It has the potential to spur major growth in the insurance sector | Dr Usha Manjunath

The implementation of Ayushman Bharat — Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) , the NDA’s flagship entitlement-based scheme, is set to cover 100 million households, i.e. 500 million individual beneficiaries with ` 5 lakh per family per annum.  An insurance plan which is now being showcased as a boon for the many who are in danger of being pushed into a debt trap due to prohibitive healthcare costs. As per the Insurance Regulatory and Development Authority of India (IRDAI), out-of-pocket medical expenses make up about 62 per cent of all the healthcare costs, with 35 million to 65 million people are pushed into poverty based on different thresholds due to high out-of-pocket expenditure on health, which is extremely regressive.

The roll-out of AB-NHPM (at least in a few states) was expected to be on August 15. Due to minor setbacks, the central government has chosen to roll out the plan in September. Out of the 36 states, 29 states have come on board with the scheme. The scheme looks at over-ambitiously insuring a large number of people based on their socio-economic and caste.
Under the scheme, both private and state-run insurance companies are said to have been given contracts after a state-wise bidding process.

Insurance premia are to be fixed according to the number of eligible beneficiaries in each state. AB has the potential to spur major growth in the insurance sector. The current infrastructure in place is a definite challenge as the scheme’s success hinges on making the primary health infrastructure more robust and ensure the participation of private hospitals as they cater to 80 per cent of the healthcare needs.

The scheme is being rushed through during its roll out, a scheme like this needs to be well thought out and every minute detail must be taken into consideration. The intent with which it is being rolled out is great, but it doesn’t take into consideration emergency cases. Another key factor in this scheme is the role of private hospitals and their willingness to participate. The infrastructure and quality provided by state-run hospitals will not be able to sustain such a large number of patients alone. Infrastructure too lacks the ability to provide the same quality that private hospitals provide.

AB needs to place their financial model in consideration with future hikes in prices in the industry and upgrading state-run facilities, for the project to become successful. The scheme also needs to change the basis on which population is included under this scheme. AB has a great potential in leading India to lower the healthcare cost overall, improve health status and achieve universal coverage in the next 8 to 10-year timeline.

Next article: Healthcare providers need to build efficiencies rather than look at pricing | Ritesh Dogra