The showpiece of the Modi government’s pre-poll Budget Thursday is an ambitious National Health Protection Scheme (NHPS) for over 10 crore “poor and vulnerable” families — an estimated 50 crore individual beneficiaries — with coverage of up to Rs 5 lakh per family per year.
Describing the scheme as “the world’s largest government-funded healthcare programme”, Union Finance Minister Arun Jaitley also announced one medical college for every three Parliamentary constituencies, and at least one in every state.
“We will launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families… providing coverage upto Rs 5 lakh per family per year for secondary and tertiary care hospitalisation… Adequate funds will be provided for smooth implementation of this programme,” Jaitley said.
The NHPS will be part of an umbrella Ayushman Bharat scheme, along with a preventive healthcare component worth Rs 1,200 crore. “These two far-reaching initiatives under the Ayushman Bharat will build a New India 2022 and ensure enhanced productivity, well-being and avert wage loss and impoverishment,” Jaitley said.
The eligibility for NHPS would be decided on the basis of “deprivations” data from the socio-economic caste census (SECC). Deciding the model of implementation is the prerogative of states: whether they want to adopt an insurance-based model like Rashtriya Swasthya Bima Yojana (RSBY) or a trust-based model like CGHS.
Jaitley said: “Several state governments have also implemented/supplemented health protection schemes providing varying coverage. My government has now decided to take health protection to a more aspirational level.”
On preventive healthcare, he said: “These 1.5 lakh centres will bring healthcare system closer to the homes of people. These centres will provide comprehensive health care, including for non-communicable diseases and maternal and child health services. These centres will also provide free essential drugs and diagnostic services.”
The NHPS is expected to be the mother of all insurance schemes in the country with sum assured estimated to touch Rs 50 lakh crore, almost one-third of India’s stock market value, or market capitalisation.
The nitty-gritties of the programme are yet to be worked out. While the government has allocated Rs 2,000 crore for the scheme, insurance sources said it’s expected to cost Rs 10,000 crore initially. “We have not been given any details of the scheme so far. We expect this to be a major initiative in the insurance and healthcare sectors,” New India Assurance Chairman and MD G Srinivasan said.
“The government is yet to decide whether to go for the trust model or the tendering process. If it’s the trust model, premium will go to the trust and it will settle the claims. In the tendering process, insurers will be allocated the business on the lines of the crop insurance in which the central and state governments share the insurance premium of up to 98 per cent,” an insurance sector official said.
“While in the crop insurance, farmers pay less than 2 per cent as premium, NHPS is likely to be free. State governments will have to agree to the proposal. Enrolment of families is also a Herculean task but we have some expertise after implementing the Pradhan Mantri Fasal Bima Yojana (PMFBY) for farmers. The government is expected to tap the Jan Dhan banking scheme to cover the families,” the official said.
Sources said the proposed NHPS could be the precursor of the Universal Insurance Scheme which will provide cover to all citizens. The success of the scheme will to a large extent depend on the pricing — the premium to be charged — and the settlement of claims, insurance officials said.
The government is expected to involve state-run hospitals in a big way for smooth takeoff of the scheme. This is the third major insurance programme of the NDA government after PMFBY and the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY).
Alice G Vaidyan, Chairman and MD, General Insurance Corporation, said, “Health insurance coverage is a much-needed measure to address protection gap for the Indian population and will boost penetration in a major way. However, success will depend upon adequate pricing based on actuarial assessment. We have a very good template in terms of the Pradhan Mantri Fasal Bima Yojana for boosting penetration for crop insurance.”
According to Vaidyan, for Rs 5 lakh insurance per family for 10 crore families, the sum insured involved is Rs 50 lakh crore. “This has the potential to match, if not dwarf, the crop segment which saw momentous growth during the last two years,” she said.
The crop insurance scheme launched by the government two years ago has turned out to be a success with business growing to around Rs 25,000 crore in two years. With insurers seeing much less than 100 per cent claims, the crop insurance has turned out to be a money spinner for them. However, in the case of third party motor insurance, insurers are saddled with huge losses as claims have overtaken premium collection.
Even if insurance companies encounter huge claims, they don’t suffer any major loss as business is reinsured with reinsurers like General Insurance Corporation (GIC Re), which re-reinsure with global giants such as Munich Re or Swiss Re. As much as 80 per cent of the crop insurance portfolio is reinsured with reinsurers.
Three years ago, the government also launched the PMJJBY to offer benefits of insurance to masses. Here, the insured person can get a life cover of Rs 2 lakh for a premium of Rs 330 per annum. It is a one year cover, renewable from year to year. It is administered through LIC and some private life insurance companies. Individual bank account holders of participating banks aged between 18 years and 50 years can join the scheme.
Bajaj Allianz Life CEO & MD Tarun Chugh said the judicious health cover of Rs 5 lakh for hospitalisation under the NHPS is a progressive move by the government towards bringing more number of people under the ambit of health insurance. “It will incentivise common people on the need for a health insurance cover, and help boost penetration level,” he said.
Meanwhile, the government also announced two major initiatives on the insurance front. On the proposed merger of three PSU insurers (United India Insurance, Oriental Insurance and National Insurance), insurance sector officials said the proposal is sound but it is the implementation which will be key to reaping benefits of the proposal. “This will boost growth prospects of the insurance sector on a sustainable basis and will have knock-on effect on reinsurance growth as well,” Vaidyan said.
The Finance Minister’s proposal to raise deduction under health insurance premium to Rs 50,000 and Rs 1 lakh for senior citizens with critical illnesses, along with the allocation of additional funds under the Rashtriya Swasthya Bima Yojna will provide fresh impetus to the adoption of protection solutions in the country, according to Mayank Bathwal, Chief Executive Officer, Aditya Birla Health Insurance Company.