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Union Budget 2018: Modicare May Only Take Off In FY20, Says Finance Secretary Adhia

Hasmukh Adhia on why “world’s largest government funded health care programme” is funded by just Rs 2,000 crore.

A patient talks with a boy on a bed inside the Indian Railways Divisional Railway Hospital in Mughalsarai, Uttar Pradesh, India, on Wednesday, Sept. 30, 2015. (Photographer: Dhiraj Singh/Bloomberg)
A patient talks with a boy on a bed inside the Indian Railways Divisional Railway Hospital in Mughalsarai, Uttar Pradesh, India, on Wednesday, Sept. 30, 2015. (Photographer: Dhiraj Singh/Bloomberg)

In his Union Budget Speech on Thursday, Finance Minister Arun Jaitley described it as the “world’s largest government funded health care programme”. In a few hours it acquired the popular label of Modicare.

“We will launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage upto Rs 5 lakh per family per year for secondary and tertiary care hospitalisation,”said Jaitley in his speech.

He also promised adequate funds for the smooth implementation of the programme. But the budget papers revealed that just Rs 2,000 crore had been allocated towards this new mission.

In an interview with BloombergQuint, Finance Secretary Hasmukh Adhia explained that it will take several months to operationalise the scheme and the bulk of the expenditure will have to be made FY19-20 onwards.

While the national health insurance scheme is an ambitious effort to provide better health coverage across India, you have backed it by just Rs 2,000 crore. Why is that?

It is because the scheme has to be operationalised. The contours of this scheme have to be worked out by the health ministry along with the state governments.

After that, the entire process of empanelment of hospitals needs to be worked out. We  will have to go for an insurance model in which price discovery will have to be done for a premium amount. So, we have to decide the hospitals’ qualification criteria, for the insurance companies to bid. Price discovery will happen after that. Hence, it will take 6-8 months for this scheme to be operationalised. This is our expectation. So, for the remaining months the amount has been provided.

Actual estimates are there with NITI Aayog and they will give you a better idea of total expenditure. They expect that when such a large group of people are insured, the premium rates come down very significantly. So, you can’t calculate the premium based on a single Mediclaim policy for each family and eventually replicate it for the entire country as a large group is being covered here.

In group insurance, the premium amount comes very low. They would have done some calculation, but it will depend on whatever is the price discovery in the insurance sector. Whatever it comes to, the government is committed to funding it.

On social media government flyers suggest it’s a medical reimbursement scheme. It’s more likely a scheme which will take over the premium burden of health insurance for 10 crore families in the country - right?

That’s a fair way. Price discovery will necessarily have to happen like that. But after that, instead of giving it to insurance companies some states may prefer to roll it out in a trust model. Both these models are available. There are some states which have their medical insurance schemes, which is a trust model. While in other states it is in an insurance model also.

Will states be sharing the cost of this as the roll out expands over time?

I presume, since it is a centrally sponsored scheme, it will be 60:40.

So, the Rs 2000 crore provides just for the start of the scheme and not for anything substantive in the scheme. The major expenditure of this scheme will fall in the next financial year ie: 2019-20?

Yes, in the next year.