Not a prescription for the poor

Not a prescription for the poor

Context:

• The National Health Protection Scheme (NHPS) is being hailed as the biggest takeaway for the aam aadmi in this year’s Budget.

Problems:

• The Budget promised to provide insurance coverage to an estimated 50 crore poor beneficiaries through the NHPS. There are two problems with this claim.

Old scheme:

1-   Rashtriya Swasthya Bima Yojana (RSBY) :

• It was launched in 2008  to target only the Below Poverty Line (BPL) households.
• However, even after nine years of its implementation, only half the BPL families have been covered, according to government data.
• There is a huge discrepancy between the coverage figures in government data and estimates from surveys.
• In the 71st round of the National Sample Survey (NSS), 11.1% of the population was covered by the RSBY and State health insurance schemes in 2014 but according to the Insurance Regulatory and Development Authority, the population coverage of these schemes was 16.4%.

Key reasons for such discrepancy:

• The creation of bogus beneficiaries by insurance companies to earn premium subsidies from the government.
• Insurance companies have been given the premium subsidy for covering all eligible households in the respective States, the insurer reached out to only a fraction of the eligible population.
• For example, in 2016, only 2.45% eligible families were enrolled under Maharashtra’s Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY) in 2016.
• Enrolment was also found to be very low in the Chief Minister’s Comprehensive Health Insurance Scheme, in Tamil Nadu, as shown in the NSS data.

2-      Identification of poor households.

• According to the NSS data for 2014, among the poorest quintile, 12.7% of households received RSBY coverage, which accounted for 25.9% of all the RSBY enrolled households.
• About 36.52% of households enrolled in the RSBY were actually drawn from the richest 40% of the sample households.
• Almost half the households enrolled in the RSBY actually belonged to the non-poor category.
• The targeting process in RSBY has been fraught with exclusion errors.

Access issues

• According to the programme data, the hospitalisation rate was found to be as low as 1% among RSBY-insured individuals, compared to a national average of 2.6% for the general population as of 2014.
• The utilisation rate of other insurance schemes is also very low.
• For example, the MJPJAY recorded a utilisation rate (calculated as the proportion of eligible persons with at least one in-patient claim during the year) of just 0.12% in 2013-14 and 0.18% in 2014-15.
• Two very recent impact evaluation studies have reported that the RSBY has hardly had any impact on financial protection.

There are two reasons:

• International experience in publicly funded health insurance in unregulated private health-care markets. This mean a larger transfer of public money into private hands.
• In absence of strong and effective government regulations for insurers and providers, well-recognised market failures such as supplier-induced demand will ensure that eligible families exhaust full coverage with little improvement in their well-being.