Budget 2018 Opinion

The Health Protection Scheme is a Gimmick

Virtually no funds have been allocated towards the health protection scheme that the government announced. It is just a gimmick for the elections.

The biggest announcement in the annual budget of the government of India, presented yesterday by the finance minister Arun Jaitley, was the announcement of the launch of National Health Protection Scheme (NHPS). Jaitley said in his speech:

We will launch a flagship National Health Protection Scheme to cover over 10 crore poor and vulnerable families (approximately 50 crore beneficiaries) providing coverage up to 5 lakh rupees per family per year for secondary and tertiary care hospitalization. This will be the world’s largest government funded health care programme. Adequate funds will be provided for smooth implementation of this programme.

It is important to remember here that all the hype and the hoopla in India notwithstanding, the budget is basically an exercise of allocation of funds towards various expenditures, along with an account of how those expenditures will be funded by raising revenue. When the finance minister said “we will launch a flagship National Health Protection Scheme,” given that he was making a budget speech, the assumption was that the launch will happen during the course of the next financial year i.e. 2018-2019.

I went digging for how much money the government has allocated to the NHPS. The scheme hopes to cover 10 crore households and 50 crore individuals, and hence, is bound to cost a lot of money. One estimate made by health economist Indranil Mukhopadhyay suggests that just the premiums to provide a cover to 50 crore beneficiaries would amount to Rs 1.2 lakh crore. Over and above this, money would be needed to implement and then run the scheme. Hence, even a partial implementation of such a scheme would need a lot of money.

The total annual budget of the department of health and family welfare is Rs 52,800 crore. The money to be spent on the flagship National Health Protection Scheme has to come from the health budget. Hence, the more money that the scheme takes away, the less  that would be left for everything else in the health budget. This is a point well worth remembering, before getting all excited about the scheme. Also, does the country have the necessary infrastructure (the doctors, the nurses, the hospital beds etc.) to deliver on a scheme, which is so ambitious in its scope?

Nevertheless, I couldn’t find an allocation made against NHPS in the health budget. Having said that, I did find a scheme with a similar sounding name, Rashtriya Swasthya Bima Yojana (RSBY), with an allocation of Rs 2000 crore. RSBY provides an annual coverage of Rs 30,000 to poor families.

For a moment, given the past record of the Modi government, I thought that the RSBY had been renamed as the National Health Protection Scheme.  And that is how things turned out. This is something that expenditure secretary AN Jha specified later. He said that Rashtriya Swasthya Bima Yojana will be changed into NHPS. Currently, the government has allocated Rs 2000 crore against Rashtriya Swasthya Bima Yojana. This is basically an allocation for NHPS.

As Jha said:

We have provided Rs 2000 crore provisionally in the Budget 2018-19 and once the contours of the scheme takes shape and details are worked out further provisioning will be done.

The budget is basically a presentation of the government’s accounts, its income and its expenditure. Given that very little money has been allocated towards the National Health Protection Scheme, the finance minister should have at least specified that in his speech. Instead he told us: “This will be the world’s largest government funded health care programme.” The world’s largest government funded health programme will be launched by allocating around 1% of the funds than what are actually required (taking into account the cost of implementing the scheme as well) to run it.

In Mathematics, when numbers are too close to zero, they are assumed to be zero. This is one such situation.

In fact, this is not the first time that the Modi government has talked about launching such a scheme. In the budget for 2016-2017, presented on February 29, 2016, finance minister Jaitley had talked about launching a similar scheme. The government press release announcing this points out:

In his Budget address in the Parliament today, the Finance Minister expressed concern that a serious illness of family member(s) causes severe stress on the financial condition of poor and economically weak families, shaking the foundation of their economic security. In order to help such families, the Government will launch a new health protection scheme which will provide health cover up-to rupees one lakh per family.

More than one and a half years later, in December 2017, in an answer to a question raised in the Lok Sabha, the government said:

The Government has proposed to launch a new health protection scheme which will provide health cover up to Rs. One lakh per family belonging to poor and economically weak families. The contours of the scheme are yet to be finalized.

The NHPS seems to be another avatar of the new health protection scheme, which the government was supposed to launch sometime in 2016, but hadn’t launched even by late 2017. If the government was not in a position to launch a scheme with a coverage of Rs 1 lakh nearly two years after announcing it, what are the chances of it launching a scheme which comes with a coverage of Rs 5 lakh? This is a question well worth asking.

Once this fact is taken into account one can understand how serious the government is about launching the NHPS. More than anything the NHPS is an electoral gimmick sold to the people of this nation, in a year when 10 assembly elections are due. And from the way the finance minister went about giving his budget speech, it can even be said that the next Lok Sabha elections might happen later this year.

About the author

Vivek Kaul

Vivek Kaul is a writer who has worked at senior positions with the Daily News and Analysis (DNA) and The Economic Times. His latest book India’s Big Government—The Intrusive State and How It Is Hurting Us, has just been published. He is also the author of the Easy Money trilogy.