All you need to know about India’s largest insurance scheme

Publish Date: September 24, 2018

India’s largest healthcare mission was launched by the Indian government in Ranchi, Jharkhand, on Sunday.

Part of the government-funded Ayushman Bharat healthcare mission, the Pradhan Mantri Jan Arogya Yojana (PMJAY) will provide Rs 5 lakh cashless insurance policy to 10 crore households in the first year.

The project will also aim to introduce 1.5 lakh health and wellness centers by 2022. These centers will be equipped to handle cancer, diabetes and blood pressure problems.

This program was first announced by India’s Prime Minister Narendra Modi on August 15. The government’s plan to insure millions of Indians is vital for the health of the nation because a Public Health Foundation of India report stated that more than 75% of Indians pay for their treatment from their own pocket. The report further said that families faced such threats because most of these families were not insured. The health ministry also brought to light that close to 86% of rural households and 82% of urban households were not insured at all.

High treatment costs, exacerbated by high medical inflation in the country, means that 3.2 crore to 3.9 crore fall below the poverty line every year as they pay for the treatment out of their own pockets.

The government hopes that PMJAY will be a “game changer” because the current health spending remains woefully substandard. As per this year’s National Health Profile, India spends just 1.02% of the GDP on health, which translates to Rs 93 per month. In contrast, other low income countries and lower middle income countries spend 1.4-2.5% of the total GDP on health.

The scheme benefits households that fall under certain deprivation criteria. The government is targeting 8.03 crore families in rural areas and 2.33 families in urban areas. They want to insure all the members of these households, irrespective of the family size and age of family members.

Details of the mission

The scheme will cover 1,354 medical and surgical procedures, such as coronary bypass, placing stents, knee replacements, chemotherapy for 50 types of cancer, among others.

If a person needs to undergo multiple treatments, the most expensive procedure will be waived, while the second and third treatment costs would be slashed by 50% and 25% respectively.

The rates for the medical and surgical procedures will be put in place by the state health agency, the selected insurance company and the hospitals that have signed up to be part of this mission.

While all public hospitals have been roped in, private hospitals are expected to register online to be a part of this process. Of the 8,700-odd hospitals that have been empanelled under this scheme, nearly 47% of them are private hospitals.

How will the process work

All hospitals covered under this scheme will have a special Arogya helpdesk. Beneficiaries can either call them or go to the hospital to verify their eligibility and get themselves enrolled. Patients can carry any ID card (ration card, Aadhaar etc) with them to start the verification process.

Once the verification process is complete, beneficiaries will receive an e-letter with QR codes. The letter can be shown to the doctor, who will then proceed to treat the patient. In case of hospitalisation, the patient’s family does not have to pay any treatment costs provided they go to an empaneled hospital.

Glitches in the system

The government plans to roll out the scheme full-fledged in the next 40 days. That seems to be a Herculean task because PMJAY will insure 10 crore households, or roughly 50 crore people, in that time period. Indu Bhushan, chairman of Ayushman Bharat, said there were only 60,000 hospital beds available right now, whereas they needed 2 lakh beds for the mission to be in full swing.

The pricing of medical and surgical procedures has been a pain point too. The Indian Medical Association told BloombergQuint that unviable pricing would result in poor quality of healthcare. It said the “non-viable and unscientific pricing” would dissuade large swathes of private hospitals from being a part of the nationwide scheme.

Poor participation of private hospitals will adversely impact the government’s ambitious plan because there are very few government doctors around. For every one government doctor, there are over 11,000 Indians, which is well below World Health Organization’s suggested ratio of 1:1,000.

The Indian Medical Association has also pointed out that the scheme is “grossly (sic) underfunded”. It released a dossier stating: “A scheme envisaging Rs 5 lakh coverage for 50 crore people should have at least Rs 1,16,000 crore allotted for adequate capitalisation. Only Rs 10,000-12,000 crore are expected to be the fund allotment.” This year, the government has allocated Rs 2,000 crore for PMJAY.

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