The two major health insurance schemes in the State – Ayushman Bharat-Karunya Arogya Suraksha Padhati (KASP) and Medisep (the medical insurance scheme for State government employees and pensioners) – are headed for a fiscal disaster. With huge cost overruns, the sustainability of these schemes in the long run is in question.
The financial fallout of KASP is now pushing the State’s public sector hospitals, which are providing a chunk of the free medical care provided to the beneficiaries of the schemes, to the verge of collapse. The government owes over ₹600 cr to medical colleges and public hospitals as claims reimbursement arrears.
In the last two years, KASP has been bleeding the State finances dry, paying out ₹1,400 crore in claims settlement in 2021-22 and ₹1,630 crore in 2022-23, more than double the allocation in Budget at which the State had been running health insurance schemes till 2021.
Medisep, still in its first year, has already paid claims worth ₹633 crore, and the projected cost overrun for the year is around ₹100 crore. However, with the insurance company acting as a buffer, the government is insulated from the impact.
Though KASP has been a drain on the State’s coffers, the government’s narrative speaks only about the free healthcare worth ₹3,030 crore it has provided in the last two years. The other side of the story is that the State’s public sector hospitals are struggling to stay afloat.
Pending bills
“We owe bills worth crores to our stents, surgical implants suppliers, and medical stores. Hospital development societies’ funds have dried up because everything goes for providing patient care to KASP beneficiaries,” the superintendent of a government medical college says.
The State was running its health insurance schemes – RSBY, CHIS/CHIS Plus – without any hitches, within a fixed resource envelope, and still providing specialty care. KASP was launched in alignment with Ayushman Bharat in insurance mode in April 2019.
KASP covers 42 lakh families in the State, and though it is being run in alignment with Ayushman Bharat, the State bears 90% of the costs. The Centre’s annual contribution to the scheme is just ₹138 crore.
Suggestions
KASP’s troubles began when the government changed the scheme from insurance mode to the Trust/assurance mode in 2020 without due diligence, it is pointed out. Since 2020, the claims expenditure has been climbing, increasing the government’s financial commitment.
“When the proportion of the aged population is steadily climbing, and more than half of them have some lifestyle disease, the health expenditure will continue to rise, and the government will find itself in a deeper crisis. The problem is not the health financing schemes per se, but the unprofessional and irresponsible manner in which these are being run,” says D. Narayana, former Director of the Gulati Institute of Finance and Taxation, who had been closely involved with the technical aspects of health insurance schemes in Kerala from its inception.
“No health insurance scheme can be run in an unregulated manner. An oversight board should have been in place to monitor all aspects of the scheme, bring in financial discipline and have proper checks and balances in place. The implementation should have been handed over to a professional body with expertise in the field. And the data should have been put on the public domain so that independent researchers could study and analyse trends from time to time,” Dr. Narayana says
