The Ayushman Bharat National Health Protection Mission (AB-NHPM) will be launched later this year. It will give 5 lakh of health cover to 500 million people for free. If successful, the scheme will set several records in scale and quality of care. The deepest impact, however, will be the confidence this will instil in the poor.

Forty per cent of India’s population will be insured immediately. The quality of healthcare that has been assured is excellent. Typically, schemes for the poor are watered-down versions of what paying customers get. In this case, though, the cover being offered is substantially superior to regular mediclaim insurance. The sum assured is more than what most have. The cover includes many items typically excluded in standard mediclaim: pre-existing diseases, mental health conditions, food and internal congenital diseases, among others. If this scheme were to be rated in the annual Mint SecureNow Mediclaim Ratings of health insurance products it would likely score an ‘A’.

The product design is simple and easy to administer. Enrolment is automatic and no forms need to be filled. Entire families, irrespective of size and age, will be covered. Eligible persons can walk into a hospital with their Aadhaar card number and be treated. The network of hospitals being created will be larger than what insurers have today. There are stringent service-level agreements: a pre-approval is required for all non-emergency cases but if the request is not addressed within 12 hours, then the treatment is considered approved. The treatment is cashless, which means that patients do not need to pay and can opt to be treated anywhere in the country.

Implementation of such scale and benefit is bound to face obstacles, the most substantial of which is for it to be economically sustainable. At the moment, hospitals are unhappy because, in their view, package rates fixed by the government are loss-making. For example, the proposed cost of a coronary artery bypass graft (CABG) is about 90,000. The Central Government Health Scheme (CGHS) rates for this in Delhi are above 1.1 lakh and private hospitals routinely charge above 3 lakh.

Insurers worry that they will be left out because states have the option to select a “Trust" model that does not require insurers to participate. In fact, this is the preferred model for many states. Where insurers participate, the auction may push premiums to unviable, low levels. There have been news reports of a recent tender in Nagaland where the lowest bid was less than 500 per family. Other bids were over twice that.

The insurer model has an in-built conflict of interest. The organisational committees that will deal with grievances of hospitals and insurers consist primarily of government representatives. Their chief focus will be to have patients’ claims paid and they have less incentive to solve the problems of hospitals or insurers.

The Trust system, that does not use insurers, has a different problem. There is less restraint on claims payment. Also, states are notorious for delaying payments and hospitals are concerned about payment cycles.

Such challenges are to be expected. Success will depend upon how quickly and comprehensively these are identified and addressed. The benefits of getting the NHPM right are huge. Hospitals will build considerable capacity to meet the demand for beds. There are about 1.5 million hospital beds in the country. These cannot support the 500 million people who will have insurance. As hospitals see an increasing patient inflow, they will build capacity.

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The scheme encourages hospitals to maintain certain minimum standards. The compensation to hospitals is 10% higher if they are NABH accredited and a minimum technology standard has been specified for hospitals to be eligible for this scheme.

The medical fraternity will be forced to present a stronger fact-based case to the government to increase the pricing of treatment packages. Organisational capacity is being built, at the district and state levels, to oversee the programme. For insurers and third-party administrators, this is a large new market that will open up.

The most meaningful impact, though, will be on the confidence of the poor and lower income groups that have this insurance. Five years ago, we had arranged insurance for a group of 1,000 daily wage earners. To our surprise, claims in the first year were minuscule. On analysing, we found that when these workers walked into a private hospital, they were turned away at the reception because nobody believed they could pay. Gradually, though, the workers began to assert themselves and got treated. Today, the claims ratio with these workers is 100%, like any other group in the country. They walk into hospitals confidently, ask to meet doctors and quickly get themselves back in shape for work.

Imagine the empowerment if the experience of these 1,000 workers could be expanded nationwide.

Kapil Mehta is co-founder, Securenow Insurance Broker Pvt. Ltd

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