Rashtriya Swasthya Bima Yojana: RSBY lessons for Ayushman Bharat

December 28, 2018 2:24 AM

What are the commonalities between the Rashtriya Swasthya Bima Yojana and the Ayushman Bharat-National Health Protection Mission, and why the increased coverage of Rs 5 lakh under the AB-NHPM may not reduce the actual out-of-pocket expenditure of citizens.

According to the latest National Health Accounts estimates among different sources of healthcare financing, 67% of the total health expenditure comes from households’ pockets.

(By Kannan Kumar & Sumedha Shukla)

The healthcare sector in India faces multiple challenges requiring government intervention. Of these, the most identifiably damaging is the rising out-of-pocket expenditure (OOPE) of the citizens. According to the latest National Health Accounts estimates among different sources of healthcare financing, 67% of the total health expenditure comes from households’ pockets. At the national level, of the Rs 3,826 spent on healthcare per capita, Rs 2,394 is OOPE. In this manner, catastrophic health expenses push about 7% of the population below the poverty threshold every year. Against this backdrop, the government of India launched the Ayushman Bharat-National Health Protection Mission (AB-NHPM) in September 2018.

The AB-NHPM shares its objectives with the Rashtriya Swasthya Bima Yojana (RSBY) scheme, which sanctioned Rs 30,000 health insurance coverage per family per year for secondary and tertiary hospitalisation. In the nearly nine years of RSBY’s existence, the scheme objectives are yet to be met. Several studies have found that the quality of healthcare provisioned under the RSBY was compromised because of insufficient coverage. In this respect, the Ayushman Bharat scheme is a positive step up, with an increased coverage limit of Rs 5 lakh. Despite this change, some less-desired aspects of the RSBY have unfortunately seeped into the AB-NHPM scheme.

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The capacity of increased coverage to reduce the actual OOPE is limited in the current form of this scheme. This is because of three main reasons that need to be addressed at early stage for effective implementation of the scheme.

  • One, similar to the RSBY, outpatient expenditure, which forms a major part of OOPE, has been left out of the ambit of the AB-NHPM.
  • Two, relying on a single rate card for the entire country could possibly limit private sector participation.
  • Three, preparing the entire medical procedure list at the central level is a potentially suboptimal move, given the heterogeneity in healthcare needs across the country.

Let us discuss each of these points.

First, despite the increase in coverage amount, the AB-NHPM is limited to only inpatient care. That is, the Rs 5 lakh cover is intended for secondary and tertiary care ‘hospitalisation’ only. This exclusion of outpatient care becomes inimical for two reasons. The first relates to the percentage of OOPE spent on outpatient care, which is well above 55%. Therefore, in its current form, the AB-NHPM would cover only 32% of the total OOPE directly. The second relates to a behavioural pattern common amongst the particularly vulnerable sections of the population, which the AB-NHPM aims to target. It is well-established that poorer people, functioning on daily income, tend to avoid hospitalisation due to the associated loss in working income. Therefore, outpatient care inclusive of diagnostics and medicines needs to be insured for them.

Second, the AB-NHPM scheme, in its current form (similar to the RSBY), may not be able to account for the rising private players’ participation in the Indian healthcare sector. The increase in compensation holds value only when it is able to induce insurance coverage for healthcare services provided by the private sector. From 1996 to 2016, the participation of the private sector in providing healthcare services has been increasing at a quick rate in urban areas, while remaining more or less constant in rural areas. In 2014-15, over 68% of hospitalised cases in urban areas and 42% of hospitalised cases in rural areas got recorded in private hospitals. Following a 2018 NITI Aayog ranking of states’ health performance, we see that even in the top-performing states with the highest government expenditure on health, the spending in the private sector in the form of OOPE is quite high. Unsurprisingly, the same holds true for the bottom three states as well.

Thus, the inclusion of private sector healthcare service providers under the AB-NHPM is crucial. Although the list of hospitals empanelled under the scheme contains many private hospitals, unfortunately, under the single rate card provision of the scheme, the private sector’s willing participation seems unlikely. This is because the prices proposed under the rate card fall much below the expectations of private sector healthcare providers.

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In a 2018 FICCI report, it attempted an estimation of costs of the 10 most common surgical procedures conducted in India. The exercise was carried out for 10 different private and public hospitals across metros and non-metros. The study found that the prices set under the AB-NHPM fail to cover even the costs (which are significantly lower than patient expense) of performing these surgical procedures in these hospitals by 25% to 300%. Additionally, the single rate card prescribed for the entire country does not take into account the heterogeneity in healthcare prices across the nation. The last round of the NSSO survey showed that the average hospitalisation rates vary significantly across the country. This could inhibit the implementation of the scheme in places where the prescribed rates fall below the market prices.

Third, the compilation of the medical packages list at the central level becomes an issue, given the diversity in disease prevalence across the country. A study in 2018 under the India State-Level Disease Burden Initiative maintains the need for state-specific health interventions. The study divides Indian states into four epidemiological transition level (ETL) groups on the basis of the ratio of burden from communicable, maternal, neonatal and nutritional diseases to those from non-communicable diseases in 2016. It is recognised that there are comprehensive inequalities in disease burden and its causes across states. This highlights a deep-rooted need for disease-specific interventions, allowing for specialised attention to associated risk factors. With a focused treatment approach, incidence itself can be brought down, not merely treatment costs.

The challenges highlighted above can be potentially addressed with the idea of cooperative federalism, which encourages Centre-state collaboration. States’ role needs to be enhanced at planning stages, a shift from their current role as implementers. For instance, states could be given the responsibility of preparing the medical package list. This would possibly have two benefits.

  • One, it can induce cost-effective accounting for interstate variation.
  • Two, if poorer states could set up lucrative prices for healthcare packages, it could augment private investment in these states. This would ideally lead to the creation of healthcare infrastructure where it is lacking.

In conclusion, while the ideation of the scheme needs to be lauded, the implementation challenges deserve some serious thought. An increased states’ participation and inflation-adjusted rates for procedures would help India progress towards its universal healthcare goal.

(Kumar is associate fellow, Pahle India Foundation, Shukla is research associate, Department of Social Science and Humanities (Economics Division), IIIT-D)

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