Who will get credit for offering health insurance under ‘Ayushman Bharat’, which is better known as ‘Modicare’, to India’s disadvantaged?

This seems to be the burning question before some non-Bharatiya Janata Party (BJP) ruled state governments, which are showing reluctance to sign up for one India’s most ambitious health care programmes proposed by the central government.

Given the scheme’s game changing potential and with 2019 general elections round the corner, opposition parties cannot let the centre walk away with all the expected political goodwill if at all Modicare meets its roll out timeline.

And it is a big if. The programme was announced during the Budget for 2018-19 and Prime Minister Narendra Modi is keen to get it greenlighted even before the August 15 deadline he had himself set earlier.

But since health is a state subject, each state must sign an Memorandum of Understanding (MoU) with the centre to get this scheme implemented and states’ share of the costs of Modicare is 40%.

The Modicare offer is tempting: it aims to cover 100 crore families, 50 crore beneficiaries with an annual health cover of up to Rs 5 lakh.

Arguably, this is the largest healthcare insurance scheme anywhere in the world.

But some states such as Delhi, Odisha, West Bengal and Punjab are worried about the political implications of signing up for a scheme that is also known by the name of the Prime Minister and virtually links the benefits to the BJP, which is ruling at the centre.

One state chief secretary has even posed this question to central government officials, saying what political benefits will his state get by agreeing to come under the umbrella of Ayushman Bharat, since the scheme is seen as a BJP largesse?

A senior central government official said that a dialogue is on with each state and union territory and things should get sorted out soon.

As on date, MoUs with Himachal Pradesh, Uttarakhand, Chandigarh, Jammu and Kashmir, Haryana, Assam, Tripura and Nagaland have been signed.

Beginning this week, five union territories and four more states including Uttar Pradesh are also slated to come on board.

Indu Bhushan, Chief Executive Officer, Ayushman Bharat, told

CNBCTV18.com, "We hope to have MoUs with all states and union territories signed by June 15.”

Not just worries over who gains politically in coming under the Modicare umbrella, some states are also opposed to the programme due to its financials.

And some others say they have existing health insurance schemes, which they are reluctant to abandon.

So West Bengal has something called the ‘Swasthya Sathi’ scheme, Punjab also has its own version of a mass health insurance scheme.

The Swasthya Sathi scheme was launched by Chief Minister Mamata Banerjee in December 2016 and offers basic health cover for secondary and tertiary care up to Rs 1.5 lakh per annum, which goes up to Rs 5 lakh for critical illnesses like cancer, neuro surgeries, cardiothoracic surgeries, liver diseases and blood disorders.

Now Punjab, which has been strident in its opposition to Modicare, says the financial terms of the MoU, the centre wants it to sign are not viable.

An article in Hindustan Times quotes a senior Punjab government official to say that the biggest objection is to a clause in the MoU, which makes it mandatory for states to pay for claims exceeding 115% of the premium.

This means state’s liability is not limited to its share of premium amount but also extends to the claim outgo.

“As per the prescribed package rates proposed by the centre for treatment of bypass surgery under this scheme, the payment claims should not exceed Rs 90,000. No hospital in Punjab will perform this surgery within the prescribed cost limit. In that case, state will have to bear the extra cost. Similarly, as per rates fixed for treatment of other ailments too, in case of exceeding of claims, state will have to shed hundreds of crores of rupees to pay full claim to patients,” the piece quotes a senior state government official as saying.

As for Delhi, the Aam Aadmi Party (AAP) government seems to be worried over, whether it will get any credit besides getting worked up about and who will actually decide whether it will participate in Modicare – the Lieutenant Governor or the Chief Minister?

The central government official quoted earlier said the centre has allocated Rs 4,000 crore for Ayushman Bharat till now, out of the Rs 10,000 crore that the scheme is supposed to get in 2018-19.

Since states are expected to bear 40% of the scheme’s burden, the remaining Rs 2,000 crore of the central share should come in the supplementary demand for grants, which will be presented later in the fiscal year.

This official said some state governments are using the ‘trust’ model for implementing Ayushman Bharat while others are doing it directly.

When asked about the earlier health insurance scheme 'Rashtriya Swasthya Bima Yojana' (RSBY), this official said it only offered Rs 30,000 annual cover and covered only about a third of Indians compared to the coverage universe of the Ayushman Bharat scheme.

He said the RSBY will anyway be subsumed in Ayushman Bharat.

Meanwhile, as some states calculate political gains or losses accruing to them from this health insurance scheme, analysts say this scheme – if implemented well – could prove to be a boon for India’s healthcare providers.

In a note to clients, ICICI Securities said, "This scheme, if implemented successfully, would be one of the largest government funded healthcare scheme globally, as it would have addressable size of Rs 50 trillion. This would be total healthcare size including hospitals, pharmaceuticals, diagnostics etc, however, hospitals would form the major portion (hospitals currently is >50% of total Indian healthcare market).”

The brokerage went on to say that the Indian healthcare industry (hospitals) is expected to grow at 16-17% compound annual growth rate (CAGR) to reach to Rs 8.6 trillion by FY22.

"That means if the above scheme is implemented successfully as planned, the healthcare delivery market can grow multifold.”

Insurers, hospitals and India’s marginalised – all see potential in Ayushman Bharat.

But the test would be its roll out - how soon and how many states and union territories come on board, whether the centre can quell fears of insurers and hospitals and ensure their ‘buy in’ and most importantly, how the scheme is implemented at a time when the country is woefully short of infrastructure, doctors and care-givers.

Sindhu Bhattacharya is a journalist based in Delhi.

First Published:May 28, 2018 2:11 PM IST