Given the worrisome state of health insurance in India, the move is a bold one and must be lauded. The current state of infrastructure and government finances seem distant from what a smooth implementation of the policy might warrant
On India’s 72nd Independence Day, the government rolled out the much propagated medical cover scheme, Ayushman Bharat, which would provide free medical insurance to eligible economically weak families. It comes as a cheer for the underprivileged class for whom medical care had been beyond means. However, it has its own flip side and might have a not-so-sunny impact for healthcare providers and insurance companies.
While the contours of the policy are still being designed, and much is under the pilot phase, a lot would depend on implementation and how the loopholes are plugged, which appear to be many as of now.The proposal and benefits
As per the announcement, the Centre intends to rollout a free Rs 5 lakh per year insurance cover for around 10 crore underprivileged families (around 50 crore citizens, 40 percent of the population) to cover primary, secondary and tertiary medical care for both pre and post diseases at any government or empanelled private hospital.
Under this technology driven initiative, all EWS families, as identified in the Socio-Economic Caste Census (SECC), will be automatically covered. After this, there will be an extensive linking of many pieces in the healthcare universe, including hospitals, beneficiaries and common service centres.
The scheme will be financed jointly by Centre and state governments in a 60:40 model. Implementation in non-Bharatiya Janata Party (BJP) states is still a question mark. The state governments have the option to choose between a trust-based or a hybrid model with insurance companies. With a sharp rise in premium levels, most states are opting for a trust-based model. The programme is already in pilot mode in six states and is proposed to be rolled out for testing in others soon.The impact
The implementation of such a large scale medical support system would alter contours of the healthcare industry and have enormous impact on all stakeholders, including healthcare providers; health insurers; medical equipment companies, professionals and training institutions; and pharmaceutical industry. The move is expected to usher a steep surge in demand for medical professionals along with infrastructure. With the policy rollout date approaching, there seems a serious lack of both.
The implementation also brings with it a high probability of capping cost of various medical procedures and medicines. The scheme covers and defines the cost of 1,354 medical and surgical packages under 25 specialties. While this could pave the way for seamless implementation, lack of oversight at every stage might lead to quality dilution.
A cap on the cost of drugs could have negative repercussion for pharmaceutical companies as this would leave them with limited investment cushion in R&D, which might hamper the overall medical innovation in the longer run.
The scheme is planned to be implemented in government medical centres as well as private hospitals. Around 7,000 hospitals are already on board, of which around 47 percent are empanelled from the private sector. Under the scheme the government proposes to set up 1,500 medical centres to impart medical care. This would result in a surge in demand for medical equipment and medical professionals.
If the pricing is rational, there could be a significant opportunity for the medical equipment industry. Companies involved in building medical infrastructure should also stand to benefit. In a situation where the cost of medical devices (like knee replacement, stents etc) is pre-decided in a package, it could lead to supply of sub-standard or spurious devices, which may in turn deteriorate the quality of treatment and make way for a black market in such products.
The surge in demand for medical professionals would also require a massive skill development exercise to provide training for additional doctors, nurses, support staff etc. Owing to a lack of government medical universities, limited college seats and high cost at private institutes, India faces a serious shortage of such professionals. While the surge in demand would stand as a positive for the medical education and training industry in the long run, implementation of the programme with such a shortage in medical workforce seems questionable.
With a high claim ratio and sizeable frauds, despite a sharp rise in the premiums charged, the claim amount tends to make the proposition unviable for insurance companies, who have been at loggerheads with the government for similar schemes imposed in pieces in a few states before. Private insurance players seem sceptical over entering this initiative and public players, who may not have a choice, might feel the heat on their margins.
The system also needs to be protected from spurious reporting of cases and misuse of identity to avail free benefits. Enrolment of ghost beneficiaries to launder cash benefits is something which should be monitored. Overcharging and unnecessary hospitalisation to avail benefits could also see a surge and cripple the intended vision.Outlook
Given the worrisome state of health insurance in India, the move is a bold one and must be lauded, though many might argue that this comes at a time too close to general elections and appears like another populist move. At a time when even the middle-class goes bankrupt in availing medical treatment, the need for medical care for economically weaker sections cannot be over-emphasised. While the move holds a grand vision, the current state of infrastructure and government finances seem distant from what a smooth implementation of the policy might warrant.
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