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Impact evaluation: Why flagship BPL health insurance scheme is in rather poor health

Eight years after it was launched, the Rashtriya Swasthya Bima Yojana remains hamstrung by inflexible procedures and an inadequate coverage ceiling, finds new evaluation of its impact.

Written by Pritha Chatterjee |
Updated: October 9, 2017 10:18:17 am
 health insurance, health insurance scheme, ministry of health, rashtriya swasthya bima yojana, india news, bpl card, bpl card families, bpl card population, Modi government, india news, nation news, indian express Health insurance in low- and middle-income countries is recognised as a strategy to improve health access and facilitate Universal Health Care (UHC) by reducing the financial burden of accessing good health.

In India’s public health calendar, the recent past has been eventful. The head of the Indian Council of Medical Research, Dr Soumya Swaminathan, has become the first Indian on the global leadership team of the World Health Organisation. The Chief Minister of Uttar Pradesh, the state with one of India’s worst health indicators, has challenged Kerala, by far the best performer on those indicators, to “see how the system works” in his state. And an evaluation of a flagship health insurance scheme for the poor has found that it “has been ineffective in reducing the burden of out-of-pocket spending on poor households”.

While the first two piqued greater interest, the quantitative evaluation of the Rashtriya Swasthya Bima Yojana (RSBY), carried out eight years after its launch, is extremely important.

“One of the main objectives of any health insurance scheme is to provide financial coverage (or risk protection) by reducing such burden while enhancing use of healthcare,” Dr Anup Karan of the Public Health Foundation of India (PHFI) and first author of the study, Extending health insurance to the poor in India: An impact evaluation of Rashtriya Swasthya Bima Yojana on out-of-pocket spending for healthcare, told The Indian Express.

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“We found that RSBY has not been able to reduce out-of-pocket payment for healthcare for the poor, and they face the catastrophic impact of such payments,” Dr Karan said.

Health insurance in low- and middle-income countries is recognised as a strategy to improve health access and facilitate Universal Health Care (UHC) by reducing the financial burden of accessing good health. WHO DG Dr Tedros Ghebreyesus has repeatedly stressed that UHC is a “political choice” governments must make, irrespective of income levels. Dr Winnie Yip, professor of health policy and economics at the Harvard T H Chan School of Public Health and a co-author of the study, said, “To move towards UHC, risk pooling and prepayment are necessary. When a large proportion of health expenditure is funded by out-of-pocket payment, as is the case in India, households or individuals are subject to major financial risk when they fall ill, because there is no sharing of risk.”

In India, insurance is often associated with for-profit private insurance, Dr Yip said, when “the majority of the world’s insurance is social or public health insurance”. In Thailand, UHC has been implemented using social insurance. “Complete tax revenue financing, like in the UK, is not feasible for lower and lower-middle income countries, including India. To have the government pay for everybody and everything (is not feasible), so individual contribution is needed,” Dr Yip said.


RSBY, a tax-financed health insurance that is managed through private insurance companies, was introduced in 2008 for inpatient care to Below Poverty Line (BPL) families. Over 40 million families were enrolled till September 2016. The evaluation, also co-authored by Dr Ajay Mahal of the University of Melbourne, was published in the peer reviewed Journal of Social Medicine. It used cross-sectional household-level survey data from the 1999-2000, 2004-05 and 2011-12 phases of the National Sample Survey Organisation (NSSO), and district records of enrolment information.

So, where is India going wrong with the first national scheme of its kind?

For starters, the authors advocate the immediate inclusion of outpatient care in the insurance scheme. Outpatient care comprises up to 70% of total healthcare utilisation in India and 60% of total health expenditure. “Unless full, or at least chronic conditions, are covered, I don’t think any scheme can provide any significant financial risk protection to Indian families,” Dr Karan said. This, he said, was particularly critical for the poor, “as they would prefer not to get hospitalised and lose their work days and wages”.

Dr Yip explained that because OP is not covered, “people could delay seeking care until they are more severely ill, which is costly both from the perspective of costs and health”.

Despite rising healthcare costs, the scheme continues to be capped at Rs 30,000 since 2008. “There has not been any revision, while the costs of hospitalisation have almost doubled,” Dr Karan said. For a family of 4 or 4.5 persons, it was “grossly inadequate”, he said, when the average expenditure on one hospitalisation in the private sector is around Rs 26,000. “This means that even if one member of the family gets hospitalised in a year, the financial coverage is exhausted,” Dr Karan said. Also, the cap does not take into account post-hospitalisation costs.


The one positive impact of the scheme was in non-medical spending, the study found. Explaining the “virtual income transfer” effect of the scheme, Dr Karan said, “The poor increased their household consumption level, or non-medical spending, after RSBY intervention. The increase is very small, but statistically significant. This is certainly an indirect benefit of the scheme which needs deeper exploration.”

The authors also caution that beneficiaries may have been persuaded by providers to utilise inpatient services that were not covered by RSBY, or denied care. “Most countries have found that health insurance without changing provider behaviour usually results in cost inflation. It was found that it is necessary to establish ‘strategic purchasing’ through quality monitoring, using provider payment methods that incentivise providers to reduce unnecessary prescriptions and tests, and establishing an IT system to audit providers,” Dr Yip said. Without these steps, she said, “no matter how much more RSBY increases coverage, it still may not reduce financial risk”.

Impact evaluation is considered increasingly necessary in all realms of public policy, to understand what is working and what isn’t. In India, Dr Karan said, there are only a few examples of rigorous impact evaluation, and fewer still for health financing schemes. The study gives the examples of four state social health insurance schemes, which reached mixed conclusions.

For example, an evaluation of the Yeshasvini scheme in Karnataka by researchers from Delhi University, reported an over 70% reduction in out-pocket spending, and a 30% reduction in borrowings. Evaluating the Rajiv Aarogyasri scheme in Andhra Pradesh in 2012, the nonprofit thinktank Centre for Global Development found reduced inpatient out-of-pocket spending among enrolled families in phase I of the study, but relatively small impacts on outpatient out-of-pocket spending, and catastrophic payments.

Pritha Chatterjee, formerly with The Indian Express, is Research Fellow at the Department of Social and Behavioural Sciences, Harvard T H Chan School of Public Health. She was not involved in the study. (

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