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Devil In Details

Business World |
Milind Kothari, Managing Partner |

16 February 2018

The government has promised Rs 5 lakh per family per year under NHPS. Let’s see how well it delivers.

All heads turned when finance minister Arun Jaitley announced the flagship National Health Protection Scheme (NHPS) in his last full year Budget before the government goes to polls in 2019. Touted as the world’s largest government funded health-protection scheme, the NHPS will cover 10 crore poor. Jaitley said the government will provide up to Rs 5 lakh per family per year for medical reimbursement. Niti Aayog is expected to roll out this initiative by 2 October, 2018.

So how different is it from the current healthcare scheme Rashtriya Swasthya Bima Yojana (RSBY)? Launched in April ’08, RSBY was a government-run health insurance programme for the Indian poor. As many as 36 million families were enrolled under it across 25 states as of Feb ’14.

“NHPS could be a game-changing announcement since there is a central government push, and the coverage, both in terms of insured amount and the population coverage, is significantly different than what we currently have in the form of RSBY,” says Sunil Thakur, director and chief operating officer at Quadria Capital, a healthcare-focussed fund. “But the biggest challenge will be financing and implementation.” In terms of budgeting, since NHPS will be transitioned from the RSBY, the government,  says Thakur, has allocated Rs 2,000 crore for the plan. Further, there is a proposal to share the expense with the states.

“To a degree, RSBY seems to have delivered in providing cover to poor and migrant workers,” says Milind Kothari, managing partner and head - Tax & Regulatory Services, BDO India. “The learning from that has been vital for the conception of NHPS. The per family dispensation of Rs 5 lakh compared to Rs 30,000 should make a large difference,” he adds.

Apart from RSBY, many states also have their own healthcare financing schemes. The trend of states stepping into health insurance started in 2003 with the Yeshasvini scheme by Karnataka. After that Andhra Pradesh introduced the wider coverage Rajiv Aarogyasri Community Health Insurance in 2007 which actually set the tone. Thereafter, many other states adopted similar schemes including Karnataka (Vajpayee Aarogyasri) in 2009, Tamil Nadu in 2009, Maharashtra in 2012, Goa and Rajasthan a few years later. Some other states have also adopted the centre-sponsored RSBY with a top-up plan. 

“There is no doubt that on the issue of universal healthcare, India is playing catch up. Decades of low public investment have resulted in two health systems co-existing under one flag: World class care for those with money and connections to access it, and for the rest a stark choice between poor quality services or financial ruin, or very often both,” says Nilaya Varma, Partner & Head, Government & Healthcare, KPMG in India. “Properly designed, funded and implemented, the NHPS represents a once-in-a-generation opportunity to improve the health and wealth of India’s under-privileged,” he adds.

Road Ahead
“Given that the backbone of NHPS is an insurance cover, a lot would depend on how insurance companies live up to this proposition. There is no obligation on insurance companies to provide such a cover as yet,” points out Kothari.

Healthcare has always been tricky. Governments could fail if they do not deliver on its promise. Take the US for instance. One of the reasons for Donald Trump being elected as President of the US was his promise of disbanding Obamacare. “When Obamacare was launched, millions lost their insurance cover as either employers or the insurance companies backed out,” says Kothari.

While Modicare or NamoCare — as the current scheme is being named — is a tad different from Obamacare, all eyes are currently on the smooth implementation of systems for on-boarding, quality management and payment from the government.

Modicare, unlike Obamacare, is a direct financing support that is provided by the government on behalf of the insured population. “The wider Modicare covers revamping the 1.5 lakh sub-centres into wellness centres to round up a proper care infrastructure for the needy,” says Quadria Capital’s Thakur. “These wellness centers will have the provision for free diagnostics and pharmacy and cover both communicable disease and NCDs (which so far was missing) besides ENT, dental, among others.”

It’s just the early days for NHPS in India. When Obamacare was introduced, it disrupted the entire ecosystem around healthcare. The introduction of patent protection and Affordable Care Act linked the cover to tax and it meant increased tax outgo for people who did not opt for cover. The cost of healthcare went up, the prices of drugs went up and also, the pharma companies landed up with extra costs. In this context, “the introduction of NHPS, looking at developing a new ecosystem that won’t be abused, would be critical to long term success,” says Kothari.

Worldwide such schemes are successful in countries where there is an enabling environment for private sector to participate in servicing the insured or where the government controls the provider side with adequate infrastructure. In the UK, for instance, the government is the provider and has government budget to support the services. From its position of strength, it is able to bring in quality protocols and cost containment both in services and consumption of medical products.

All in all, the question on people’s mind currently is: Can NHPS transform itself into an election manifesto? Only time can tell, but steps are initiated to maintain a healthy India and empower India’s poor and underprivileged. And lastly, as the saying goes, everything is achievable if we have our heart in the right place.