Moneycontrol
Last Updated : Feb 02, 2018 10:26 PM IST | Source: Moneycontrol.com

States may have to partly fund ambitious ‘Modicare’ plan; trust-based model likely to pilot scheme

"The normal sharing formula for Centre and states is 60:40, but for this particular scheme, many states have started doing it to some extent. That exact formula will also be worked out,” said Subhash Chandra Garg, Economic Affairs Secretary.

Gaurav Choudhury @gauravchoudhury
Shreya Nandi @shreyanandi15

States will likely have to pick up a part of expenditure for the Modi government's ambitious National Health Protection Scheme (NHPS), billed as the world’s largest state-funded health insurance programme benefitting 500 million people.

The sharing between the Centre and the states will be decided at the time of roll out. “The normal sharing formula for Centre and states is 60:40, but for this particular scheme, many states have started doing it to some extent. That exact formula will also be worked out,” Subhash Chandra Garg, Economic Affairs Secretary, told Moneycontrol on Friday.

NHPS could cost the Centre Rs 4,000 crore in the first year, with states likely to share the remaining part of the bill. “Preliminary estimates suggest that there will be Rs 4,000 crore implication for the Centre,” Garg said.

Finance Minister Arun Jaitley in Budget 2018-19, announced the launch of NHPS to cover over 100 million “poor and vulnerable families”, approximately covering 500 million beneficiaries. It will provide coverage up to Rs 5 lakh per family per year for secondary and tertiary care hospitalisation.

Garg said that the funds for the programme will depend on the model that is adopted. State governments will likely be given the option to choose between a trust-based model and an insurance company-driven model.

The Centre, in consultation with NITI Aayog and the health ministry, may favour a trust-based model for implementing NHPS. Global evidence shows that trust-based models have proved to be more successful in implementing such schemes that profit-maximising insurance firms are hesitant to take up.

Under this plan, trusts, funded by the Centre and states, will likely pilot the scheme. The trusts will act as the main gatekeeper for processing and settling claims of hospitals that treat the scheme’s beneficiaries. Andhra Pradesh’s Arogyasri scheme and Karnataka’s Yeshasvini’s programme serve as a proof-of-concept for trust-driven group health protection model, without cover from insurance companies.

The sharing between the Centre and the states will be decided at the time of roll out, Garg said. “The normal sharing formula for Centre and states is 60:40, but for this particular scheme, many states have started doing it to some extent. That exact formula will also be worked out,” he said.

On Thursday, Jaitley said that “several state governments have also implemented/supplemented health protection schemes providing varying coverage”.

In his Budget speech, Jaitley had said that “adequate funds” will be provided for the programme. In the Budget, he has set aside Rs 2,000 crore the existing Rashtriya Swasthya Bima Yojna (RSBY), which provides an annual coverage of only Rs 30,000 to poor families. There is also another Rs 1,000 crore earmarked specifically for NHPS in the Budget for 2018-19. The existing RSBY will likely merge with the new scheme, which will likely be rolled out by July.

Garg said that NHPS will be an emergency prevention medical scheme for major diseases.

“It is not an all-care kind of scheme. The objective is to prevent families from falling into a debt trap because of unfortunate health emergencies. Obamacare is more universal. This is a targeted intervention,” Garg said.

The government will work out a plan to identify the beneficiaries. “An existing identifier may be used (to identify the beneficiaries),” he said.

“This scheme will be available even if someone has an (existing) insurance cover. The family would have a choice whether to continue with another scheme or not,” he said.
First Published on Feb 2, 2018 09:53 pm
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