There is perhaps no better way todescribe the response of most States to the Narendra Modi government’s flagship health care initiative, the Ayushman Bharat-Prime Minister’s Jan Arogya Yojana (AB-PMJAY), than how Kerala’s Finance Minister Thomas Isaac chose to do it in his Budget speech in January this year.
“It appeared as if a mountain had given birth to a mouse,” Isaac told the Assembly about how the State government felt when it first came to know the details of the much-hyped AB-PMJAY scheme in October 2018.
A subtle political game has been going on between the Communist Party of India (Marxist)-led government in Kerala and the Bharatiya Janata Party government at the Centre as the State prepares to launch an improved version of its comprehensive health insurance scheme instead of the AB-PMJAY programme.
The contours of the Karunya Arogya Suraksha Paddhati (KASP), as the new State scheme is to be known, was drawn up by the Left Democratic Front (LDF) government more than a year ago to complement its ongoing Aardram Mission, an initiative to improve the quality of service in government health facilities from primary health centres (PHCs) to medical college hospitals.
But the KASP was kept on hold as the Central government had by then announced its plans to launch the AB-PMJAY, with its grand claim of being the world’s largest government-funded health care programme. It had two objectives: “To establish health and wellness centres to bring health care closer to home” and to launch an “insurance scheme to protect poor and vulnerable families against financial risk arising out of catastrophic health episodes”.
Since 2006, Kerala had been trying to implement a variety of health insurance/assistance schemes for the poor, understanding that such schemes would work only as part of a larger health sector reform that strengthens the public health care system and limits the involvement of the private sector in a way that prevents it from preying on the government sector.
Under LDF rule in the past two years, Kerala was, therefore, already much ahead of other States in making efforts to reorient the public health system, by creating a primary care system capable of addressing the challenges of the current pattern of diseases in the State; providing quality treatment services at the secondary-level hospitals that include taluk, district and general hospitals and scaling-up those improvements at each level up to the medical college hospitals; and, importantly, generating a patient-friendly environment in all government hospitals (see “Reinventing health care”, Frontline , September 29, 2017).
The AB-PMJAY scheme promises to provide a health insurance cover of up to Rs.5 lakh to eligible “poor and vulnerable” families in place of the Rashtriya Swasthya Bima Yojana (RSBY), which it was set to replace from April 1 and where the benefits were limited to Rs.30,000 for a family of five a year.
But when the details of the AB-PMJAY scheme were finally disclosed, the total financial provision for the scheme proved to be far too insufficient and the number of people who would be eligible for benefits under it, based on the Socio-Economic Caste Census (SECC), 2011 data, was far below the number of beneficiaries already entitled for health insurance benefits under various schemes in the State.
While the Centre’s proposal envisages giving an insurance cover of Rs.5 lakh to 18.5 lakh families in Kerala under the AB-PMJAY, the improved and enlarged Kerala version of the RSBY, the RSBY-Comprehensive Health Insurance Scheme (RSBY-CHIS) launched by the previous LDF government in 2008 already had nearly 40.9 lakh families enlisted and claiming benefits under it.
Efficient health delivery mechanism
Kerala is a State where people go to hospitals even for minor ailments, and the health delivery mechanism is much more efficient than in many other States. For instance, according to a recent estimate, the State, with just over 3 per cent of India’s population, accounted for over 40 per cent of the nationwide claims under the RSBY scheme. The Central government was, therefore, very keen on Kerala joining its new scheme too, and the State, going through a serious financial crisis after the devastating floods in August 2018, could not afford to lose the Rs.120 crore that came as part of the AB-PMJAY.
But, according to Isaac, the State had no intention of confining the health insurance scheme to just 18.5 lakh families. “We were clear that we were not going to blindly implement Ayushman Bharat and undermine our public health system. We opposed it at first. But the Central government wanted us to join it because, for instance, a major share of the total RSBY premium collected is from Kerala. But the way the AB-PMJAY was structured, Kerala had to bear 80 per cent of the expenses. The financial burden would have been on the State, while the entire credit would go to the Centre. So we said we will not then call our scheme ‘Ayushman Bharat’. Nor will it be the same scheme. There will be add-ons: all the 40.9 lakh families currently in the RSBY-CHIS will be eligible, not just the 18.5 lakh on the Central list. In addition, we would allow the rest of the people in Kerala too to join the scheme if they paid the full premium,” Isaac told Frontline .
In February, after much coercion from the Central government, as the State eventually agreed to join the AB-PMJAY on its own terms and was deciding how to integrate it with its own “bigger, better health protection schemes”, hundreds of people in the State began receiving “letters by speed post” from the Union Health Ministry. The letters claimed that the recipients would henceforth be eligible for health insurance benefits of up to Rs.5 lakh under the Modi government’s AB-PMJAY programme.
The protests were shrill. The State alleged that it was a move that violated all federal norms: selecting beneficiaries and informing them directly and bypassing the State government. Isaac said in a Facebook post that went viral: “It is the State government which should decide how the scheme should be implemented. We were then only discussing the modalities of implementing the scheme and the tender process had only just then been initiated. But even though there were over 40 lakh beneficiaries under RSBY-CHIS in Kerala, the Union Ministry’s letter was being sent reportedly to a selected 18.5 lakh families, based reportedly on the SEC 2011 data. But how was the selection done or who made the selection?”
Eventually, Kerala decided to bring together the various insurance and financial assistance schemes operating separately in the health sector in the State, combine their resources with that of the Centre’s AB-PMJAY, and launch a customised and improved version of its own health insurance scheme, the KASP. An expert committee appointed by the Kerala government had found it was a better health care package that could be implemented “without the State incurring a significant additional financial commitment”.
The committee estimated that the premium would have to be between Rs.2,000 and Rs.2,400 to make it work. However, it was Reliance General Insurance that won the rights, quoting a lower annual premium of Rs.1,671 for providing a coverage of Rs.5 lakh per family. The State government has decided to pay the additional premium so as to benefit all the 40.9 lakh families now getting benefits under the State’s RSBY-CHIS scheme. All the beneficiaries would be eligible for free health care from government and empanelled private hospitals.
The State government estimates that nearly 10 lakh government employees and pensioners in Kerala are members of their own exclusive insurance schemes. In addition, 10 lakh families are beneficiaries of the Employees’ State Insurance (ESI) scheme. The rest of the population, estimated to be around 20 lakh people, will also have the right to join this scheme by paying the premium of Rs.1,671, thus bringing the entire population under the scheme, for the first time offering an insurance coverage of Rs.5 lakh to the beneficiaries.
According to State government sources, the premium of Rs.1,671 per family would be paid to the insurance company by the government on behalf of 40.9 lakh families. Of this, the Central government would pay Rs.661 (60 per cent of Rs.1,100, the premium the Centre has fixed as a maximum) for 21.58 lakh families. The State government would have to pay Rs.1,010 (that is, 1,671 – 661) for these families and also the entire Rs.1,671 premium for the rest of the families. Of the total cost of Rs.684 crore, the Central government would pay Rs.142 crore. The rest of the amount would have to be paid by the State government.
In other words, for an insurance programme named after the Prime Minister, the Central government would pay only 21 per cent of the cost, while the rest would have to be borne by the State government.
According to Additional Chief Secretary (Health) Rajeev Sadanandan, switching over to the KASP offers Kerala an opportunity to club together various schemes, such as CHIS-Plus, the Karunya Benevolent Fund and the Sukrutam project, which were in operation in the State. “These schemes had different risk pools and implementing mechanisms and were not properly targeted towards the poor. When they are combined under the new State scheme, KASP, they will be targeted towards the poor and have a common risk pool and implementation mechanism. This is more efficient than the fragmented system Kerala had in the past. Given these gains in efficiency, the increase in outflow for financial protection is acceptable to the State. We are also hopeful that the Central government will fix a more reasonable premium next year,” he told Frontline .
“In the Budget speech, the Finance Minister committed himself to covering the entire population of the State. This is necessary given the high share of out-of-pocket expenditure (Rs.5,111 per capita) in Kerala, the highest in the country. The government will work out the modalities this year and will roll it out by next year. The KASP provides a good platform to commence work on universal coverage,” he said.
Towards universal health care
The draft health policy indeed is one step closer towards Kerala’s eventual aim to have “a publicly funded, free, universal and comprehensive health care system”.
Isaac told Frontline : “While Modi’s Wellness Centres will soon prove to be a sham, in Kerala we are already transforming our PHCs into family health centres. We will not allow our universal healthcare system to be destroyed by a health insurance programme. We are actively on the road to provide insured health care for all through the public health system.”
He said that the State government found that the difference in the premium amounts required for a coverage of Rs.2 lakh and Rs.5 lakh was very small. “That is why we decided to go for an insurance coverage of Rs.5 lakh. It is in Kerala alone that a Rs.5 lakh insurance scheme is being launched. We have made this possible by ensuring that the hospital rates are not fixed very high. Ayushman Bharat too is supposed to be a Rs.5 lakh insurance programme. But that claim is false. In most States, the insurance guaranteed is only Rs.50,000 or some such amount. The rest is an assurance model. You have to apply to the government to get that assistance.”
He also said that the new scheme meant that no future government in the State would be able to reduce the benefits. “You cannot take away people’s rights in Kerala. The key is to improve the quality of service in the public health system. We are using the entire premium received by government hospitals solely for hospital development.”
According to State Planning Board member and health activist Dr B. Ekbal, Kerala’s plan is to implement the insurance scheme as a temporary measure to provide relief to people and, at the same time as part of its long-term plan, improve the facilities and develop its government hospitals. “The Central government, on the other hand, is trying to concentrate on the Ayushman Bharat insurance scheme that drives public funds to the private sector under the expense of the State governments and weaken the public health system,” he said.
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