Budget 2018: Jaitley's 'Modicare' health scheme music to the ears of 50 crore Indians, but it's too good to be real

The biggest announcement made on Thursday, in what was the Narendra Modi government's last full Union Budget , was the new healthcare scheme announced by Union finance minister Arun Jaitley. The government promised to provide free medical care of up to Rs five lakh each to 10 crore poor families – about 50 crore beneficiaries (assuming five members per family). If successful, the scheme will be expanded to include more people, Jaitley said during his speech. He said that it will be the “world’s largest health care programme” and that the government will make an adequate capital allocation for its implementation. In many ways, it sounded like the ‘Obamacare’ scheme announced by the Democrats in the US, under which the onus of social healthcare lied on the government. Can it work in India? Is the scheme viable in the fashion Jaitley has envisaged? [caption id=“attachment_4331035” align=“alignleft” width=“380”] Union Finance Minister Arun Jaitley presented the Union Budget in Parliament on Thursday. PTI[/caption] A fact check reveals that the scheme is too good to be real. The simple reason is that there is no fund allocation mentioned in the budget to support this mammoth plan. To begin with, there are similar schemes that were announced earlier. Initially called the Rashtriya Swasthya Bima Yojana (RSBY), the scheme was later renamed as Rashtriya Swasthya Suraksha Yojana (RSSY). Then last year, the National Healthcare Protection Scheme (NHPS) was launched as a repackaged version of all these. Even at state level there are similar schemes offering free healthcare to poor segment of the population. For instance, Aarograshri in Andhra Pradesh, Vajpayee Arogyashree in Karnataka, Bhamashah Swasthya Bima Yojana in Rajasthan, Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY) in Maharashtra, Deen Dayal Swasthya Seva Yojana in Goa among others. Maharashtra has allocated Rs 1,316 crore in 2017-18 for MJPJAY. In five years period, the MJPJAY scheme settled total claims of 15.04 lakh amounting to Rs 3343.51 crore. The current free healthcare plan is a magnified form of all these and is far bigger than its predecessors. The RSBY/RSSY promised Rs 30,000 cover per insured. The NHPS that followed increased it to Rs one lakh and now, under Thursday’s latest plan, the insured amount is Rs five lakh. The question is, how exactly will the government find the resources to implement this scheme? As mentioned earlier, the only line from Jaitley on fund allocation was that “adequate funds will be provided for smooth implementation of this programme”. No figure was mentioned. [caption id=“attachment_4338053” align=“alignnone” width=“825”]  Cartoon by Manjul.[/caption] Typically, when a scheme is announced in the budget, the fund allocation is mentioned alongside. Even if one assumes that the government intends to use the allocation made to its existing scheme, around Rs 2,000 crore, the figure is too little to support its implementation. A typical Rs five lakh health insurance policy cover demands an annual premium of at least Rs 10,000. Since this is a government scheme, the premium will be far lesser but not very less either. A Hindu BusinessLine report quotes Professor Indranil Mukhopadhyay, a health economist and assistant professor, OP Jindal University as saying: “If we look at similar models and at half the market rates, the allocation the government would need to pay just the premiums is about Rs 1.2 lakh crore and the country’s total spending on health is about Rs 1.3 lakh crore.” So, what is the total allocation to healthcare in this year’s budget? Rs 52,800 crore. Together with states, the amount will be of course be a lot higher. But, even then, it is difficult to imagine how the implementation will work.

To be clear, it will be a wonderful scenario if the government can actually offer Rs five lakh cover per family. But, let’s remember that even the NHPS announced last year hasn’t made any progress yet.

In December last year, the government informed the Parliament that “the contours of the scheme are yet to be finalised”. Another question raised here is that even if the allocation is made, does the public health system possess the necessary infrastructure to support the plan? One cannot expect private hospitals to take the responsibility of opening their doors to the poor, seeking NHPS protection – the buck will stop at government hospitals.  Unless the infrastructure of these hospitals is improved, it won’t make much difference. Here’s where the maximum attention is needed. To sum up, the free healthcare scheme announced by Jaitley is music to the ears of 50 crore poor people in India. But, given that there isn’t a plan to implement this and looking at the past performances of similar schemes, it seems too good to be real. One will have to wait and watch how the Modi government is planning to implement this behemoth of a healthcare scheme. Click here for full coverage of Union Budget 2018 .