RESEARCH ARTICLE

P.S.D.A: RESEARCH ARTICLE

HEALTH INSURANCE IN INDIA &

AYUSHMAN BHARAT SCHEME

SUBJECT: BANKING & INSURANCE LAW

SUBMITTED TO – MRS. ALISHA KHATUN
SUBMITTED BY- MR. ANIRUDH KAUSHAL
41210303815
3-E

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 Background

Over the last 50 years India has achieved a lot in terms of health improvement. But still
India is way behind many fast developing countries such as China, Vietnam and Sri
Lanka in health indicators (Satia et al 1999). In case of government funded health care
system, the quality and access of services has always remained major concern. A very
rapidly growing private health market has developed in India. This private sector bridges
most of the gaps between what government offers and what people need. However, with
proliferation of various health care technologies and general price rise, the cost of care
has also become very expensive and unaffordable to large segment of population. The
government and people have started exploring various health financing options to
manage problems arising out of growing set of complexities of private sector growth,
increasing cost of care and changing epidemiological pattern of diseases.

The new economic policy and liberalization process followed by the Government of India
since 1991 paved the way for privatization of insurance sector in the country. Health
insurance, which remained highly underdeveloped and a less significant segment of the
product portfolios of the nationalized insurance companies in India, is now poised for a
fundamental change in its approach and management. The Insurance Regulatory and
Development Authority (IRDA) Bill, recently passed in the Indian Parliament, is
important beginning of changes having significant implications for the health sector.

The privatization of insurance and constitution IRDA envisage to improve the

performance of the state insurance sector in the country by increasing benefits from
competition in terms of lowered costs and increased level of consumer satisfaction.
However, the implications of the entry of private insurance companies in health sector are
not very clear. The recent policy changes will have been far reaching and would have
major implications for the growth and development of the health sector. There are several
contentious issues pertaining to development in this sector and these need critical

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examination. These also highlight the critical need for policy formulation and assessment.
Unless privatization and development of health insurance is managed well it may have
negative impact of health care especially to a large segment of population in the country.
If it is well managed then it can improve access to care and health status in the country
very rapidly.

Health insurance as it is different from other segments of insurance business is more

complex because of serious conflicts arising out of adverse selection, moral hazard, and
information gap problems. For example, experiences from other countries suggest that
the entry of private firms into the health insurance sector, if not properly regulated, does
have adverse consequences for the costs of care, equity, consumer satisfaction, fraud and
ethical standards. The IRDA would have a significant role in the regulation of this sector
and responsibility to minimise the unintended consequences of this change.

Health sector policy formulation, assessment and implementation is an extremely

complex task especially in a changing epidemiological, institutional, technological, and
political scenario. Further, given the institutional complexity of our health sector
programmes and the pluralistic character of health care providers, health sector reform
strategies in the context of health insurance that have evolved elsewhere may have very
little suitability to our country situation. Proper understanding of the Indian health
situation and application of the principles of insurance keeping in view the social realities
and national objective are important.

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 HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (
Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The writings
talk in terms of pooling of resources that could be re-distributed in times of calamities
such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day
insurance. Ancient Indian history has preserved the earliest traces of insurance in the
form of marine trade loans and carriers’ contracts. Insurance in India has evolved over
time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In
1829, the Madras Equitable had begun transacting life insurance business in the Madras
Presidency. 1870 saw the enactment of the British Insurance Act and in the last three
decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and
Empire of India (1897) were started in the Bombay Residency. This era, however, was
dominated by foreign insurance offices which did good business in India, namely Albert
Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian
offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in

India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to
enable the Government to collect statistical information about both life and non-life
business transacted in India by Indian and foreign insurers including provident insurance
societies. In 1938, with a view to protecting the interest of the Insurance public, the

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earlier legislation was consolidated and amended by the Insurance Act, 1938 with
comprehensive provisions for effective control over the activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there
were a large number of insurance companies and the level of competition was high. There
were also allegations of unfair trade practices. The Government of India, therefore,
decided to nationalize insurance business.

An Ordinance was issued on 19 th January, 1956 nationalising the Life Insurance sector
and Life Insurance Corporation came into existence in the same year. The LIC absorbed
154 Indian, 16 non-Indian insurers as also 75 provident societies—245 Indian and foreign
insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west and
the consequent growth of sea-faring trade and commerce in the 17 th century. It came to
India as a legacy of British occupation. General Insurance in India has its roots in the
establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the
British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.

In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalisation) Act, general
insurance business was nationalized with effect from 1st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company
Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and
the United India Insurance Company Ltd. The General Insurance Corporation of India
was incorporated as a company in 1971 and it commence business on January 1sst 1973.

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This millennium has seen insurance come a full circle in a journey extending to nearly
200 years. The process of re-opening of the sector had begun in the early 1990s and the
last decade and more has seen it been opened up substantially. In 1993, the Government
set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to
propose recommendations for reforms in the insurance sector.The objective was to
complement the reforms initiated in the financial sector. The committee submitted its
report in 1994 wherein , among other things, it recommended that the private sector be
permitted to enter the insurance industry. They stated that foreign companies be allowed
to enter by floating Indian companies, preferably a joint venture with Indian partners.

MILESTONES IN INDIAN LIFE INSURANCE BUSINESS

 1912: The Indian Life Assurance Companies Act came into force for regulating
the life insurance business.
 1928: The Indian Insurance Companies Act was enacted for enabling the
government to collect statistical information on both life and non-life insurance
businesses.
 1938: The earlier legislation consolidated the Insurance Act with the aim of
safeguarding the interests of the insuring public.
 1956: 245 Indian and foreign insurers and provident societies were taken over by
the central government and they got nationalized. LIC was formed by an Act of
Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that
too from the Government of India.

The history of general insurance business in India can be traced back to Triton Insurance
Company Ltd. (the first general insurance company) which was formed in the year 1850
in Kolkata by the British.

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LIST OF INSURANCE COMPANIES IN INDIA:

LIFE INSURERS Websites

Public Sector
Life Insurance Corporation of India www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com
ING Vysya Life Insurance Company Limited www.ingvysayalife.com
Max New York Life Insurance Co. Limited www.maxnewyorklife.com
MetLife Insurance Company Limited www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com
SBI Life Insurance Company Limited www.sbilife.co.in
TATA AIG Life Insurance Company Limited www.tata-aig.com
AMP Sanmar Assurance Company Limited www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com
GENERAL INSURERS
Public Sector
National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in

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Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
REINSURER
General Insurance Corporation of India www.gicindia.com

HEALTH INSURANCE IN INDIA: CURRENT SCENARIO

Introduction

The health care system in India is characterised by multiple systems of medicine, mixed

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ownership patterns and different kinds of delivery structures. Public sector ownership is
divided between central and state governments, municipal and Panchayat local
governments. Public health facilities include teaching hospitals, secondary level
hospitals, first-level referral hospitals (CHCs or rural hospitals), dispensaries; primary
health centres (PHCs), sub-centres, and health posts. Also included are public facilities
for selected occupational groups like organized work force (ESI), defence, government
employees (CGHS), railways, post and telegraph and mines among others

HEALTH SECTOR AND ITS FINANCING: PRESENT SCENE AND ISSUES FOR
THE FUTURE

During the last 50 years India has developed a large government health infrastructure
with more than 150 medical colleges, 450 district hospitals, 3000 Community Health
Centers, 20,000 Primary Health Care centers and 130,000 Sub-Health Centers. On top of
this there are large number of private and NGO health facilities and practitioners scatters
though out the country.

Over the past 50 ears India has made considerable progress in improving its health status.
Death rate has reduced from 40 to 9 per thousand, infant mortality rate reduced from 161
to 71 per thousand live births and life expectancy increased from 31 to 63 years.
However, many challenges remain and these are: life expectancy 4 years below world
average, high incidence of communicable diseases, increasing incidence of non-
communicable diseases, neglect of women's health, considerable regional variation and
threat from environment degradation. It is estimated that at any given point of time 40 to
50 million people are on medication for major sickness in India. About 200 million
workdays are lost annually due to sickness. Survey data indicate that about 60% people
use private health providers for outpatient treatment while 60 % use government
providers for in-door treatment. The average expenditure for care is 2-5 times more in
private sector than in public sector.

India spends about 6% of GDP on health expenditure. Private health care expenditure is

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75% or 4.25% of GDP and most of the rest (1.75%) is government funding. At present,
the insurance coverage is negligible. Most of the public funding is for preventive,
promotive and primary care programmes while private expenditure is largely for curative
care. Over the period the private health care expenditure has grown at the rate of 12.84%
per annum and for each one percent increase in per capital income the private health care
expenditure has increased by 1.47%. Number of private doctors and private clinical
facilities are also expanding exponentially. Indian health financing scene raises number of
challenges, which are: increasing health care costs, high financial burden on poor eroding
their incomes, increasing burden of new diseases and health risks and neglect of
preventive and primary care and public health functions due to under funding of the
government health care.

Given the above scenario exploring health-financing options becomes critical. Health
Insurance is considered one of the financing mechanisms to over come some of the
problems of our system.

CONSUMER AND SOCIAL PERSPECTIVE ON HEALTH

INSURANCE

With the liberalization of insurance and entry of private companies in this business it is
very important that specific interventions are developed which focus on increasing the
consumer awareness about insurance products. One of the major challenges after
privatization of insurance would be how to develop such mechanisms, which help
making consumers aware about the various intricacies of insurance plans. As of now
information, knowledge and awareness of existing insurance plans is very limited. This is
also shown by the study of Gumber and Kulkarni (2000) among the members of SEWA,
ESIS and mediclaim schemes. With Consumer Protection Act coming in force it has
become easy for aggrieved consumers to complain and seek redressal for their problems.
Consumer organizations such as CERC of Ahmedabad have been helping consumers to
get due justice in disputes with the insurance companies. Their experience would be
varying valuable in guiding development of health insurance plans that are transparent

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and just.

Many a times the insurance claims are rejected due to some small technical reasons. This
leads to disputes. Most of the time the conditions and various points included in
insurance policy contracts is not negotiable and these are binding on consumers. There is
no analysis on what is fair practice and what is unfair practice. Given that insurance
companies are large and almost monopoly setting the consumers is treated as secondary
and they do not have opportunity to negotiate the terms and conditions of a contract.
Many times insurance companies do not strictly follow the conditions in all cases and this
create confusion and disputes. (Shah M 1999)

The most important area of dispute and unfair treatment is the knowledge and
implications of pre-exiting conditions. A number of cases of litigation are disagreement
on these pre-existing conditions. These problems also arise because of lack of
specification of number of areas and properly spelling out the conditions. This is also
because some chronic conditions such as high blood pressure and diabetes can increase
the risk of may other disease of organs such as heart, kidney, vascular and eyes diseases.
The patients with these pre-existing conditions are denied claims for treatment of
complications. This is not fair and leads to disputes.

Health insurance is typically annual and has to be renewed yearly. Policy, which is not
renewed in time lapses and a new policy has to be taken out. Medical conditions detected
during the interim period are treated as pre-existing condition for the new policy, which is
not fair. This is seen as major issue as it changes the conditionalities about what
constitutes pre- exiting conditions. Courts, however, have ruled that even if there is delay
in renewing the policies it should be considered as renewed policy. In case two doctors
give different reports one favouring consumer and other insurance company, the
insurance company generally follows the later opinion. There are several such consumer-
related issues, which need to be addressed in health insurance.

One of the planks on which the insurance has been deregulated is the gain in efficiency

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and passing on these benefits to the consumers. It is very unrealistic to assume that
insurance companies will be able to gain efficiency, which helps them to reduce the price
of schemes. At least one should not be expecting this thing happening in the short-run.
But providing full information to the consumer and dealing with claims in a just and
expeditious manner is the minimum expected outcome of the deregulation process.
Consumer organizations have to play very active role in future development of the health
insurance sector in India.

There are several social issues such as exclusions of sexually transmitted diseases, AIDS,
delivery and maternal conditions etc. These are not socially and ethically acceptable.
"Insurance companies much take care of all the risks related to health. The companies
may charge additional premium for certain conditions. Secondly the present mediclaim
policy premiums are high and do not differentiate between people living in urban and
rural areas where the costs of medical care are different. Thus the present policy is less
attractive to poor and rural people. The tax subsidy provided to the mediclaim is also
going largely to the rich who are the taxpayers.

The newer health insurance policies have to improve upon the shortcoming of the
existing policies.

IMPACT OF HEALTH INSURANCE ON STRUCTURE AND

QUALITY OF PRIVATE PROVISION

The experiences in liberalizing the private health insurance suggest that it has undesirable
effects on the costs of health care. The costs of care generally go up. Given the present
system of fee for service and current scenario of health infrastructure in private sector, the
development of insurance will need improvements in quality and change in structure. The
new investments to improve quality will result into high cost and therefore increase in
prices of insurance products. There would be developments in the direction of exploring
options of managed care, which would help in reducing the costs. The developments
would be needed in the direction of strong information base and accreditation system for

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providers. The structure of the health sector will have to change from multiple-single
doctor hospitals and clinics to larger hospitals and polyclinics, which provide services of
multiple specialities and can operate at larger scale. This
will allow them to provide high quality professional care at competitive prices. As one of
the responses to these issues Third Party Administrators (TPA) are rapidly emerging in
India. Here we can learn from the models, which have emerged elsewhere. But their
applicability to Indian situation needs to be examined carefully. These aspects of the
health sector will need detailed study.

We lack adequate information base to operate insurance schemes at large scale. The
insurance mechanism prevalent in many developed countries has their history. Health
reforms experiences in many countries are replete with the suggestion that the systems
cannot be replicated easily.

Self-regulation is an important in any market driven system. The regulation from outside
does not work. Implementation of regulation in this sector is difficult. We significantly
lack mechanisms and institutions, which would ensure self- regulation and continuing
education of provides and various stakeholders. The accreditation systems are hard to
implement without mechanisms to self-regulate. For example it took 35 years in US to
put the accreditation system effectively in place. For example, it has been difficult for
many States in India to put nursing homes legislation in place. Given the deterioration on
standards in medical education, lack of regulation by medical council and rising
expectations of the community it is difficulty to ensure quality standards in Indian health
care system. Given this situation health insurance systems will have to deal with this
complex issue of quality of care in years to come.

VARIOUS HEALTH INSURANCE PRODUCTS AVAILABLE IN INDIA

The existing health insurance schemes available in India can be broadly categorized as:

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Voluntary health insurance schemes or private-for-profit schemes Mandatory health
insurance schemes or government run schemes (namely ESIS, CGHS) Insurance offered
by NGOs/Community based health insurance Employer based schemes

1. Voluntary health insurance schemes or private-for-profit schemes:

In private insurance, buyers are willing to pay premium to an insurance company that
pools similar risks and insures them for health related expenses. The main distinction is
that the premiums are set at a level, which are based on assessment of risk status of the
consumer (or of the group of employees) and the level of benefits provided, rather than as
a proportion of consumer’s income.

2. Mandatory health insurance schemes or government run schemes (namely ESIS,

CGHS)

Employer State Insurance Scheme (ESI):- Enacted in 1948, the employers’ state
insurance (ESI) Act was the first major legislation on social security in India. The scheme
applies to power using factories employing 10 persons or more and non-power & other
specified establishments employing 20 persons or more. It covers employees and the
dependents against loss of wages due to sickness, maternity, disability and death due to
employment injury. It also covers funeral expenses and rehabilitation allowance. Medical
care comprises outpatient care, hospitalization, medicines and specialist care. These
services are provided through network of ESIS facilities, public care centers, non-
governmental organizations (NGOs) and empanelled private practitioners. The ESIS is
financed by three way contributions from employers, employees and the state
government.

Even though the scheme is formulated well there are problem areas in managing this
scheme. Some of the problems are :-

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  Large numbers of posts of medical staff remain vacant due to high turnover and
low remuneration compared to corporate hospitals.
 Rising costs and technological advancement in super specialty treatment.
Management information is not satisfactory.
 The patients are not satisfied with the services they get Low utilization of the
hospitals.

In rural areas, the access to services is also a problem.All these problems indicate an
urgent need for reforms in the ESIS Scheme.

Central Government Health Insurance Scheme (CGHS):- Established in 1954, the

CGHS covers employees and retirees of the central government and certain autonomous
and semi autonomous and semi-government organizations. It also covers Members of
Parliament, Governors, accredited journalists and members of general public in some
specified areas.
Benefits under the scheme include medical care, home visits/care, free medicines and
diagnostic services. These services are provided through public facilities with some
specialized treatment (with reimbursement ceilings) being permissible at private
facilities. Most of the expenditure is met by the central government as only 12% is the
share of contribution.

The CGHS has been criticized from the point of view of quality and accessibility.
Subscribers have complained of high out of pocket expenses due to slow reimbursement
and incomplete coverage for private health care (as only 80% of the cost is reimbursed if
referral is made to private facility, when such facilities are not available with the CGHS).

Universal Health Insurance Scheme (UHIS):- For providing financial risk protection to
the poor, the government announced UHIS in 2003. Under this scheme, for a premium of
Rs. 165 per year per person, Rs.248 for a family of five and Rs.330 for a family of seven ,
health care for sum assured of Rs. 30000/- was provided. This scheme has been made
eligible for below poverty line families only. To make the scheme more saleable, the

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insurance companies provided for a floater clause that made any member of family
eligible as against mediclaim policy which is for an individual member. In spite of all
these, the scheme was not successful.

The reasons for failing to attract rural poor are many :-

The public sector companies who where required to implement this scheme find it to be
potentially loss making and do not invest in propagating it. To meet the target, it is
learnt that several field officers pay the premium under fictious names. Identification of
eligible families is a difficult task Poor find it difficult to pay the entire premium at one
time for future benefit, foregoing current consumption needs. Paper work required to
settle the claims is cumbersome Deficit in availability of service providers Set back due
to health insurance companies refusing to renew the previous year’s policies.

In 2004, the government also provided an insurance product to the Self Help Group
(SHG) for a premium of Rs.120 and sum assured of Rs.10000/-. However, the intake is
negligible. The reasons for poor intake are similar to those cited above.

3. Insurance offered by NGOs/Community based health insurance

Community based schemes are typically targeted at poorer population living in

communities. Such schemes are generally run by charitable trusts or non-governmental
organizations (NGOs). In these schemes the members prepay a set amount each year for
specified services. The premia are usually flat rate (not income related) and therefore not
progressive. The benefits offered are mainly in terms of preventive care, though
ambulatory and inpatient care is also covered. Such schemes tend to be financed through
patient collection, government grants and donations. Increasingly in India, CBHI
schemes are negotiating with for profit insurers for the purchase of custom designed
group insurance policies.

CBHI schemes suffer from poor design and management. Often there is a problem of
adverse selection as premiums are not based on assessment of individual risk status.

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These schemes fail to include the poorest of the poor. They have low membership and
require extensive financial support. Other issues relate to sustainability and replication of
such schemes.

Some of the popular Community Based Health Insurance schemes are: - Self-Employed
Women’s Association (SEWA), Tribuvandas Foundation (TF), The Mullur Milk Co-
operative, Sewagram, Action for Community Organization, Rehabilitation and
Development (ACCORD), Voluntary Health Services (VHS) etc.

4. Employer based schemes

Employers in both public and private sector offers employer based insurance schemes
through their own employer. These facilities are by way of lump sum payments,
reimbursement of employees’ health expenditure for out patient care and hospitalization,
fixed medical allowance or covering them under the group health insurance schemes.

The Railways, Defense and Security forces, Plantation sector and Mining sector run their
own health services for employees and their families.

AYUSHMAN BHARAT OR NHPS

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INTRODUCTION

Prime Minister Narendra Modi announced his flagship project, Ayushman Bharat or
National Health Protection Scheme on Independence Day. The project was on September
25, on the birth annivarsary of Deen Dayal Upadhyay. Dubbed by ministers and BJP
leaders as ‘Modicare’, the full roll-out of the scheme is expected to be announced from
September 25 onwards. The policy was initially announced by the then finance
minister Arun Jaitley in February this year during the presentation of last full budget of
the NDA government.

It has two components namely-

HEALTH AND WELLNESS CENTRE[HWC]
HWC'S will be upgraded form of primary health centres[PHC].the focus area includes
non communicable diseases and infectious diseases along with neonatal and maternal
care.HWC are primarily meant for early detection and prevention. This is significant in
sense as burden on secondary and tertiary health system will reduce if early detection
takes place, moreover rural areas will benefit as HWC will spread across India.

NATIONAL HEALTH PROTECTION SCHEME[NHPS]

NHPS is an insurance scheme which covers costing up to 5 lakh rupees per family per
year for secondary and tertiary care hospitalization. It will cover 10 crores poor and
vulnerable families. The scheme will reduce out of pocket expenditure and offers a
choice for treatment at private hospitals.

Strategy of Scheme
Establishment of Ayushman Bharat National Health Protection Mission Agency at
National Level and State Health Agency to ensure proper implementation of Scheme at
National,State and UT levels.
The States and UTs can implement scheme through an insurance company or Directly
through Trust/Society. This would increase Ambit of the Scheme at Ground levels.

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Merits of Scheme
A Strong Network of 1.5 Lakhs Health and Wellness Centers across the Country would
constitute Foundation of India's new Healthcare Systems.
It will cover more than 10 Crore Poor and Vulnerable Families of the Society.
The Support from Trained Nurses and Health Workers increase the Availability near
Home in Rural Areas.
Vulnerable Sections of the Society would have access to Healthcare to almost all medical
and Surgical Conditions that can occur in Lifetime.
Package Rates decided by Government for Private Hospitals would help in keeping the
cost low.
It will generate Employment Especially for Women would help in Economic
Empowerment of Women.

Challenges
Major Challenge would be Implementation and Governance of the Scheme.
The private hospitals are based on profitability motives and fixing rates of procedures
would increase chances of hospitals neglecting poor Patients. The Healthcare is a goal
under SDG 2030 Goal-3 of good health. The scheme would ensure proper healthcare
facilities for most vulnerable sections of the society.
By preventive disease at early stage can make a change.For example, early detection of
diabetes at the age of 35 can avoid the kidney failure at age of 50.Also schemes exclude
outpatient health care that is responsible for 70% of health expenditure.
Budget allocation of 2000 crore scheme doesn't serve the purpose.Amount is meager as
compared to scope of the scheme.
The schemes is far from universal health coverage as it exclude 80 crore (60%) of the
population.

Way forward
Providing insurance covers alone will not improve the health system in the
country.Rather, there is a need to build robust health care infrastructure in the remotest

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corners of the country where people have easy access. Budget allocation needs to be
increased to realize the purpose of the scheme.

What is Ayushman Bharat or National Health Protection Scheme?

The ambitious Ayushman Bharat or National Health Protection Scheme aims to cover
over 10 crore vulnerable families (approximately 50 crore beneficiaries) and provide
health cover up to Rs 5 lakh per family per year. The programme is being touted as the
world’s largest health protection scheme. The benefits of the scheme are portable across
the country and a beneficiary covered under the scheme will be allowed to take cashless
benefits from any public/private empanelled hospitals across the country.

Who are covered under Ayushman Bharat or NHPS?

The scheme will aim to target over 10 crore families based on SECC (Socio-Economic
Caste Census) database. To ensure that nobody from the vulnerable group is left out of
the benefit cover, there will be no cap on family size and age in ‘Ayushman Bharat’
scheme. The insurance scheme will cover pre and post-hospitalisation expenses.

How will the finances of Ayushman Bharat be covered?

The expenditure incurred in premium payment will be shared between Central and State
Governments in a specified ratio. The funding for the scheme will be shared – 60:40 for
all states and UTs with their own legislature, 90:10 in Northeast states and the three
Himalayan states of Jammu and Kashmir, Himachal and Uttarakhand and 100% Central
funding for UTs without legislature. The states are also free to continue with their own
health programmes.
So far, 14 states have finalised their memoranda of understanding with the Centre. Of
these Andhra Pradesh, Telangana, Madhya Pradesh, Assam, Sikkim and Chandigarh are
the states that will use a trust model for the mission. In a trust model, bills are reimbursed
directly by the government. Gujarat and Tamil Nadu have opted for mixed mode
implementation. In an insurance model, the government pays a fixed premium to an
insurance company, which pays the hospitals.
Who are Covered?

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The National health Agency headed by a full time CEO will be the nodal
agency for the implementation of the programme. States and Union Territories
will devise their own modes of implementation – the one suggested by the
Centre as a model is through state health agencies (SHA). They can use either
an existing trust or society or not for profit company or a state nodal agency or
can set up a new entity.
Like in case of the National Health Mission, responsibility for the
implementation of NHPM will lie with the states. It is their call whether they
choose to implement through a trust model, an insurance model or in the
mixed mode.
Right from the beginning, the issue of branding for the mission – that has been
lovingly referred to as Modicare by ministers and BJP functionaries – has
been a thorny one. That is why a “consensus “ was reached that for states that
already have a health scheme running, AB-NHPM would enter the state as an
“alliance” with the state programme. So in Telangana, Ayushman Bharat will
be in alliance with Aarogyashri, in Tamil Nadu, it will be in alliance with the
Chief Minister’s Comprehensive Health Insurance Scheme and in
Maharashtra it will be in alliance with the Mahatma Jyotiba Phule Jan Arogya
Yojana.

The funding for the scheme will be shared – 60:40 for all states and UTs with
their own legislature, 90:10 in NE states and the three Himalayan states of
Jammu and Kashmir, Himachal and Uttarakhand and 100% Central funding
for UTs without legislature.

The states are also free to continue with their own health programmes. That
would take care of the concerns of states like Maharashtra about the existing
beneficiary list already being bigger than what the SECC data entails. The
“dovetailing” means that if as per SECC data, 2 lakh people in the state are
covered by NHPM, while the state scheme already has 3 lakh people, the

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 Centre would pay 60% of the premium amount for 2 lakh people. For the state
it would mean some savings. For states particularly ambitious and willing to
pay it is even possible for them to make the beneficiary base additive, at least
theoretically. It also means that Naveen Patnaik has not only stolen the Centre
of bragging rights by announcing a Rs 5 lakh health scheme, a time may soon
come when 60% of that premium amount is paid by the Centre.
There will be 100% portability within the country. Package rates of the
hospital where benefits are being provided will be applicable while payment
will be done by the insurance company that is covering the beneficiary under
its policy. State Governments will enter into arrangement with all other States
that are implementing AB-NHPM for allowing sharing of network hospitals,
transfer of claim & transaction data arising in areas beyond the service area.

AIMS AND IMPLEMENTATION

The Ayushman Bharat programme is apparently driven by two main aims: 1) to
strengthen primary health care which has been lacking in the country and 2) to offer
finacial protection from catastrophic expenditure, often encountered once a family
member is sick and needs long-term health care.

Implementation is Key
1. The scheme, if implemented properly could be a game changer by
enhancing access to health re including early detection and treatment
services by a large section of society who otherwise could not afford them.
The identification of beneficiaries can be done by linking with Aadhar and
similarly following up for services received and health outcomes achieved,
thereby helping to monitor and evaluate the impact of the programme.
2. Ultimately, NHPS could help country move towards universal health
coverage and equitable access to healthcare which is one of the UN
Sustainable Development Goals or SDGs.This new scheme builds on the
already existing Rashtriya Swasthya Bima Yojna or RSBY – a health

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 insurance scheme for the below poverty line families, with entitlement of
upto Rs 30,000 per annum for diseases requiring hospitalization. However,
given that states are expected to agree for 40 per cent share under the
NHPS and that health being a state subject, state ownership and
commitment will be critical for the success of the programme.
3. The Finance Minister has made a budget allocation at Rs 52,800 crores for
the health ministry, up from Rs 47,352 crore during the previous year
signifying an increase of 11%, yet as percentage of the GDP, it is still
among the lowest in the world. In addition, government plans increase the
levy of health cess from 3 to 4%. According to health minister J P Nadda,
Rs 2000 crore has been allocated as of now.
4. It is clear that the NHPS scheme, which primarily offers support for
clinical services such as hospitalization, is unlikely to help fix the broken
public health system in the country. The most critical issue remains the
limited and uneven distribution of human resources at various levels of
health services, with up to 40 per cent of health worker posts lying vacant
in some states. Most primary health care centres suffer from perennial
shortage of doctors and even district hospitals are without specialists.
5. Without addressing the human resouce situation, public sector health care
will remain of poor quality and largely unacceptable, forcing patients to go
to the private sector. Therefore, it seems as if NHPS is likely to benefit
private parties more than government health services. This will ultimately
be unsustainable and even detrimental for the poor for whom the scheme
is intended.
6. To maximise benefits, it may be wise to establish a link among various
health initiatives announced in the budget and also with related
programmes such as the National Health Mission.
7. Clarity is also needed on what services will be provided by government
health facilities and for which conditions patients will have to use private
parties and what mechanisms are being thought of. There is a need for
uniformly pricing systems for various health interventions, including

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 diagnostics and medicines, and making them transparent by displaying
them in hospital premises.
8. Moreover, a continuum of care system also needs to be established by
linking institutions or hospitals, with health centres and the community.
Community engagement is thus crucial in planning and implementation of
the programme and in ensuring that the health and wellness centres and
the primary health centres are responsive to the needs of the community.
For the success of the programme, effective implementation is the key.
9. Finally, the scheme is innovative and path-breaking in the history of public
health in India, which may have a transformative impact if implemented in
an effective and coordinated manner. The enduring interest and level of
discussion in the media does reflect the wider realization in the country
that only healthy people can build a strong and prosperous nation.

CONCLUSION

The preceding sections of this paper present the health insurance scenario in India. Given
the situation, there are few issues of concern or barriers towards implementing a social
health insurance scheme in India. These are enumerated below along with the possible
way ahead.

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India is a low-income country with 26% population living below the poverty line, and
35% illiterate population with skewed health risks. Insurance is limited to only a small
proportion of people in the organized sector covering less than 10% of the total
population.
Currently, there no mechanism or infrastructure for collecting mandatory premium
among the large informal sector. Even in terms of the existing schemes, there is
insufficient and inadequate information about the various schemes. Data gaps also
prevail. Much of the focus of the existing schemes is on hospital expenses.

There continues to be lack of awareness among people about health insurance. In spite of
existing regulation in some States, the private sector continues to operate in an almost
unhindered manner. The growth of health insurance increases the need for licensing and
regulating private health providers and developing specific criteria to decide upon
appropriate services and fees.

The success of any social insurance scheme would depend on its design,the
implementation and monitoring mechanisms which would be set in place and it would
also call for restructuring and reforming the health system, and developing the necessary
prerequisites to ensure its success.

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