The government?s reported plan to roll out a universal health insurance scheme in the 12th Plan period will be welcomed by all citizens since, at the moment, under a tenth of all Indians are covered by any form of medical insurance, either through their jobs or by buying insurance. And to the extent households move in and out of poverty with each medical emergency, the need for this policy is much more immediate. Even so, it is important to get it right, to ensure we don?t get into the kind of trap the US is in, for instance, or the kind of trap India has got into in the case of pensions. The Employees Pension Scheme (EPS) is extremely limited in its coverage, stretching to perhaps a couple of crore persons, but the uncovered gap in it jumped from Rs 22,000 crore in 2004-05 to around Rs 54,000 crore in 2009-10?when it was started in the mid-1990s, the EPS was easily funded with interest rates at around 15%, but with interest rates much lower now, the uncovered gap is ballooning each year.
Keep in mind that even at the upper end of the scale, for the 5-6% of Indian households that buy medical insurance, there is a serious problem of uncovered deficits. Annual insurance payouts are around 120% of premia, which is why insurance firms discontinued their cashless treatment facilities some months ago. While these are being partially restored, attempts are being made to work on treatment and price protocols. If this is being done only now, and there is still no certainty as to how it will turn out, it is a bit of a stretch to try and do something similar for the entire country. Surely, a series of pilots, in different parts of the country, is a better way to go, to evaluate the profitability of insurance firms and the feasibility of offering this to one and all. More so, since this is not the first time that such a plan is being tried. The government introduced Universal Health Insurance in 2003, where it paid Rs 100 per household as a subsidy, with the sum assured of Rs 30,000?the scheme never took off. In 2008, the government launched the Rashtriya Swasthya Bima Yojana to provide health insurance coverage of Rs 30,000 to BPL families for hospitalisation costs. After three years, only a third of the districts have had enrolments. There is no independent corroboration of how well the scheme is doing in terms of meeting the needs of the poor themselves. So, it?s a good idea to develop the scheme carefully, even if that means going slow. And yes, it may do the poor more good than insurance if the government worked on improving the quality of primary healthcare.
