Prime minister Narendra Modi has done well to focus on various insurance schemes for the poor since it is medical emergencies and the death of the chief wage-earner that are major reasons for people slipping back into poverty. The schemes have been well received—Pradhan Mantri Jeevan Jyoti Bima Yojana (life insurance) has been purchased by 3.5 crore people at an annual premium of a mere Rs 330 per person, and Pradhan Mantri Suraksha Bima Yojana (personal accident) has been bought by 1.1 crore persons at an annual premium of Rs 12 per person. Though it is early days, the government’s focus will have to be on ensuring more people buy it and that the payouts are simple and fast.
What is disappointing, in this context, is the medical insurance scheme Rashtriya Swasthya Bima Yojana (RSBY) that has been bought by 3.6 crore families. According to a recent study, RSBY has not provided any significant financial protection for poor households and has been ineffective in reducing the burden of out-of-pocket spending on poor households. Launched in 2008, about 3.6 crore of the targeted 5.9 crore BPL families are enrolled under the scheme. At present, the beneficiaries under RSBY are entitled to hospitalisation coverage up to Rs 30,000 per annum on family floater basis (for five people) for most of the diseases that require hospitalisation. While pre-existing conditions are covered, outpatient services are not. The government pays premium of Rs 750 per family per year, which is shared between Centre (75%) and states (25%) and managed by public and private insurance companies selected by a competitive bidding process. This is grossly inadequate, and the government needs to think of raising the cover and look for better policies that include out-of-pocket expenses. The NSSO survey shows that out-of-pocket expenses account for 70% of the total healthcare expenditure of a person.
Similarly, the Employees State Insurance Corporation (ESIC) that offers medical cover to those earning below Rs 21,000 per month needs to be replaced since it is very expensive—right now, the premium is as high as 6.5% of one’s salary. Plagued by problems like non-availability of doctors, nurses, diagnosis and medicines, people have to go to the private sector health-care providers and incur out-of-pocket expenses. As on March 2016, there were 8.28 crore beneficiaries while there were 1,626 ESI dispensaries/ISM units. How profitable the ESI is—or expensive from the point of view of those who use its services—is best seen from the fact that its reserve fund was Rs 49,358 crore as on March 2016; in FY16 alone, the surplus was Rs 6,497 crore. For a person whose average income is Rs 10,000 per month, the ESI costs Rs 7,800 a year for hospital expenses. A group insurance cover of Rs 2 lakh, on the other hand, would cost Rs 5,000 a year and will cover both out and inpatient costs. The government needs to relook ESIC and substitute it with more cost-effective solutions.