Best alternative within limitations

Interview with Finance Minister T.M. Thomas Isaac.

KERALAS Finance Minister T.M. Thomas Isaac explains why the modified health insurance scheme launched in the State is not a sign of the government withdrawing from the public health care system. Excerpts from an interview:

You were among the critics of the health insurance scheme for the poor launched by the United Democratic Front government. You had wanted the scheme scrapped because you said it was unviable and would eventually dest

We have tried to address both these concerns and that is the uniqueness of the Kerala scheme. For health insurance to succeed, we need to strengthen the public health care system. But to start with, we would prefer the direct provisioning of health care rather than insurance.

However, the Central government has instituted a health care scheme for which it is providing a certain amount of money. We have to work within the framework of the Central scheme. But we decided to modify it to ensure that it will not destroy the public health care system in Kerala. This is sought to be achieved by several means. One, we will accredit private hospitals only in places where we do not have sufficient government health care facilities. Two, we have fixed the insurance rates for various hospital and treatment services with reference to the rates in the government hospitals. The insurance scheme will include only those private hospitals which are ready to accept these rates, which will be lower than the market rates. Three, the public sector hospitals are going to get the insurance payments. The State government does not want that income to come to the State treasury. Each hospital development committee can use that money to further improve the hospital facilities which means the government is going to pump in Rs.50 crore to Rs.60 crore more into the public health care system in addition to the regular budgetary support.

What this means is that local hospital development committees will have an incentive to run the hospital well so that, if they do so, they will get more patients and more premium reimbursements as additional funds. In no way is it a case of the government withdrawing from the public health care system. It is using the insurance scheme to further strengthen it.

Is it not true that many such schemes launched with much fanfare in the country have never really reached the intended beneficiaries?

We have chosen only public sector insurance companies and we have brought in the Kudumbashree network (of Self-Help Groups and National Healthcare Groups under the State Poverty Eradication Mission) as a support mechanism. All the poor are members of the Kudumbashree network. So there will definitely be a demand.

What happened to most health insurance schemes in India is that the intended beneficiaries remained unaware of the programme. The insurance premium would be paid by the government but there would be no claim and hardly any money was given by the insurance company to the beneficiaries.

We have linked the scheme to the Kudumbashree network so that it would generate a demand from below. Moreover, the scheme in Kerala is not just for those in the Central BPL list. The State government is paying the premium for an additional 15 lakh people in Kerala. The rest of the population has the option of joining if they are ready to pay the full premium. So we have integrated the RSBY [Rashtriya Swasthya Bima Yojana] scheme with ours in such a way as to include our larger population. There have been a lot of difficulties in doing it but the Government of Kerala has been very insistent that it should be done.

Is the involvement of the APL category a crucial factor for the success of the State scheme?

We do not agree that the 11 lakh people in the Central BPL list are the only poor people in Kerala. Our estimate of the poor is much higher. Well, those in the APL category are not given any subsidy. We do not want to exclude anyone. The more the number of people who join, the lower the premium and, everybody would benefit.

Already there is concern that the premium fixed is too low to sustain the scheme for long. If the premium goes up, will the Centre give more money for such a scheme?

If the Centre does not provide a matching increase the programme will end, but we will still have our public health care system intact. It is the Centre that has forced us to implement such a programme. We did not want to implement it and destroy our public health care system.

The UDF government was oblivious to the drawbacks of such a Central scheme. The major claim of its leaders was that the poor would get access to the private sector. But today, in the private health care sector, Rs.30,000 would evaporate in, say, two days and the poor would then be left to fend for themselves and the public health care sector would be destroyed. Our scheme is one example of alternatives within the limitations. We are trying to optimise within what is possible. So this is a good example of how the insurance model, which is very much American, is different from the Kerala model. We have modified it in such a manner that it will not affect our public health care system.

But there is the question of the State too having to face the additional burden of higher premiums, perhaps next year itself, because of the inclusion of 15 lakh more people in the scheme from the State BPL list.

Yes. That is true. The States burden will rise, definitely.

Then will the scheme be closed?

No. It need not be. How much will the premium go up? Rs.50 crore may become Rs.100 crore or Rs.200 crore. We should bear that burden. Without riding the tiger, you cannot get down [from it].

Despite the low rates prescribed, why are private medical colleges so eager to be part of the scheme?

They are eager because it will bring them a large number of patients. We cannot ban the private sector altogether. We do not want to do that. But by prescribing the rates we are trying to give the public sector a competitive advantage.

But how do you ensure that only public sector insurance companies will run the scheme?

The selection is through a process of open tender, but then we negotiate.

You mean one way or the other the government will ensure that private insurance companies will not be included?

The Government of India does not want any restriction. So it is an open tender system. ICICI Lombard had quoted a low figure in Palakkad district, for example. Then, we negotiated them out.

Is it becoming difficult for Kerala to continue its free health care system?

Why should it not continue? It is a unique feature of Kerala free public health and free education. The insurance scheme, as implemented in Kerala, will become an incentive for government hospitals to do better. But, I agree, there are many concerns.

Is there a problem of over-inclusion in the State BPL list? How are you going to deal with it?

Over-inclusion is okay. That is the governments view. The BPL list is a myth. There is no scientific basis, no objective criteria, for it. We have already announced that all families of fishermen, the Scheduled Castes and the Scheduled Tribes will be included in the scheme, whether they are in the BPL list or not. The State government will pay the premiums for them. I also believe that the LDF government will be able to offer comprehensive social security cover for everyone, beginning with those in the BPL category, before the end of its term. The modalities are being worked out. I am sure we can do it.