estimating a lower premium than what they ask today for a similar cover. "The premium rates come down with high volumes. The new proposed scheme is talking of about 100 million households and some 500 million people," says Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance Company. There is a big advantage to insurers of low or negligible distribution costs under Modicare. The insurers are estimating a premium of around Rs 5,000 per annum for a comprehensive health cover. If one takes this figure into account, the total outlay for Modicare comes out to be Rs 50,000 crore. The Centre's share will be roughly Rs 30,000 crore annually (60 per cent share) to cover the 100 million households.
Clearly, there are going to be budgetary challenges for both the central as well as state governments. The government's finances are already stretched, given the deviation in the fiscal deficit numbers. Since health policies are valid for a year, the government has to renew the existing policies every year and keep adding new households. Apart from the usual subsidies in food, fertilisers and petroleum, there is an additional burden of pro-poor schemes like the Fasal Bima Yojana and MGNREGA. In the current budget, the finance minister has allocated Rs 13,000 crore for the revamped Fasal Bima Yojana and
Rs 55,000 crore for MGNREGA. If the government sticks to the final numbers of Rs 1,000 to Rs 1,200 premium for general insurers, there are likely to be challenges for the government to scale up the scheme.
Firstly, the Rashtriya Swasthya Bima Yojana (RSBY) offering a cover of Rs 30,000 is already in the market, along with other government-sponsored schemes, but such schemes never find takers from the insurance companies. The total contribution of government-sponsored schemes in the last five years has been less than Rs 3,000 crore, just 10 per cent of the total health insurance pie of Rs 30,000 crore annually. Therefore, in order to make Modicare more acceptable, the premium amount has to be market-linked allowing the insurers to cover their costs, risk and also make some profits. Second, health insurance has been a difficult business in India. The public sector companies are mostly bleeding, with a claim ratio of over 100 per cent. The private sector has managed to show a much better claim ratio of 70-80 per cent. In the past, the pricing game-of lowering the premium amount to capture large business-hasn't paid off. Many companies have incurred huge losses in the corporate health insurance business.
There are also numerous instances of fraudulent claims, which can be up to 15 per cent of the total claims. Krishnamoorthy Rao, MD & CEO of Future Generali India, says that the success of the proposed scheme will depend upon how it is implemented on the ground. The insurers talk about the poor hospital facilities in some of the states. Hospitals are also notorious for doing unnecessary tests. Many private insurers ask: is it worth underwriting the health insurance business in far-flung areas when the market in the metro and urban sector is already booming? The health insurance business has been growing at 18-24 per cent a year. Many insurers will certainly think twice before underwriting a business with a premium as low as Rs 1,200, when they are doing metro business for Rs 12,000 to Rs 24,000 every year for almost identical covers.
PROBLEMS AND SOLUTIONS
As the nation tries to make sense of the meagre information on the ground, the ambitious health protection plan provides more questions than answers. Solutions and suggestions are pouring in. Here are a few from the experts we spoke to. The sooner they can be implemented the better.
l The government should not be just the largest payer of health bills
What happens if the government becomes the single largest payer of healthcare? That's an issue of concern in the private healthcare market. Having a single entity provide so much of the revenue gives it outsize influence. It's a problem that the US faces in the wake of Obamacare and post-NHPS, India may face the same issue. Should the government have the determining voice in what treatments and technologies are worth covering and how much they are willing to reimburse for them? Sangita Reddy, joint managing director of Apollo Hospitals, says, though its is "a path-breaking and landmark scheme", the government seems to have taken on the role of a payer, rather than the provider. "A provider would have required creation of infrastructure, resources and management on the part of the government, and a longer gestation time," she adds. "I'm sure the government will also evolve a model of effective provider."
l Focus on primary healthcare
Every stakeholder cautions about the need for a sharp focus on preventive and primary health, to reduce the patient funnel into non-communicable diseases (like diabetes and heart ailments) and secondary and tertiary care. For that, the need is to figure out carefully eligibility criteria, digital health cards, cashless processing down the value chain and timely payments to minimising fraudulent claims. Some of these have been the weakest links in the past.
l Go for transparent and viable rates
The rates fixed by the government have to suit all categories of providers, right from a single doctor practice to a multi- and super-speciality hospital so that there is buy-in from all categories of providers and the scheme is sustainable in the long run.
l Make sure the scheme is not underfunded
The big issue for many is that a large part of the NHPS is also being funded by the states. A look at past schemes shows that each of those-be it RSBY or those implemented by Andhra Pradesh or Karnataka-have been completely underfunded and face huge issues on the payment front. Even central schemes, for instance, the Central Government Health Scheme (CGHS) or the Employment State Insurance Scheme (ESIS), payment schedules are very time-consuming. Hence, the schemes are not capitalised in the right manner.
l Keep an eye on the management of premiums
The rate of utilisation of insurance schemes is so high that the premium is likely to rise every year. How will this rise in premium be managed? "What is needed is a very clear-cut funding mechanism, so that the scheme lasts long," says Vishal Bali, co-founder and chairman of Medwell Ventures. Delays cost dear and many institutions can't afford to take patients on such schemes.
l Learn from past schemes to avoid abuse
To some experts, the critical issue is how the linkages, protocols and referrals between different levels of care would be built while putting together the NHPS, to avoid abuse or unnecessary utilisation of secondary and tertiary care. There is much to learn from schemes like the RSBY, state government schemes like Andhra Aarogyasri, Maharashtra Jeevandayee Yojana, Tamil Nadu Chief Minister Comprehensive Health Insurance Scheme, which have been running for nearly 10 years.
l One size doesn't fit all
For a country the scale and size of India, one mechanism can hardly provide and deliver all. Many countries have customised solutions to their needs, says Malti Jaswal, chief operating officer, Health Insurance TPA of India. "The Indian insurance industry,"she says, "with all its expertise can certainly lend a helping hand in secondary-tertiary care, but the government's focus on strengthening primary care and public health system will create a win-win situation."
l The challenge lies in the execution
Dr Mark Britnell, global chairman (healthcare), KPMG, says, "Going by my experience, raising and spending money is the easy part." The execution requires a strong public-private partnership model. "It will open up potential for foreign direct investment in healthcare. Both public and private hospitals will have to change their business models."
Few things in Budget 2018 captured the public imagination more than the health protection scheme. As Amartya Sen says, "India being a democracy, things can happen here only when there is a public demand for it, through the voters taking healthcare more seriously and forcing the political leadership to respond." If implemented successfully, the Modi government will be blessed by voters with a longer mandate. And from that first baby step towards good health for all-perhaps, just perhaps-it will be an easy walk towards becoming the first country in the world to dissociate healthcare from affluence. Fingers crossed.
WILL IT WORK?
Never before has healthcare hit such a sweet spot in the grim business of budget-making. "If we can make this successful, then the world will know whether Obamacare was successful or not, Modicare was," Jaitley told reporters. #Modicare is trending, along with BJP national president Amit Shah's #NaMoCare. Opposition leaders are chanting jumla-the sceptre of "empty promises" that haunts the Modi government. "What worries me is that the fiscal arithmetic is at fault," says former prime minister Manmohan Singh. "There's no money provided in the budget for it," scoffs former finance minister P. Chidambaram. A "big bluff", scoffs West Bengal chief minister Mamata Banerjee.
Commentators are locking horns, pelting out a storm of questions: will this intervention really work? Is this old wine in new bottles? A feelgood political tidbit? Do the numbers tally? Where will the money come from? And, finally, will it be enough to dissociate healthcare from affluence? A week later, the debate continues. To Nobel laureate Amartya Sen, "basic healthcare for all can be provided at very low cost if society, including the political and intellectual leadership, can get its act together". Dr K.S. Reddy, chairman, Public Health Foundation, says, "The amount allocated will not be adequate for the huge hike in coverage unless the government starts merging the state-funded insurance schemes." At his press meet on February 2, Union health minister Jagat Prakash Nadda asked everyone to trust the government. "It's much more than just a health insurance scheme," he said. "And money won't be an issue. Everything is in place, we have done our homework. We will announce the details as and when we are ready to implement it." The buzz is: D-day could be August 15, or October 2, Mahatma Gandhi's birthday.
WORLD'S BIGGEST MESS
The new scheme has put Modi at the forefront of the world's largest challenge: Indian healthcare. India ranks 154 out of 195 countries in terms of access to healthcare, worse than Bangladesh, Nepal, Ghana and Liberia. India's government expenditure on healthcare (1.15 per cent of the GDP) is among the lowest in the world. India faces a desperate shortage in health infrastructure and manpower: there are 0.7 hospital beds per 1,000 Indians (should be 1:1,000) and 0.6 doctors per 1,000 Indians (should be 1:1,000). There is 1 nurse per 2,500 Indians, compared to 1 for every 150-200 in richer countries. There is close to a 40 per cent shortage of medical teachers in its 472 medical colleges. India needs 65 million surgeries a year, but only 26 million are carried out. The country has the world's highest disease burden-700 Million DALY (Disability-Adjusted Life Year) units (or years lost due to premature death, disability, poor quality of life) and a WHO estimate says India's economic burden just from non-communicable diseases will be $6.2 trillion between 2012 and 2030.
What's more, India has the highest burden of infectious as well as killer lifestyle diseases. It is not just the diabetes and heart disease capital of the world, it also tops in HIV-AIDS and tuberculosis. Between 2004 and 2014, average medical expenditure per hospitalisation per urban patient rose by 176 per cent and 160 per cent per rural patient. No wonder, over 60 per cent of health expenditure is out-of-pocket, amongst the highest in the world. Around 60-70 million people fall into a crushing debt cycle and poverty each year due to "catastrophic" medical expenses (see graphic).
If this sounds challenging, consider the world's largest mess: healthcare in rural India. It is estimated that 32 per cent of rural patients are forced to travel over five kilometres to access healthcare. The 150,000 sub-centres or the smallest level of basic healthcare facilities in every village, catering to 1 for every 5,000 population-exist mostly on paper-and offer only maternal and child healthcare services. For OPD, emergency or basic lab services, one has to go to one of the 25,000-plus primary health centres, while for more serious ailments, the options are far-flung community health centres, taluka hospitals or district hospitals, which work with a severe shortfall of 81 per cent specialists and just 12 per cent MBBS doctors (see graphic).
NUTS AND BOLTS AAYOG
The swanky premise of the government's premier think-tank, NITI Aayog, on Delhi's Sansad Marg is all abuzz. No surprises there. It's the NITI Aayog experts who conceived the scheme, carried the team and convinced the prime minister about the importance of adopting it. Four key people in the government have been the drivers of this scheme which has gone through several iterations in the past one year: Amitabh Kant, the chief executive officer of NITI Aayog, Dr Vinod Kumar Paul, former professor and chair of paediatrics at the AIIMS and now member (health and nutrition) at the NITI Aayog, health minister Nadda and health secretary Preeti Sudan. The NITI Aayog team made a series of presentations to the PM, who asked "searching questions", on grassroots healthcare implementation, regulation and technology, on the success of similar schemes elsewhere and more, before finally giving his approval.
"This is the first time the social sector has been brought to the centre stage," says Kant. It's a world-class scheme and the challenge is not of resources, but of rolling it effectively, he adds. "The idea is to be able to harness the power of 50 crore Indians to bring down the premiums."
In many ways, the scheme will be a "game changer", say members of the NITI Aayog. The Ayushman Bharat scheme rests on two interlinked pillars: first, strengthening the primary healthcare foundation and, second, financial health protection of vulnerable citizens. The idea is to convert the sub-centres into wellness centres, equipped to diagnose and treat common ailments like hypertension, diabetes, chronic bronchitis, undertake screening for common cancers, apart from mental health and elder-care. "The target is to roll out the 150,000 health and wellness centres across India by December 31, 2022," says Kant. Architects have been hired, district collectors have been roped in to incentivise doctors to come and work in rural areas, salaries upto Rs 30 lakh a year are being offered, along with multi-skilled, bridge courses with tele-medicine facilities in the pipeline to upgrade the skills of healthcare professionals.
STATES TO THE FORE
The financial health protection scheme is about funding hospitalisation expenses, with beneficiaries identified according to the parameters of the Social Economic Caste Census, 2011. The scheme, according to Kant, will be "cashless, paperless and portable-that'll discourage profiteering by the private sector". As health is a state subject, it will be implemented with 60:40 Centre and state share. "A National Health Authority of India will be set up for the implementation of the scheme," says Kant. Taking the spirit of cooperative federalism forward, the states will be given the option to decide their model of implementation, he explains. States may choose an intermediary such as an insurance company, based on the premise that the government pays the insurance company premium on behalf of the beneficiary. Or states may try a trust-funded model, in which an autonomous entity will be set up to receive funds from the Centre, to be processed by the state to settle claims of hospitals providing healthcare services to people below the poverty line.
The model a state chooses will depend on the governance style of the state. Every state scheme that offers health insurance was studied in detail before the NHPS was announced. States such as Kerala, Himachal Pradesh, Telangana, Maharashtra, Tamil Nadu and Rajasthan have similar programmes running, but with an average cover of Rs 1 to 1.5 lakh. As per the preliminary calculations by the government, initial premium per family per year will be between Rs 1,000 and Rs 1,200. The government expects premiums will begin to fall as and when the scheme widens its base. Initial estimates by the government show that the scheme will cost between Rs 10,000 and Rs 11,000 crore. Kant gives the analogy of the telecom revolution: call rates dropped significantly as more people became a part of it. The scheme is most likely to be an Aadhaar-linked programme, but the officials working on the nuances of it are quick to point out that it will not be exclusionary. As soon as the states are ready with a fraud-proof information system, beneficiary identification, hospital empanelment and strategic purchase from the private hospitals, the scheme will be rolled out, say NITI Aayog members.
SHOW ME THE MONEY
The devil lies in the details. The general insurance players are waiting to see the fine print of Modicare to work out an acceptable premium rate. For them, the new scheme has to be attractive enough to underwrite it. Clearly, they are looking at a market-linked premium like the Fasal Bima Yojana by taking into account the costs, risks and profit margins.
First, consider what the NITI Aayog members say: they have projected a premium of Rs 1,000 to Rs 1,200 per family per annum for the Rs 5 lakh health cover. To cover 100 million households, the total outlay for the government (both central and states) works out to be a maximum of Rs 12,000 crore. With a 60:40 ratio split, the central government's contribution will be Rs 7,200 crore per annum. The Union budget of 2018 has allocated only Rs 2,000 crore, and so there will be only a partial implementation of the scheme in 2018-19.
The math just doesn't add up. Currently, a health insurance cover for a family of five costs anywhere between Rs 12,000 and Rs 24,000 per annum. Private sector Universal Sompo Health Insurance offers one of the cheapest health covers of Rs 5 lakh for a family of five for Rs 12,800 per annum. This includes pre- and post-hospitalisation and critical illnesses, among other benefits. Thus, a Rs 12,000 per annum premium takes the cost for covering 100 million households to a staggering Rs 1.2 lakh crore annually. Given the size and scale of Modicare, general insurance players are estimating a lower premium than what they ask today for a similar cover. "The premium rates come down with high volumes. The new proposed scheme is talking of about 100 million households and some 500 million people," says Tapan Singhel, MD & CEO, Bajaj Allianz General Insurance Company. There is a big advantage to insurers of low or negligible distribution costs under Modicare. The insurers are estimating a premium of around Rs 5,000 per annum for a comprehensive health cover. If one takes this figure into account, the total outlay for Modicare comes out to be Rs 50,000 crore. The Centre's share will be roughly Rs 30,000 crore annually (60 per cent share) to cover the 100 million households.
Clearly, there are going to be budgetary challenges for both the central as well as state governments. The government's finances are already stretched, given the deviation in the fiscal deficit numbers. Since health policies are valid for a year, the government has to renew the existing policies every year and keep adding new households. Apart from the usual subsidies in food, fertilisers and petroleum, there is an additional burden of pro-poor schemes like the Fasal Bima Yojana and MGNREGA. In the current budget, the finance minister has allocated Rs 13,000 crore for the revamped Fasal Bima Yojana and
Rs 55,000 crore for MGNREGA. If the government sticks to the final numbers of Rs 1,000 to Rs 1,200 premium for general insurers, there are likely to be challenges for the government to scale up the scheme.
Firstly, the Rashtriya Swasthya Bima Yojana (RSBY) offering a cover of Rs 30,000 is already in the market, along with other government-sponsored schemes, but such schemes never find takers from the insurance companies. The total contribution of government-sponsored schemes in the last five years has been less than Rs 3,000 crore, just 10 per cent of the total health insurance pie of Rs 30,000 crore annually. Therefore, in order to make Modicare more acceptable, the premium amount has to be market-linked allowing the insurers to cover their costs, risk and also make some profits. Second, health insurance has been a difficult business in India. The public sector companies are mostly bleeding, with a claim ratio of over 100 per cent. The private sector has managed to show a much better claim ratio of 70-80 per cent. In the past, the pricing game-of lowering the premium amount to capture large business-hasn't paid off. Many companies have incurred huge losses in the corporate health insurance business.
There are also numerous instances of fraudulent claims, which can be up to 15 per cent of the total claims. Krishnamoorthy Rao, MD & CEO of Future Generali India, says that the success of the proposed scheme will depend upon how it is implemented on the ground. The insurers talk about the poor hospital facilities in some of the states. Hospitals are also notorious for doing unnecessary tests. Many private insurers ask: is it worth underwriting the health insurance business in far-flung areas when the market in the metro and urban sector is already booming? The health insurance business has been growing at 18-24 per cent a year. Many insurers will certainly think twice before underwriting a business with a premium as low as Rs 1,200, when they are doing metro business for Rs 12,000 to Rs 24,000 every year for almost identical covers.
PROBLEMS AND SOLUTIONS
As the nation tries to make sense of the meagre information on the ground, the ambitious health protection plan provides more questions than answers. Solutions and suggestions are pouring in. Here are a few from the experts we spoke to. The sooner they can be implemented the better.
l The government should not be just the largest payer of health bills
What happens if the government becomes the single largest payer of healthcare? That's an issue of concern in the private healthcare market. Having a single entity provide so much of the revenue gives it outsize influence. It's a problem that the US faces in the wake of Obamacare and post-NHPS, India may face the same issue. Should the government have the determining voice in what treatments and technologies are worth covering and how much they are willing to reimburse for them? Sangita Reddy, joint managing director of Apollo Hospitals, says, though its is "a path-breaking and landmark scheme", the government seems to have taken on the role of a payer, rather than the provider. "A provider would have required creation of infrastructure, resources and management on the part of the government, and a longer gestation time," she adds. "I'm sure the government will also evolve a model of effective provider."
l Focus on primary healthcare
Every stakeholder cautions about the need for a sharp focus on preventive and primary health, to reduce the patient funnel into non-communicable diseases (like diabetes and heart ailments) and secondary and tertiary care. For that, the need is to figure out carefully eligibility criteria, digital health cards, cashless processing down the value chain and timely payments to minimising fraudulent claims. Some of these have been the weakest links in the past.
l Go for transparent and viable rates
The rates fixed by the government have to suit all categories of providers, right from a single doctor practice to a multi- and super-speciality hospital so that there is buy-in from all categories of providers and the scheme is sustainable in the long run.
l Make sure the scheme is not underfunded
The big issue for many is that a large part of the NHPS is also being funded by the states. A look at past schemes shows that each of those-be it RSBY or those implemented by Andhra Pradesh or Karnataka-have been completely underfunded and face huge issues on the payment front. Even central schemes, for instance, the Central Government Health Scheme (CGHS) or the Employment State Insurance Scheme (ESIS), payment schedules are very time-consuming. Hence, the schemes are not capitalised in the right manner.
l Keep an eye on the management of premiums
The rate of utilisation of insurance schemes is so high that the premium is likely to rise every year. How will this rise in premium be managed? "What is needed is a very clear-cut funding mechanism, so that the scheme lasts long," says Vishal Bali, co-founder and chairman of Medwell Ventures. Delays cost dear and many institutions can't afford to take patients on such schemes.
l Learn from past schemes to avoid abuse
To some experts, the critical issue is how the linkages, protocols and referrals between different levels of care would be built while putting together the NHPS, to avoid abuse or unnecessary utilisation of secondary and tertiary care. There is much to learn from schemes like the RSBY, state government schemes like Andhra Aarogyasri, Maharashtra Jeevandayee Yojana, Tamil Nadu Chief Minister Comprehensive Health Insurance Scheme, which have been running for nearly 10 years.
l One size doesn't fit all
For a country the scale and size of India, one mechanism can hardly provide and deliver all. Many countries have customised solutions to their needs, says Malti Jaswal, chief operating officer, Health Insurance TPA of India. "The Indian insurance industry,"she says, "with all its expertise can certainly lend a helping hand in secondary-tertiary care, but the government's focus on strengthening primary care and public health system will create a win-win situation."
l The challenge lies in the execution
Dr Mark Britnell, global chairman (healthcare), KPMG, says, "Going by my experience, raising and spending money is the easy part." The execution requires a strong public-private partnership model. "It will open up potential for foreign direct investment in healthcare. Both public and private hospitals will have to change their business models."
Few things in Budget 2018 captured the public imagination more than the health protection scheme. As Amartya Sen says, "India being a democracy, things can happen here only when there is a public demand for it, through the voters taking healthcare more seriously and forcing the political leadership to respond." If implemented successfully, the Modi government will be blessed by voters with a longer mandate. And from that first baby step towards good health for all-perhaps, just perhaps-it will be an easy walk towards becoming the first country in the world to dissociate healthcare from affluence. Fingers crossed.
Comments
Post a Comment