RSBY cashless scheme - Insuring the uninsured in India, similar to Obama Healthcare reform

We have heard enough debate on the Obama healthcare reform. A few years before that something was brewing up in India. Most people in India pay for their medical and hospital expenses out of their pocket. According to a report (Emerging Health Insurance in India - An overview) by J Anita, less than 15% of India’s 1.2 Bn population possesses health insurance. How can the poor families with neither money nor insurance hope to get themselves admitted to a hospital in case of an emergency. The Rashtriya Swasthya Bima Yojana (RSBY) with its cashless insurance scheme seeks to address this issue.

RSBY scheme was launched in 2008 by the Ministry of Labour and Employment, Government of India to provide health insurance cover to the population below Poverty Line and informal sector workers of India.

Under the RSBY scheme, all families categorized under below the poverty line (BPL) are eligible to get a biometric enabled smart card for cashless transaction with a registration fee of Rs 30 i.e. ~$ 0.5. This smart card contains a consumers’ fingerprint data and photograph which grants access of medical care up to Rs 30,000 (~$500) per family per year in any of the government and private hospitals. A sum of Rs 1000 per year (i.e. ~$17) is provided in cash as transportation expenses for travelling to the hospital. As per the scheme, 75% of the premium cost is handled by the Central Government (90% in case of North-Eastern states and Jammu & Kashmir) and the rest is taken care of by the respective State government

As per the system, the expenses incurred by the government hospitals and medical colleges for free treatment of RSBY beneficiaries, is to be reimbursed by the insurance companies. RSBY beneficiaries get free treatment from government hospitals and medical colleges and the amount of treatment is reimbursed to the hospitals by the insurance companies.

According to a news release from Press Information Bureau (PIB), Govt. of India, 4 Mn families had registered for the RSBY cashless insurance scheme by 31st March, 2009. The numbers rose to 34.16 Mn by 28th February, 2013. The number of hospitalization cases rose from 12,500 in FY 2008-09 to 1.75 Mn in 2011-12 and reached 4.98 Mn in total as of 28th February, 2013. The number of households possessing an RSBY card for cashless transactions was 171 Mn out of which 119 Mn were enrolled in the scheme. According to the National Sample Survey Organization, access to hospitals for the poor has gone up from 1.7% to 2.7%.

RSBY claims to have garnered greater demand among women who neglect health due to financial issues. The number of females enrolled for the program increased from 4.53% to 6.6% after implementation of RSBY. This cashless transaction scheme is implemented by most of the state governments and targets the BPL families in India. Despite having its own health system, Aarogyasri, the Andhra Pradesh government too has implemented RSYB this scheme.

World Bank reports that The experience with the design and implementation of the Rashtriya Swasthya Bima Yojana in particular, is one of the most promising efforts in India to bridge this gap by providing health insurance [via cashless transaction] to millions of poor households. The program is now internationally recognized for its innovative approach to harnessing information technology to reach the poor. Various countries such as Maldives, Bangladesh, Pakistan, Nepal, Nigeria, Ghana, Indonesia, Vietnam etc. have shown interest in the scheme.

There is a concern however, over the problems that the RSBY scheme might bring with it.

Indian Express, one of the news dailies in India reported that hospitals conduct unnecessary hysterectomies (16000 illegal hysterectomies) on patients for easy money through the cashless insurance schemes.

LTP View: The RSBY might have provided only partial financial coverage to the poor, since many of them still have to make payments out of their own pocket for medicines and diagnostics. This RSBY cashless insurance scheme may provide private hospitals with a large number of patients while reducing the patient intake at the government hospitals. The scheme creates healthy competition between the public and private healthcare providers and might lead to improvement in the health infrastructure in rural areas due to private sector participation. RSBY’s cashless cards empowers people classified under BPL, with the ability to get themselves treated for any disease or illness without worrying about payments or costs associated with the treatment.