State-sponsored insurance may not be the best idea

By: |
Published: December 2, 2019 12:46:20 AM

State-sponsored insurance may not be the best idea. Instead, govt should increase spend on offerings.

The Centre, which is mulling over insurance-based universal healthcare coverage, should take note.

A new paper by researchers at the National Institute of Public Finance and Policy shows that basic healthcare will suffer after implementation of large government-sponsored health insurance schemes like Ayushman Bharat, especially when the government must contend with a fiscal strain. The researchers examined health insurance schemes implemented by the governments of undivided Andhra Pradesh, Karnataka, and Tamil Nadu between 2004-2017. In all three states, the schemes started with covering just the poor, and were gradually extended to other sections of society. Insurance spending cast a shadow on other public health spending, including on primary and secondary healthcare—this increases dependence on private healthcare, which, in turn, pushes up the costs of insurance schemes. The Centre, which is mulling over insurance-based universal healthcare coverage, should take note.

The government must vastly expand its healthcare spend; public spend on healthcare is just 1.13% of the GDP while the total spend is around 4%, indicating, against a backdrop poor health insurance penetration (total health insurance premium, including government, private, and standalone insurance, stood at just Rs 37,000 crore in FY18), massive out-of-pocket expenditure.

But, as the NIPFP study shows, public-funded health insurance schemes may not be the best idea, more so, given the high chances of fraud as Rajasthan’s Bhamashah experience shows. Instead, the government must increase healthcare offerings, from infrastructure to direct spending—Delhi offers a template, having made diagnostics and surgery free at private hospitals (the government will pay the hospitals), it is now making ICU beds free, all subject to referral by a government hospital.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Next Stories
1In Modi 2.0, there’s a glaring lack of interest in fortunes of the economy
2Who is Akshay Bhatia? The 17-year-old phenom who is being billed as next big thing in golf
3GDP growth: Unless credit flows to industry revive quickly, it’s hard to see any pickup