New Delhi: India’s four state-run general insurers have suggested new ways to improve its universal health insurance scheme, or UHIS, so that it benefits more poor families, after finance minister P. Chidambaram wanted to overhaul the scheme, which will run for another five years.
“Considering that UHIS still has five years to phase out, the finance minister has sought recommendations to improve the policy,” said Ashok Sharma, divisional manager of The Oriental Insurance Co. Ltd.
The government launched the scheme in 2004 to provide health cover to the poor for a daily premium of Re1.
The claim ratio of UHIS is staggeringly low at 10%, compared with 140% for the insurers’ retail and health cover porfolios, according to a senior government official who did not wish to be named.
It means that for every Rs100 premium collected under UHIS, the firms were paying out only Rs10 against claims.
“The claim ratio of UHIS is low because poor people are mostly ignorant about the health benefits available to them,” said the official. The failure of the scheme prompted the government to announce a new plan dubbed the Rashtriya Swasthya Bima Yojana, or RSBY, in October.
For UHIS, “we have also recommended that both male and female should be equally allowed to be a head of the family,” said Sharma. Currently, only men can head a family and avail family insurance.
Another key proposal suggests increasing the age limit of policyholders from 65 to 70. The insurers have also suggested providing maternity benefits to the tune of Rs5,000.
The scheme also failed to take off because policyholders found it difficult to contribute the Rs165 they were asked to pay as annual premium. The government subsidized the remaining. Also, as it only paid a measly Rs25 commission to insurance agents, the agents did not push it aggressively.
RSBY, expected to be rolled out across India by April, plans to provide cover to about 50 million families below the poverty line. Insurers have been asked to follow market-determined pricing, and the Union and state governments will jointly subsidize the premium.
The Union government had worked out an annual premium of Rs750, of which it would pay 75% and the state governments 25%. Policyholders will pay Rs30 a year.
“Even though UHIS drawbacks have been removed by the introduction of RSBY, the poor still need to be educated about the benefits of using smart cards that has been introduced under RSBY,” the government official said.