Budget 2018: Jaitley's Rs 500,000 health scheme for 500 mn ahead of polls

Rs 12 bn proposed for free drugs and diagnostic tests, benefits to be provided through creation of 150,000 health and wellness centres

Finance Minister Arun Jaitley on Thursday announced a flagship National Health Protection Scheme, which would provide health insurance cover of Rs 500,000 each to about 100 million poor families.

The new scheme, billed as the biggest government-funded health insurance programme, appears to be an extension of the Rashtriya Swasthya Bima Yojana (RSBY), launched in 2008 to provide secondary care to people living below the poverty line. 

The benefit under the RSBY was restricted to Rs 30,000 per family, whereas the beneficiaries under the newly announced scheme may seek secondary and tertiary treatment up to Rs 500,000 in a year.

Jaitley said the scheme was a step towards providing universal health coverage. “Once the experiment is successful, we will roll out the scheme throughout the country.” He, however, fell short of revealing the funding details of the proposed scheme. 

Under the RSBY, which covers 30.6 million families in 15 states, the cost is shared by the Centre and states in the 75:25 ratio. The premium paid for the RSBY is estimated to be around RS 500 per family.

The new health insurance programme also resembles Rajasthan’s Bhamashah Swasthya Bima Yojana (BSBY) under which the state government pays a premium of Rs 1,261 per family for a Rs 300,000 cover.

Industry experts believe that the National Health Protection Scheme would cost the Centre around Rs 200 billion annually, assuming the premium to be around Rs 2,000 for a single family. The government is likely to fund the scheme through the increase of education and health cess, from 3 per cent to 4 per cent. “This will enable us to collect an estimated additional amount of Rs 110 billion,” Jaitley said in his budget speech. 

Officials in the Union health ministry said the government would also be providing money for the new scheme through RSBY funds, which received Rs 20 billion in the current Budget. 

Jaitley’s announcement impacted the insurance companies positively. The stock prices of both HDFC Standard Life Insurance Company and ICICI Lombard General Insurance Company went up by around 5 per cent each.

“It is indeed heartening that 40 per cent of India’s population will be covered under an insurance scheme. Effectively, this initiative tops even the US’ Medicaid programme, which amounts to $550 billion,” said Suneeta Reddy, managing director of Apollo Hospitals.

Besides this scheme, Jaitley announced allocating Rs 12 billion for free drugs and diagnostic tests. These 

benefits will be provided through the creation of 150,000 health and wellness centres.

Jaitley said that Rs 6 billion had been allocated for the treatment of tuberculosis patients. “We are also setting up one medical college for every three parliamentary constituencies, with 24 new medical colleges,” he said, adding the government would upgrade existing hospitals.

Poonam Muttreja, executive director at non-profit organisation Population Foundation of India, however, said, “A mere increase in budgetary allocations for health is disappointing, especially with the announcement of schemes that require large sums of money.” 

The government’s overall expenditure for the social sector, mainly health and education, has risen substantially in 2018-19 (BE) over 2017-18 (RE).

Jaitley also announced the launch of ‘Revitalising Infrastructure and Systems in Education (RISE)’ with a total investment of Rs 1 trillion in the next four years, for research and related infrastructure in premier educational instructions.