In the context of several insurance schemes, from the PM Jeevan Jyoti Bima Yojana to the Rajasthan Bhamashah health insurance scheme, being in the red, the government needed to put in a mechanism to equitably share both the profits as well as the burdens.
Following feedback on its draft consultation paper, the government has made several changes to the tender document for the National Health Protection Scheme (NHPS) that is to be rolled out on August 15—NHPS will provide 10 crore families a floater healthcare policy of Rs5 lakh per annum. There are, however, several problem areas that still require fixing or greater clarification. In the context of several insurance schemes, from the PM Jeevan Jyoti Bima Yojana to the Rajasthan Bhamashah health insurance scheme, being in the red, the government needed to put in a mechanism to equitably share both the profits as well as the burdens. Since there is a natural tendency for any insurance company to reject claims, the government has put in a clawback policy. In Category A states, for instance, if claim ratios are below 60%, the insurance company is allowed an administrative cost of 10%, and then all the premium has to be refunded to the government. If, on the other hand, the claim ratios are between 60-70%, an administrative cost of 15% is allowed, after which the balance has to be repaid.
Logically, this should also apply the other way, in that if claims ratios rise above 100%, the government should pay the claims—indeed, once this is done, the government will also have a vested interest in ensuring fake claims are busted at the earliest. What has been done, however, is something that makes little sense. So, if the claims ratio exceeds 120%, the excess amount will be equally shared by the insurance company and the state government—logically, since insurance companies are refunding premium when claims are low, they should be fully compensated when they are excessive. Later, the central government will reimburse the state government based on its share. The tender document says this “shall not exceed the maximum ceiling amount of the share of the Central Government”—it is not clear whether this puts a ceiling to how much the Centre will eventually pay.
Nor is it clear whether the insurance company has enough levers to check fraud. Clause 24 (e) of the tender document says the insurance company can take the lead to start investigating fraud, but, clause (f) says “all final decisions related to outcome of the investigation and consequent penal action, if the fraud is proven, shall vest solely with the SHA”—the SHA is the State Health Agency. The SHA does its empanelment and de-empanelment of hospitals through a State Empanelment Committee (SEC) and a District Empanelment Committee (DEC). The problem, however, is that while the SEC has five members, only one of them is from the insurance company; in the case of the DEC, only one of three members will be from the insurance firm. A table in the chapter on de-empanelment, on the other hand, seems to indicate that the punishment for the third offence is automatic de-empanelment. Given the importance of both these issues, the government needs to issue an immediate clarification. The government also needs to relook the premium cap being talked of, since, most experts argue it is too low. Indeed, since there is a clawback provision, the issue of putting a cap on the premium—it should be discovered through bidding—is quite redundant.