Govt’s health insurance plan to hurt non-life companies

MUMBAI: The government is looking at taking the Rashtriya Swasthya Bima Yojana (RSBY) out of the hands of the insurance companies and creating trusts which will take over the insurance of these schemes. Such a move would hit the business of the non-life Rashtriya Swasthya Bima Yojana as this scheme generates premium revenue of over Rs 2,000 crore.

“It is not clear what the government intends to do. It looks like the thinking is to bring it under the health ministry,” said a senior official with a non-life insurance company.

He said the advantage of providing healthcare through the insurance route was that the payout process was completely documented. The downside was that while it provided cover, the scheme did not ensure that there were enough hospitals. By taking the trust route, the government could divert some of the funds to creating healthcare capacity.

The RSBY was rolled out in 2008 for those below the poverty line under the ministry of labour. RSBY beneficiaries are entitled to hospitalization coverage of up to Rs 30,000. What makes the scheme unique compared to earlier ones is that it provides cashless benefits with the government enrolling hospitals across the country and financing is provided through district-wide group health insurance. The scheme ensures that cashless benefits are available even for low sum insured, with the government enrolling hospitals after getting them to agree on package rates for various ailments.

While the scheme has resulted in a solid support structure being built for enrolment and an IT backbone, its shortcomings are in the lack of awareness and more than anything, lack of hospitals. In states like Orissa and Bihar there have been large scale enrolments but utilization has been low because of the lack of healthcare capacity.