In his Budget speech of February 1, Finance Minister Arun Jaitley announced a National Health Protection Scheme (NHPS) to provide insurance cover to an estimated 50 crore individuals from nearly 10 crore poor and vulnerable families. The announcement of the so-called “world’s largest health protection plan” was followed by questions over whether the healthcare system had the capacity to handle a scheme of such proportions, and whether the NHPS wouldn’t end up being an unbearable burden on the exchequer.
The Health Ministry and NITI Aayog are now studying the experience of states such as Kerala, Tamil Nadu, Andhra Pradesh and Telangana, where similar schemes are already in force. During the consultation organised by the Ministry last month, the states flagged several challenges.
In health insurance parlance, “moral hazard” is the tendency of insured people to buy or be sold additional healthcare interventions irrespective of their actual needs, leading to expenses that do not necessarily add to their well-being, but which bleed the insurer. Experts have been cautioning authorities about potential moral hazard challenges, and the matter was flagged by Kerala Health Secretary Rajeev Sadanandan.
Typical moral hazard procedures include Caesarean sections, hysterectomies, and procedures for inserting orthopaedic implants. The 2015-16 National Family Health Survey (NFHS-4) noted a disproportionately high number of C-sections for childbirth in the private sector, especially in the cities. Nationally, 40.9% of births in the private sector and 11.9% in the government sector happen by C-section. According to the World Health Organisation, the ideal rate for C-sections should be between 10% and 15%.
All non-emergency surgical and medical packages now require pre-authorisation in Kerala. These include cardiovascular, cardiothoracic, and neurosurgical procedures. Tamil Nadu has listed 138 procedures under the Chief Minister’s Comprehensive Health Insurance Scheme. But these procedures, including arthroplasty and pancreatectomy, are covered only if they are carried out in government hospitals.
Union Health Secretary Preeti Sudan recently informed states that eligibility for NHPS will be determined based on data from the socio-economic caste census (SECC). “The number of poor and vulnerable beneficiary families eligible for the scheme is proposed to be based on deprivation and occupational criteria as per SECC data. The scheme will be open to all States/UTs. The proposed target population is (a) families that belong to any of the 7 deprivation criteria (b) automatically included families as per SECC database for rural areas and (c) defined occupational criteria for urban areas,” Sudan wrote.
But several states argued that depending on the SECC would limit the reach of the scheme. Maharashtra, for example, currently provides a Rs 2 lakh annual health cover to about one crore people; this would fall to 60 lakh people if the state were to follow SECC data.
Tamil Nadu Health Secretary Dr J Radhakrishnan suggested that the National Food Security Act entitlement list be used as the basis of NHPS instead of SECC. While the Centre is not averse to allowing states to decide their own entitlement criteria, using the NFSA beneficiary list will substantially increase the NHPS bill.
The other issue is of the identification document. In a presentation on its own health programme, West Bengal spoke of ration cards. Kerala has expressed opposition to using Aadhaar as identification.
Deciding what procedures would be included in the NHPS list is one of the most crucial decisions. During initial meetings with general insurers, NITI Aayog had calculated the annual premium per family to be Rs 1,082. However, insurers have pegged the actuarial premium at Rs 2,500, citing the sustainability of the scheme. If the government agrees to the premium amount put forth by the insurers, the cost will more than double from the present estimate of Rs 10,000 crore.
In Tamil Nadu, 686 procedures are covered under the Chief Minister’s Comprehensive Health Insurance Scheme, including most complicated cardiac procedures, hernia, tracheotomy and oesophagectomy. The scheme covers 1.57 crore families with an annual income of less than Rs 72,000.
The Directorate General of Health Services (DGHS) has been asked to prepare a list of procedures/diseases to be covered under NHPS. Once finalised, the list will be circulated to states who opt for the scheme, with a provision to make marginal changes in the package rates.
Packages are important because the coverage amount is limited, and no ceiling has been proposed on family size. In addition, a balance will have to be struck between all the common conditions based on India’s unique disease burden and procedures that are value for money. For example, whether organ transplant will be covered is a tricky question, as the money paid as premium is meagre and only a few government hospitals have the capability of carrying out such procedures.
Since Parliament enacted the Clinical Establishments (Registration and Regulation) Act in 2010, the Union government has planned to implement a regulatory framework for private hospitals based on the standard treatment guidelines laid down in the law. Third-party audit of procedures/prescriptions is now back on the table for the Health Ministry.
Like Kerala, the Ministry is looking at the option of pre-authorisation for non-emergency procedures. The audit, sources say, could be a mandatory requirement for reimbursement of expenses to private hospitals.