As the central government prepares to roll out Ayushman Bharat — the world’s largest government-funded health protection programme — attention has been shifted to the annual premium insurance companies will quote in the Request for Proposal (RFP).
A senior government official told CNBC-TV18 that the premium amount will have to be arrived at through the market discovery process but he expected it to be in three digits.
He pointed to the Tamil Nadu government’s own health cover programme is for a universe of 2 lakh people under which insurance companies are working at Rs 699 per family for three years and the Telangana and Andhra Pradesh government's health cover under a trust model, offering Rs 3 lakh cover at Rs 800 per family.
“We had suggested Rs 700 as the premium in the previous health scheme, the Rashtriya Swasthya Bima Yojana (RSBY), but the market discovered price was only Rs 345. The Ayushman Bharat universe is much larger, over 10 crore families, so it's reasonable to expect that the premium quotations will be in three digits,” this official said.
Ayushman Bharat, popularly known as Modicare, aims to offer medical cover of up to Rs 5 lakh to more than 10 crore families at no cost.
The central and state governments have to bear the cost of Ayushman Bharat in a 60:40 ratio.
The states that do not wish to implement this scheme under the so-called trust model will have to invite quotations from insurance companies to start the health cover.
As of now, about ten states have indicated they will implement this scheme under the trust model, so the remaining will need to rope in insurance companies.
Under the trust model, the government fixes prices and there is no price discovery. This model is considered ideal for health insurance as a non-profit motive is assured.
In the case of RSBY, which provided a cover of just Rs 30,000 and which will now be discontinued, insurers had themselves arrived at much lower premium due to aggressive bidding.
Perhaps, the government is banking on similar aggression to lower the premium amount for Ayushman Bharat too, which certainly offers a much larger insurance universe.
But the insurance companies may not share the government’s confidence on the low premium amount under the new scheme, just yet.
A senior official at one of the insurance companies said the union health ministry has been seeking premium amounts in the range of Rs 1,000-1,100, but any decision will come after insurers get extensive data on the demographic profile of the insured universe.
"We need demographic data to analyse the costs. For example, if the universe to be insured is largely above 40 years of age, the premium will have to be on the higher side. Then, all pre-existing illnesses are supposed to be covered, the scheme has to be portable. We believe the premium could be Rs 2,000-2,200 but a final amount can come only after data has been analysed,” this official said.
But another insurer said the premium could be in line with the government’s expectations provided it managed to curb fraudulent practices by hospitals, became lenient with package rates etc.
This person cautioned that even with all such benefits thrown in, government should not expect any insurer to offer rates below breakeven point.
The success of Ayushman Bharat is crucial for improving India’s health indicators. As the government’s own data show, health insurance coverage in India has been far from satisfactory till now.
According to National Family Health Survey four, less than a third (29%) of households have at least one member covered under any health insurance or health scheme.
Only every fifth (20%) of women aged 15-49 and 23% of men aged 15-49 are covered by health insurance or a health scheme.
Half of those with insurance are covered by a state health insurance scheme and more than one-third are covered by RSBY.
The highest proportion of households covered under health insurance or a health scheme is found in Andhra Pradesh (75%) and the lowest coverage (less than 5%) is in Lakshadweep, Manipur and Jammu & Kashmir.
Meanwhile, the government official quoted above said the RFP document gives details of the tender conditions for insurance companies and details of the scheme.
As the contours of the scheme get debated by stakeholders, the government is also slowly bending to some of their demands.
For example, dismissing fears of package rates offered under Ayushaman Bharat being significantly lower than those offered under the Central Government Health Scheme (CGHS) scheme, this official listed concessions to hospitals:
1) Hospitals qualifying for entry level NABH (National Accreditation Board for Hospitals and Healthcare Providers) accreditation (Ayushman Bharat) will receive an additional 10%, while those qualifying for full accreditation will receive an additional 15% over and above the package rates
2) States are now provided with the flexibility to increase rates up to 10% or reduce them, to suit local market conditions.
Additionally, Indu Bhushan, Chief executive officer, Ayushman Bharat, has conceded to another demand by states and added a line in the scheme which reads, “States could retain their existing package rates even if they are higher than the prescribed 10% flexibility slab.”
States need to be wooed to join this ambitious scheme, since many have existing parallel schemes, which they are loath to abandon and many others are worried about the sheer optics of the scheme.
Who will get credit for offering health insurance under ‘Ayushman Bharat’? Some non-BJP ruled state governments are especially perturbed over the optics and are showing reluctance to sign up.
Given the scheme’s game changing potential and with 2019 general elections round the corner, opposition parties cannot let the centre walk away with all the expected political goodwill if at all Modicare meets its roll out timeline.
So Delhi, Odisha, West Bengal and Punjab are worried about the political implications of signing up for a scheme that is also known by the name of the Prime Minister Narendra Modi and virtually links the benefits to the BJP, which is ruling at the centre.
Kerala, which was earlier skeptical, has signed the memorandum of understanding (MoU) now.
The programme was announced during the budget for 2018-19; since health is a state subject, each state must sign an MoU with the centre to get this scheme implemented.
Till now, MoUs with ten states have been signed. The centre has allocated Rs 4,000 crore for Ayushman Bharat till now, out of the Rs 10,000 crore that the scheme is supposed to get in 2018-19.
Since states are expected to bear 40% of the scheme’s burden, the remaining Rs 2,000 crore of the central share should come in the supplementary demand for grants, which will be presented later in the fiscal year.
Insurers, hospitals and India’s marginalised see potential in Ayushman Bharat.
But the test would be its rollout—how soon and how many states and union territories come on board, whether the central government can quell fears of insurers and hospitals and ensure their ‘buy in’ and most importantly, how the scheme is implemented at a time when the country is woefully short of infrastructure, doctors and care-givers.
Sindhu Bhattacharya is a journalist based in Delhi who writes on a range of topics in business and economy