New health scheme to reduce out of pocket expenses for BPL families

The new health scheme launched by finance minister Arun Jaitley in his budget speech yesterday will not only provide additional top-up coverage of Rs 30,000 to senior citizens, it will also help reduce the cost burden and out of pocket expenses for families below poverty line.

On an average, India sees an annual health inflation of 18 per cent which is also reflected in increase in health insurance premiums on a periodic basis. The committee, constituted to examine health insurance framework in India, has recommended that increase in premiums each year be linked to Consumer Price Index-based (CPI) inflation and that should be CPI-plus-three per cent. This will lead to additional rises in premiums. Standard health policy premiums increase only after three years.

With this, health insurance may become costlier, leaving economically vulnerable out of coverage from the standard policies offered by health insurers and non-life insurers.

K G Krishnamoorthy Rao, MD & CEO, Future Generali India Insurance said that the new health scheme would enable that the number of ailments/procedures where complete cost of treatments can be covered would increase than in the existing scheme.
 

“This would also increase the number of quality hospitals within the network of this scheme with more number of hospitals getting empanelled. For the BPL families, this scheme would definitely reduce the financial burden of catastrophic Health care costs,” he said.

India already has the Rashtriya Swasthya Bima Yojana (RSBY) that was envisaged to provide health insurance coverage to Below Poverty Line families. Its beneficiaries are entitled to hospitalisation coverage of up to Rs 30,000 for most diseases. Hence, the new scheme could run parallel to RSBY since existing contracts for the scheme have been extended till March 2017.

Here, the cost would be subsidised heavily by the government. While in the RSBY scheme, insured paid Rs 30 as premium while the government pays the rest, the premium in this scheme would be much higher since the size of the cover is also higher.

A contour similar to RSBY scheme is expected to be followed, where insurers bid for districts to implement the scheme. The Centre pays 75 paise of every rupee of policy premium for the RSBY and the states pay the rest. Here, Jammu and Kashmir and the north-eastern states pay only 10 per cent of the premium.

It was earlier anticipated that RSBY will be subsumed in a universal health scheme. However, since several insurers have recently taken part in bidding process for existing and new districts, that is slated to continue for another year.
 

Hence, overall the size of the cover available goes up. What share of it can be used for outpatient expense which now forms a significant chunk of health costs needs to be seen. These expenses include doctor’s fees, special diet, additional injections, nurse charges among others.