A winning model of health insurance for the poor - Economic Times
Access to healthcare in India has certainly improved over the past few decades. All indices point in this direction. However, India still languishes amongst the worst providers of healthcare. Outof-pocket expenses are the primary cause of indebtedness for the poor. The key issue is how to reach out to the population at the bottom of the pyramid. Is there a model that is socially desirable, politically acceptable, technologically feasible and financially sustainable?
Rashtriya Swasthya Bima Yojana (RSBY) is gradually demonstrating that there can be a business model for a social sector scheme. It is also demonstrating that markets do not necessarily work against the poor. In fact, markets can bring about efficiency in delivering public services that are (should be) delivered by the government or its agencies. At present, under RSBY, the premium for health insurance cover of `30,000 for a family of five is shared by the central and state governments.
The beneficiary pays only `30 as registration fee. However, the delivery of healthcare services is by public and private sector insurance companies that cover the risk and in-patient health care is provided by more than 8,000 hospitals, public and private, spread across the country. The scheme, therefore, illustrates how public-private partnership can successfully deliver a social sector scheme.
What the scheme does is to really empower the poor. They are free to access healthcare in any of these hospitals anywhere in the country with a smart card enabling the portability of entitlements.
Independent third-party evaluations have revealed a beneficiary satisfaction rating between 70% and 90% with the services provided under the scheme. This is so because the scheme was designed keeping in mind the characteristics of the targetted beneficiary. He was poor, illiterate and migrant hence the scheme had to be cashless, paperless and portable.
Insurance companies have a business interest in issuing as many smart cards as possible as the amount paid to them is a multiple of the cards issued. The inbuilt security and verification system ensures that the card cannot be issued to the wrong person.
As the beneficiary carries a credit of `30,000 on the chip of the smart card, the hospitals do not chase the 'poor' (now empowered) beneficiary away. There is a fortune waiting for them at the bottom of the pyramid. The RSBY covers 26 million families, providing health insurance to around 100 million poor people. Nearly 3 million people have used these services. The scheme shows why technology and markets should be used to bring transparency and efficiency in delivering public services.
The biggest lesson perhaps is in terms of thinking out of the box, of evolving a market-driven model for a social sector scheme. Markets as such may not work for the poor but market mechanisms can be used to bring about efficient delivery of services to the poor. Extended to schemes like the Public Distribution System, the smart card platform can save the country `20,000 crore per annum, and a lot more.
This is probably one of the bright spots in the social welfare sector. And the good thing about this is instead of direct govt. Intervention in the healthcare sector, the PPP format is being used to provide quality healthcare. As of now they are reportedly 26.7 million poor registered in this pilot programme