News Life and Health07 Sep 2018

India:Government health insurance scheme to get an allocation of US$1.7bn for 2019-20

| 07 Sep 2018

Pradhan Mantri Jan Arogya Yojana, the mammoth Indian public health insurance scheme to be formally launched on 25 September, would be allocated INR120bn ($1.67bn) for the next financial year beginning on 1 April 2019 (FY2020). This would be the first complete year of operation of the ambitious health insurance scheme of the government of India.

Centre to share 60% of the expenses

Financial daily Business Standard, quoting Indian Finance Ministry officials, has reported that for the current FY2019, the Health Ministry has projected a total expenditure of INR60bn, of which 60% will come from the central government and 40% from the states.

This compares to INR20bn allocated for FY2019 in the federal budget by the Centre. The states had no budgeted amount for this scheme. Business Standard reports that the Health Ministry has sought an additional amount of INR20bn for the current year from the Finance Ministry.

“We need at least INR60bn combined from the Centre and states to fund the scheme for five months this year. For next year, the total requirement will be INR120bn, of which 60% will be paid by the central government.”

According to the report, the government had felt that it would be able to pay its share with inflow from the education and health cess over and above the budgetary support. Now, however, the Health Ministry feels that it needs more funds to pay the Centre’s share in the mega scheme.

Scheme to operate on insurance and trust models

This scheme will operate on two models: insurance model and trust model. Under the insurance model, insurance companies are empanelled to operate as part of the scheme and they bid to provide insurance cover to those eligible under the scheme. Under the trust model, a state sets up a trust and allocates funds to it. The money is then transferred from the trust to the hospitals directly.

Most states opt for trust model

Cigna TTK Health Insurance Company COO and customer officer, Ms Jyoti Punja speaking to Asia Insurance Review said, “A high number of state governments have opted for the trust model. The scheme being on a large scale, every insurer is compelled to quote a viable price in order to avoid getting hurt. Business needs to be done right even in the health scheme.”

“On a broader perspective, however, the entire scheme will spread greater awareness and long-term inclusion for the insurance industry. It will expand medical services and allied facilities to rural areas as more people will opt for cashless insurance policies and additional health cover,” added Ms Punja.

This health insurance scheme plans to bring 100 million families or around 40% of India’s population under its coverage and will provide tertiary care to all those who feature in the social economic cast census of 2011. They can avail themselves of medical treatment benefits of up to INR500,000 under this scheme.


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