Scheme will help the poor, needs tight monitoring
Ayushman Bharat, a mammoth national health insurance-cum wellness centre plan, cleared by the Cabinet on Wednesday, should go a long way in helping the underprivileged. Given how medical expenses can be a huge financial burden for any household, a scheme of this kind is long overdue. While the target of buying a medical insurance cover for a little over10 crore families or roughly 50 crore people appears ambitious, it would help provide scale benefits for the insurers. While the government is looking at a plan that will have a sum assured of Rs 5 lakh at a premium of Rs 1,200 which the government will bear, insurers are understood to have indicated to the government this would make the business unviable. A slightly higher premium, of between Rs 2,000 and Rs 2,500, is what insurers feel is a workable number.
That, of course, assumes the package rate, which the government negotiates with the hospitals, is reasonable. Given the scale of the scheme, the government should be able to convince hospitals to charge moderate rates. Even otherwise, the cost of the treatment in smaller hospitals will be much lower than that available in a big city hospital.
Insurers are also betting on the law of large numbers which give scale benefits and should result in a relatively lower frequency of claims. Also, since this is an entitlement scheme, they would save on customer acquisition costs. However, the problem with an Aadhaar-based entitlement scheme compared with an enrolment programme is that there would be very little screening for pre-existing diseases or perhaps none at all. That, insurers believe, is a risk and could result in driving up the claims ratio.
In fact, the government should heed a suggestion that insurers have put forth for a centralised fraud-detection mechanism. If the job of investigating frauds is left to the local officials, there could be a fair amount of connivance with the hospital authorities and the number of fraud cases could shoot up. This is among the biggest concerns that insurers have, given many of the hospitals will be in very small towns and it will be difficult for them to follow up on any alleged frauds. If insurers find the claims are unusually high in the first couple of years, they may stay away altogether and that will hurt the scheme in subsequent years.
On paper, it appears to be simple enough, but with so many state governments and hospitals involved, implementing it will not be easy. Those working on the scheme in government have been talking of using state-of the-art technology which is a must; else, the leakages could be very high. Also, insurers must get the premiums on time, whether it is from the state or central government.