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How Ayushman Bharat will impact the health insurance sector in India
Subir Mukherjee

With the government’s implementation of the Ayushman Bharat-National Health Protection Mission in September 2018, the health insurance sector in India stands to gain like never before. A health policy for the socio-economically underprivileged sections of the country, Ayushman Bharat will potentially benefit nearly 500 million Indians or 100 million families, by providing them health insurance of up to Rs 5 lakh per year. Although the underlying framework for the scheme’s pricing and delivery is still under consideration, the central and state governments will finance it.

There are two components to the Ayushman Bharat scheme. The first is the National Health Protection Scheme, which has been created to provide cashless treatment to patients. The second is the health and wellness centres, which will provide primary care to patients. As part of this scheme, the government will upgrade the existing public health centres to wellness centres.

Key features and benefits of Ayushman Bharat

The biggest driver behind Ayushman Bharat has been the provision of access to healthcare for the socio-economically backward and underprivileged sections of the country’s population. For this, the ministry of health and family welfare has incorporated a comprehensive list of 1,354 packages in the Ayushman Bharat scheme. Under the scheme, patients would be provided with treatment for knee replacements and coronary bypass and stinting, among others, at 15-20% lower rates than the Central Government Health Scheme.

Further, representatives will be allotted under the scheme, called Ayushman Mitra, to provide assistance to patients and their families in each empanelled hospital with their documentation, eligibility, and enrolment in Ayushman Bharat. In addition to this, they will also coordinate with hospitals and beneficiaries through various stages before, during, and after the treatment.

Once they are enrolled for Ayushman Bharat, a demographic authentication of the beneficiaries will be conducted. Following this, they will be provided letters with QR codes, which will be scanned to identify and verify their eligibility to receive the benefits under the scheme. One of the major benefits of the scheme is that there is no cap on the size of a family or the age of the members in it. Another is that the benefits under the scheme can be availed across the country through all empanelled healthcare providers. In addition, coverage of pre-existing diseases will be provided from the very first day of a beneficiary being enrolled for the scheme, which will cover both secondary as well as tertiary healthcare.

Impact of Ayushman Bharat on the insurance sector

Ayushman Bharat is likely to offer significant benefits to the health insurance sector, while expanding the market over a period of time. The scheme will be run through two modes, that is, a trust model and an insurance model. Under the trust model, premiums will not be paid to insurance companies, but will be collected by a trust from the state and pooled together. The trust will be responsible for managing and administering the scheme, as well as for paying off the claims. On the other hand, under the insurance model, the premiums will be paid directly by the state to the insurance companies, much like how policy holders generally pay their premiums on a health insurance policy. Under this model, the insurer will be responsible for the payment of the claims.

Although there will be no major changes to the coverage under either the trust or the insurance model, competition between insurance companies will intensify. While there will be significant differentiation in the products offered by various players, they will nevertheless be standardised. From a regulatory point of view, standardisation in the products will apply to the exclusions under the policy coverage, along with streamlining of specific processes and clear definition of what will be included and what won’t.

With the scheme already in effect, it is only a matter of time before it leads to structural changes in how the health insurance market in India works. According to a report by Credit Rating Information Service of India (CRISIL), the scheme will increase the penetration of health insurance in the country, from the current 34% to over 50%. In addition, a report by credit ratings agency Moody’s states that the number of people in India covered by health insurance stood at 440 million at the end of 2016-17, which could increase by an additional 500 million with the implementation of Ayushman Bharat.

A smooth implementation of the scheme by the government, insurance companies, and third-party administrators could bring about a paradigm shift in the health insurance market, significantly aided by the standardisation of the regulatory guidelines and framework pertaining to the workings of the scheme. In the long run, this would certainly help in clarifying not only the key aspects of the scheme for customers, but also enable insurance companies to develop products and deliver them effectively to the users in a seamless manner.

Subir Mukherjee is the founder and director at GreenLife Insurance Broking Pvt. Ltd, an online and offline insurance distribution network. Views are personal.

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