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Re-envisioning a Central scheme, the Kerala model

The federal structure in the country is such that no State government can hope to overturn the policy prescriptions of the government of the day at the Centre if it wishes to have its rightful share of Central government funding; especially so, in the case of Centrally-sponsored schemes which are accompanied by detailed prescriptions on how to go about implementing them. Very often, the State governments are left with little leeway to either alter such schemes substantiall y to suit their needs and regional specificities or look out for alternative implementation methodologies. While in most cases, the State governments have been giving in to the Centre’s diktats, the CPI(M)-led Left Democratic Front (LDF) government in Kerala has chosen to tread a different path at least in the case of the Rashtriya Swasthya Bima Yojana (RSBY), which became operational in the State on October 2 .

The LDF government has worked several of its own innovations into the health insurance scheme, reworking its emphases and operational dynamics to make the Central scheme more in line with the ideological perspective of the ruling alliance in the State. What is being implemented in Kerala is not the RSBY as conceived and implemented countrywide by the United Progressive Alliance (UPA) government with sufficient width for the private insurance players and private healthcare industry, but one that places emphasis on the public healthcare infrastructure and a public insurance company.

The re-envisioning of the RSBY by the LDF government may not certainly qualify to be the elusive “alternative” to the neo-liberal underpinning of the Central scheme, but it merits attention as a significant attempt by a State government to imaginatively re-engineer a Central scheme to make it more nuanced and reflective of its ideological position on how best to give healthcare to the poorest segment of its population.

The objective of RSBY is to provide the insurance cover to below the poverty line (BPL) households from major health shocks that involve hospitalisation and the Centre has directed the States to extend the benefits of the scheme to BPL families as identified by the Planning Commission. The coverage of the scheme would be available to a family of five (head of family, spouse and three dependents including parents of the head of the family) and each family would be entitled to more than 700 in-patient medical procedures with a cost of up to Rs. 30,000 a year for a nominal registration fee of Rs. 30.

Pre-existing medical conditions are covered and there is no age limit for enrolment. The scheme envisages cashless transactions, with each family being given a ‘Smart Card’ which can be used anywhere in the country. The Centre had launched the scheme on October 1, 2007, with a five-year rollout beginning with 20 per cent of the districts in a State in the first year and adding 20 per cent each in the subsequent years.

In Kerala, the scheme is being launched simultaneously in all the 14 districts and it is expected to cover 1.10 crore persons (one-third of the State’s population) when fully operational. Kerala could not have done this if it had stuck to the Central guidelines. By the Planning Commission’s definition, there are only 11.79 lakh BPL families in the State. But, in the State government’s estimation, there are an additional 10 lakh families who are equally worse off. The Comprehensive Health Insurance Scheme (CHIS) that was rolled out in Kerala would cover these families for a token insurance premium of Rs. 100 as also the above poverty line (APL) families who are ready to pay the full annual premium of about Rs. 550 and bear the cost of the ‘Smart Card.’

The scheme was re-engineered by the State Planning Board headed by noted economist Prabhat Patnaik on the premise that health insurance schemes are a sub-optimal way of providing healthcare to the people and preferring the universal free healthcare route to the insurance route. The Central scheme does not discriminate between public or private insurers or public and private healthcare providers. Aware of the imperatives of Central government funding, the State government has gone along with the Centre on this score, but it has reserved the right to choose the insurance provider, the criterion for selection not being the lowest bid.

It has also stipulated that private hospitals and healthcare facilities that participate in the scheme, in addition to the public system that would be the scheme’s mainstay, would have to accept a set of prescribed rates as the maximum charges for various treatments, the rates being much less than those fixed by the Central government .

Kerala has a free healthcare system. As conceived at the State level, the health insurance scheme is not intended as a replacement for the free healthcare system, regardless of its many ills, but an initiative that can also help build it up further. Thus, whenever a family approaches a public health institution for care and treatment, that institution would be compensated to the extent to which the treatment costs the family. This, it is hoped, would help strengthen the public health system and increase its capability to cater to the treatment needs of both the insured and the uninsured in society. As Prof. Patnaik puts it, “the public system will continue its current practice with regard to charging for its services, which also means that it will not charge any money to the poor; the compensation it will claim from the insurance provider will only be against notional payments calculated at certain specifically-fixed rates.” Each public healthcare institution would be allowed to retain insurance premium flowing back to it, at least during the first year, and the healthcare personnel would be given bonuses for the additional burden they would have to bear once the scheme gets going.

The scheme is certain to throw up several operational challenges for the State government, both on account of the scale of its operation and the demands it is likely to pose for the public healthcare infrastructure. The government would have to prepare over one crore Smart Cards, distribute them, empanel private hospitals willing to participate in the scheme accepting the prescribed rates and prepare the public healthcare facilities for the onrush of care seekers. If it succeeds in tackling these challenges and taking the scheme forward, it would mark yet another trail blazing achievement for Kerala.

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