Amma Marunthakam
Amma Marunthakam
படிக்க எடுத்துக்கொள்ளும் நேரம்: 3 நிமிடங்கள்

Health Insurance scheme announced by Modi’s finance minister is old wine in a new bottle as over half the target beneficiaries proposed to be covered already stand covered under existing schemes.

Objective of health insurance

The key objective of any health insurance programme is to protect individuals from income shocks that entail an unexpected event like an illness requiring lumpy expenditures to be incurred without prior notice. Since such medical expenditures in India are known to push an estimated 60 million people below poverty line every year and get an equal number indebted, state intervention to insulate and protect people from such catastrophes is of critical significance. Due to the abysmal public spending of about 1.15% of GDP on health, it is individual households that bear the brunt of the expenditures accounting for almost 67% of the total health spend.

Countries provide such health security based on values and their own development context. Canada, the UK, Japan, Thailand, Sri Lanka, for example, provide health services through own hospitals or fully pay for services availed from private facilities, in the belief that it is the state’s obligation to its citizens to ensure that no one should suffer for want of ability to pay for medical treatment. The US makes individual citizens responsible for falling sick. Citizens in the US have to, therefore, buy insurance in the market as well as pay 30% of the cost of treatment upfront, as a co-pay. The US, however, subsidises the poor and the elderly. European countries follow the social insurance model under which the government, employers and individuals share the cost. Such arrangements are, however, possible when over 90% of the people are in formal, organised employment enabling making health insurance a mandatory requirement.

Given that 93% of our workers are in the non-formal sector with no certainty or reliability of income flows, the government has been taking the responsibility of paying the premium on behalf of the poor and vulnerable. While in 20 states, such financial arrangements are made through the intermediation of commercial insurance companies, about three states have established government-owned trusts and five have a combination of both. In 2008, the Rashtriya Swasthya Bima Yojana (RSBY) was launched providing annual insurance cover for Rs 30,000 for a BPL family.

While there is no firm estimate of the total value of the insurance premia provided by the government and the total number of people covered, some studies suggest that government (Centre and states) spends over Rs 20,000 crore a year on insurance for government employees (Central Government Health Scheme (CGHS)); workers in the formal sector (Employment State Insurance Scheme (ESIS)) and people below poverty line under government-sponsored health insurance programmes. About 30% or 40.8 crore people, that includes those having private commercial insurance and other small community based insurance, are thus covered with health insurance. The premia paid under all these different schemes by governments and individuals during 2013-14 was estimated to be Rs 32,308 crore, up from Rs 3,661 crore in 2004 and accounting for 7.6% of the total health expenditures incurred during the year.

Given this background, what is the significance of the new Ayushman Bharat Scheme announced in the budget?

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Authored by K. Sujatha Rao