Insurance, false assurance
Mains Paper: 2 | Health
Prelims level: National Health Protection Scheme
Mains level: Issues relating to development and management of Social
Sector/Services relating to Health, Education
The National Health Protection Scheme (NHPS) has
received much media attention and political heft.
It is expected that the scheme will reduce
impoverishment caused by unexpected events that require lump sum amounts.
How NHPS can be improved?
The NHPS is an improvement over the UPA’s Rashtriya
Swasthya Bima Yojana (RSBY) in three ways:
It does not require the renewal of the ID card every
year, the ration or the Aadhaar card being adequate;
Services can be accessed from any empaneled hospital
in the country; and
An increase in the sum assured from Rs 30,000 to Rs 5
lakh, per family per year.
Analysing on medical services
The scepticism has to do with access to medical
services. The scheme is founded on two assumptions.
One, there is “excess capacity” to be addressed under
the facility of “portability”. Such thinking has proved wrong by cases of
emergencies in the supply deficit northern states while in the
better-endowed southern states.
The wait lists for elective surgeries are growing
longer. Besides, indirect costs and constraints can be substantial
The NHPS, by creating an “effective market,” will
incentivise private investment flow in Tier 2 and 3 cities.
The critical barriers are acute shortage of human
resources, huge operational costs and the low volume of paying patients to
Impacts on government budget
Cost of Care
The scepticism has to do with the cost of care.
The NHPS has begun with a low benchmark of prices,
though in the face of stiff resistance from private hospitals.
The government has promised a review after the
general elections in 2019.
Prices are likely to be substantially hiked
necessitating a higher outlay. Besides, with increased utilisation,
premiums are likely to increase in future years.
The NHPS has increased the base premium amounts.
The scheme’s sustainability will hinge on pricing
a complex issue that requires engaging economists, cash accountants and
actuaries who know how to measure risk.
Fixing package rates by drawing averages of prices
charged by the variety of providers and validated by some doctors, no
matter how well meaning, is neither a rigorous nor a sustainable
The stakes are high and setting prices in a market
place requires the purchaser to have a near-perfect information of
prices in order to bargain effectively.
In other words, the relationship between hospitals
and service providers and government is antagonistic, as it should be.
Impacts on economy
Government-subsidised insurance schemes are
closely-linked to the prevailing macroeconomic variables.
In environments of low tax to GDP ratios or high
fiscal deficits, budgets for health often get slashed.
In such situations, any contractual obligation
requiring timely payments could potentially imply a substitution effect
with money being diverted from other heads such as the more desperately
needed primary care and infectious disease-control programmes.
This did happen in united Andhra Pradesh when the
Rajiv Aarogyasri Scheme was announced.
This is a concern necessitating building in
firewalls to protect the immediate from the urgent.
The problem NHPS seeks to address will not go away
by taking the path of least resistance giving a voucher and raising
demand in a supply-deficit environment.
The solution lies in bringing about structural
shifts based on a well-thought through sequenced reform process.
Optimising the functioning of the public
Incentivising the small and mid-level hospitals .
Strengthening primary healthcare to reduce
Such an evidence-based process would require
Budgetary hikes and enhancing capabilities.
Learning from every country, rich, middle and
That India can be an exception is being in denial
of the costs that it will entail in future.
Q.1) With reference to the 'National Health Protection
Scheme', which of the following statements is/are correct?
1. It is a universal health coverage scheme.
2. Only one member of a family can join the scheme.
3. It will cover both secondary and tertiary care hospitalization.
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 2 only
(c) 3 only
(d) 1, 2 and 3
Q.1) What is NHPS? How it can effective of healthcare sector in India?