The Finance Minister Arun Jaitley, while presenting the Union Budget 2018-19 on February 1st 2018, unveiled the World's largest healthcare scheme, the National Health Protection Scheme (NHPS). This scheme called "Modicare" or "NaMoCare" will cover 10 Crore poor and vulnerable households in India, up to Rs 5 Lakhs a year, for free healthcare treatment. Yes...we are talking 50 Crore beneficiaries....
This massive healthcare scheme will cost Rs 11,000 Crores a year. The Government has allocated about Rs 2,000 Crores towards this scheme, but more money is required, as the scheme rolls out over the year. The Government estimates that the cost of insuring each family comes to around Rs 1,100 a year. (This is the insurance premium it would cost per family).
The World's largest healthcare scheme is still in its early days....We need more details....Many critics believe this scheme will not work out. They believe the funding is inadequate. But is it?
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You must have heard the phrase, It's all about the money. The critics of Modicare are very happy, it's a flop show they say. Where is the money for the National Health Protection Scheme?
The critics in a hurry to call Modicare a flop, missed an important detail. They believed that the amount of Rs 5 Lakh a year for free healthcare, was for 50 Crore citizens. In reality, it was Rs 5 Lakhs per family, for 10 Crore households.
This is an important point missed by the critics. They believe that each family would use the entire Rs 5 Lakh coverage a year. But, this is not true. Not every family member will require hospitalization each year.
Even if one or two family members are hospitalized, the family will not require the entire amount of Rs 5 Lakhs a year for hospitalization. So, the cost of insurance will be much lesser than predicted.
The Government will have to strengthen the primary and secondary healthcare in India, to make Modicare a success. Secondary healthcare includes healthcare services provided by skilled medical practitioners for outpatient treatment or a brief stay at a hospital for any serious illness.
The Government has to focus on more hospital beds, specialist doctors, healthcare staff, diagnostic facilities, pharmacies and so on, for the public healthcare sector.
A good and robust public healthcare system will strengthen the Governments bargaining power vis-a-vis private healthcare. Private healthcare offers excellent tertiary medical treatment as it invests in technology and R&D. The Government must use the private healthcare system to provide healthcare to crores of beneficiaries of Modicare.
The Government can focus on the affordable care model, to make Modicare a success. The Government must pay a per capita amount (fixed amount for each beneficiary of the scheme), to hospitals for the hospitalization costs of the beneficiaries. Hospitals and doctors would be rewarded for outcomes. This would incentivize hospitals to provide good quality services to the beneficiaries of Modicare.
Actuaries would estimate how much the hospitals must be paid by the Government, to give quality healthcare to the beneficiaries of Modicare. Healthcare providers are paid a fixed amount by the Government, and will ensure quality medical treatment to beneficiaries of Modicare, without inflating healthcare costs. As crores and crores of citizens receive quality healthcare treatment, costs will come down.
Yes, Modicare can be a success. The Government must focus on quality healthcare for the beneficiaries of Modicare. Be Wise, Get Rich.
Mr. C S Sudheer is the founder and CEO of IndianMoney.com – India’s largest Financial Education Company. He started his career with ICICI Prudential Life Insurance and later on worked with Howden India. After his brief stint in Howden India, he moved on and incorporated Suvision Holdings Pvt Ltd which is the sole promoter of IndianMoney.com. He aims to build a nation that is financially literate with investment savvy citizens.
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