Will NHPS work? The answer is in the details

Dr Somen Saha, Faculty, Indian Institute of Public Health Gandhinagar and Dr Sudha Chandrashekar, Public Health Expert and Health Economist, give insights on NHPS and the strategies to optimise its potential

The Union Budget 2018’s announcement on healthcare is being hailed as the ‘world’s largest healthcare programme’, also dubbed as ‘Modicare’. Under Ayushman Bharat initiative Government of India announced National Health Protection Scheme (NHPS) to provide financial protection for secondary and tertiary care illness that require hospitalisation. NHPS aims to provide a coverage of Rs 5 lakhs per family to 100 million families.

Critics immediately term the initial Rs 2,000 crores allocation for the scheme as grossly inadequate. Some analyst suggested this allocation works out to only Rs 40 for each person and questioned the logic behind the allocation. The more hawkish analyst, particularly from general insurance companies argued that such schemes will cost upward Rs 50,000 crores with an annual average premium for per family in the range of Rs 4,000 – 5,000.

So, is the government ill-informed in its calculation? Our argument is No.

Although the contours of NHPS is not out in public, it is very likely that it will subsume existing, centrally-funded Rashtriya Swasthya Bima Yojana (targeted mostly at secondary care hospitalisation) and parallel schemes funded by state governments (mostly for catastrophic, tertiary care illness) into a ‘single payer’ mechanism. Such state funded schemes – Vajpayee Arogyashri in Karnataka, Mukhyamantri Amrutam Yojana in Gujarat, Aarograshri in Andhra Pradesh, Bhamashah Swasthya Bima Yojana in Rajasthan, Mahatma Jyotiba Phule Jan Arogya Yojana in Maharashtra, among others – already offers health cover to the extent of Rs 1 – 3 lakhs. An analysis of existing state sponsored schemes in India shows the average annual premium size for covering catastrophic tertiary care hospitalisation expenses is about Rs 1,000 per household and average claim payout is around Rs 60,000. This clearly shows increasing the coverage to Rs 5 lakhs per family gives a huge political dividend without necessarily stressing the public exchequer. The government showed fiscal prudence by not front-loading the financial allocation in the first year thereby allowing to bootstrap the allocation over a period of time.

The details of NHPS needs to be carefully worked out. It should not turn out to be a windfall gain for private hospitals. Instead, it should strengthen public hospitals and involve private hospitals for specific procedures. This will be possible by involving a gatekeeping system that rationally direct beneficiaries to care providers. The government can clearly cut administration cost by following an assurance model that does not pass the premium amount to an insurance company. However, this will depend on the capacity of states to have structures and systems to manage such large-scale health protection programme. Existing best practices and challenges in programme implementation needs to be considered in planning for such a roll out. This will need consultation with states, implementation partners and other professional bodies for smooth roll out. In particular, it calls for improvement in scheme management capacity, faster decision making process, and capacity building of the states.

An important challenge for NHPS might be bringing existing, state-funded health protection schemes under a single authority. While this will bring efficiency in the system, an alternative arrangement could be co-branding NHPS with existing state schemes to enable better buy-in from states.

Strategic purchasing of healthcare through NHPS demands increased capacity for defining the package of services, appropriate skills in costing of healthcare packages that are sensitive to variations in cost of care, setting standard management guidelines and monitoring quality. NHPS can play a major role in controlling cost of care. Under a single-payer model, NHPS can have the leverage to control cost of healthcare through strategic purchasing that no scheme has  had so far.

The other big challenge would be covering out-patient treatment and prescription medicine that is known to have the greatest impact on cost of care. NHPS needs involvement of civil societies to promote awareness about entitlement, develop a system to gather data and research to understand the scheme’s impact on out-of-pocket expenditure, hospital utilisation and explore the potential to expand the base through a contributory mechanism from the not so poor.