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Jaitley is Carrying Forward a Deeply Flawed Health Insurance Program

Jaitley is Carrying Forward a Deeply Flawed Health Insurance Program

Credit: Calcutta Rescue, Flickr CC BY 2.0
A quarter of RSBY beneficiaries do not have a BPL card. Credit: Calcutta Rescue, Flickr CC BY 2.0

The message coming out of finance minister Arun Jaitley’s budget this year is that the rural economy is back at the heart of policy-making. One of the highlights of the budget was the announcement of the ‘Health Protection Scheme’, under which poor households will be provided with an annual cover of Rs. 1 lakh to protect them from health-related financial shocks. This marks a significant expansion of the Rashtriya Swasthya Bima Yojana, under which the cover was limited to Rs. 30,000. While the move has generated mostly positive responses, it is a matter of concern that a program whose efficacy is shrouded in mystery is being expanded. This becomes all the more worrisome when one takes into account that the infrastructure-augmenting National Rural Health Mission (NRHM) has seen no such increase in outlay.

Unlike the NREGA, publicly available information on the RSBY programme is rare. This has seriously hampered academic work that can evaluate the impact of the program. Yet, a few researchers have managed to study the impact of the RSBY and similar state-level schemes. While evidence of a reduction in financial burden for households is unambiguous, that on the quality and accessibility of hospitals is mixed.  What that implies is that households are merely saving cash that they would have earlier spent on healthcare, and the scheme has failed to increase access to quality healthcare. If this is the case, then a direct cash transfer would work better. A direct cash transfer would also help in getting rid of the perverse incentives that the RSBY creates for hospitals; the mass hysterectomies identified in Bihar are a prime example of these incentives

Whatever little data is available to the public points towards a deeply flawed programme. While the programme is targeted at poor households, almost a quarter of RSBY beneficiaries do not have a BPL ration card. Enrolment also remains extremely poor – even in the districts in which the program was rolled out before 2010, nearly 30% of targeted households are still not enrolled. This despite the fact that, under the scheme, the government provides an electronic list of all targeted households to the enrolment agency and the registration fee is a paltry Rs. 30 for a family of five. Awareness and utilisation also remain extremely poor, with nearly 60% of households enrolled under the scheme unaware that they are covered by government health insurance. Hence, the benefits of the scheme remain limited to a population much smaller than what the scheme is intended to cover.

What then explains the government’s hurry to expand this untested program? In many ways, the new ‘Health Protection Scheme’ ties in with the Modi government’s ‘minimum government, maximum governance’ mantra.

Underlying the new priority is the belief that putting purchasing power in the hands of consumers will drive the private sector to open more hospitals in these underserved areas. It is version 2.0 of the public – private partnership model. However, in a market that has asymmetric information between the hospitals and patients, such policies leave the uninformed consumers exposed to possible exploitation. Whether such a programme is a panacea to India’s health woes is yet to be seen, but the need for a mission to improve health is there for all to see.

Despite a long period of robust economic growth, India’s health outcomes leave much to be desired, being often comparable to much poorer Sub-Saharan Africa. Over half of India’s women are anaemic, 47% of children of age 5 are stunted, and a quarter of pregnant women never receive prenatal care. The government’s intention to involve the private sector in addressing the healthcare gap is praiseworthy, but the government cannot avoid its responsibility as the primary service provider and regulator in this sector. The government needs to open the data books so that citizens and researchers can evaluate the program. Opacity, such as the one existing with the RSBY currently, can quickly become a recipe for corruption. The government, with its focus on efficiency of subsidies, would benefit immensely from open data and transparency.

Subhashish Bhadra is an economic researcher based out of the University Oxford

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