Filling the gaps in healthcare

Realistic premiums and strict due diligence are key for the success of Ayushman Bharat

India will move a step closer to providing affordable and quality healthcare to all once the Ayushman Bharat - National Health Protection Scheme (AB-NHPS) is launched on August 15.

The scheme proposes to strengthen India’s healthcare infrastructure and provide health insurance of up to ₹5 lakh per family per year to over 10 crore families.

That would improve India’s insurance penetration to over 50 per cent from 34 per cent now, and also its health indicators.

Need of the hour

The need stems from wide gaps in healthcare delivery. Though there are 23,582 government hospitals with 7,10,761 beds, tertiary care is woefully limited.

Also, according to the National Family Health Survey 2015-16, citizens don’t prefer government hospitals given the perceptions of poor quality of care and lack of such facilities in their vicinity.

The Pradhan Mantri Swasthya Suraksha Yojana (PMSSY) and funding to States to strengthen their public healthcare system under the National Rural Health Mission (NRHM), however, have led to considerable improvement in the scenario.

Besides, the Budget outlay for infrastructure maintenance and strengthening of the healthcare system under NRHM has been increased by 11 per cent for fiscal 2019, to ₹15,446 crore.

But with this comes the added onus of ensuring quality services through continuous monitoring.

There are 1,61,358 sub-centres in the country that act as the first contact point between the primary healthcare system and the community.

All of these are dedicated to curative care.

Ayushman Bharat will transform such sub-centres into health and wellness centres, boosting their capacity to cover more ailments and offer preventive care.

This should reduce the burden at the secondary and tertiary levels. Also, where the norm earlier was to have one sub-centre per 5,000 people, the new health and wellness centres would be set up based on geography and need, improving access for people in remote locations.

Over the past four years, government expenditure under PMSSY for setting up institutions modelled on All India Institutes of Medical Sciences, and upgrading government medical institutions has seen a robust 47 per cent compound annual growth rate.

But given the capital outlay and execution time per institute, the task, both financially and operationally, is enormous. Besides, once such facilities are operational, attracting and retaining talent becomes a challenge. The six newly formed AIIMs are finding it tough to fill vacancies.

This is why the Centre is putting its weight behind Ayushman Bharat, which will subsume centrally sponsored schemes such as Rashtriya Swasthya Bima Yojana, Senior Citizen Health Insurance Scheme and most of the existing State-sponsored health insurance schemes.

Private participation crucial

However, ensuring superior healthcare to almost half a billion people will not be possible without the private sector playing a big part.

Private hospitals have already voiced concerns over low package rates for treatments proposed under the scheme.

The National Sample Survey Organisation’s 71st Round Survey of 2014 reported the average total medical expenditure for treatment per hospitalisation at around ₹15,000 in rural areas and ₹24,500 in urban areas.

Which means the premium touted of around ₹1,085 per family for medical cover is too low.

This is especially important for ensuring the involvement of private insurance companies. CRISIL Research carried out a sensitivity analysis in anticipation of the participation of private insurance companies.

The analysis, based on the assumption of an incurred claim ratio of 85 per cent and hospitalisation ratio of 7.5 per cent families, indicates an national average premium (with an average claim of ₹20,000 per family) of ₹1,765 per family.

That’s 63 per cent higher than what’s being touted. The other reasons for the higher premiums are lack of data on families that will be covered for the first time and the high sum assured of ₹5 lakh per family.

The Bhamashah Swasthya Bima Yojana in Rajasthan was launched at a premium of ₹370 per family in December 2015, but was revised sharply to ₹1,263 in the second phase, following higher claims.

While frauds can be offset by stricter due-diligence, getting the premium right will be key to the success of Ayushman Bharat.

The writer is Director,

CRISIL Research.

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