Though the government has announced Rs 5 lakh health cover for 10 crore families under the National Health Protection Scheme, it may not provide the full cover to all or may have several exclusions for the rate at which it has priced the cover, find experts.
The Niti Aayog has said the premium per family of five would be Rs 1,000 to Rs 1,200 and has found that the government would need a total of Rs 10,000- Rs 12,000 crore for the scheme. Most insurance firms charge premium between Rs 12,000 and Rs 20,000 to provide Rs 5 lakh cover for a 5-member family. The premium here is 3 per cent of the sum assured. Experts find that a similar cover may not be possible for 0.25 per cent premium.
“The government has used the words ‘up to Rs 5 lakh’ and the choice of these words indicates that it may not be a full cover of Rs 5 lakh for all. The cover may depend upon the average age of the family, the number of senior citizens as well as demographics. The policy might cover only certain critical illnesses or might have some cap based on age,” said Antony Jacob, CEO, Apollo Munich Health Insurance.
A flat cover for both rural and urban families also will not be feasible. In that case, the government may provide different covers for those in villages, smaller towns and cities. The government may also choose the hospitals to be empanelled under the scheme. There could also be exclusions or cap on certain surgical procedures.
Star Health and Allied Services, which has operated state-government health schemes in Andhra Pradesh and Tamil Nadu in the past, finds the government will have to plan the scheme and implement it properly. “Under the schemes in AP and TN, not all surgical procedures were covered. There were exclusions,” said Prakash, senior executive director, Star Health and Allied Insurance.
Further, the government has not clarified whether the scheme will be administered by a trust or by insurance firms. The government has schemes like ESI and CGHS for central government employees. Railways and some of the public sector firms too have health insurance schemes administered by trusts. But under these schemes the beneficiary too has to make a contribution and the premiums too come closer to the commercial rates.
Meanwhile, according to a research paper, authored by a professor at economic think-tank NIPFP, the healthcare plan for the poor, as announced in the budget, will cost about Rs 1,00,000 crore annually and curtail states’ autonomy to design own policies in the sector.
The paper’s estimate is 10 times higher than the one made last week by Niti Aayog adviser Alok Kumar, who had said NHPS will cost around Rs 10,000-12,000 crore annually. National Institute of Public Finance and Policy (NIPFP) assistant professor Mita Choudhury said in the paper resource requirements for implementing NHPS are likely to be very high.
“Not only would such a scheme impose a heavy burden on both the Union and the states’ exchequers, it will also curtail states’ autonomy to design own policies in a sector that is constitutionally mandated to be in their domain,” said the paper.
Even if one assumes a “conservative 2 per cent rate of premium on the insured sum, the scheme would cost about Rs 100 thousand crore annually,” it added.
“Assuming that 60 per cent of this burden would be borne by the Centre and the rest passed on to states, the central government would still need to fork out an additional Rs 60 thousand crore annually,” the study said.
To put this in perspective, the paper pointed out, the combined allocation for the ministry of health and family welfare and the ministry of AYUSH is only around Rs 55,000 crore. Even if the entire Rs 11,000 crore generated through 1 per cent additional cess imposed for education and health is directed to the scheme, “the shortfall will be substantial,” it said.
Niti Aayog member and architect of the scheme VK Paul has said the additional 1 per cent health and education cess would be sufficient to meet cost of the scheme.