Publicly Financed Health Insurance:

A number of publicly financed health insurance schemes were introduced to improve access to
hospitalization services and to protect households from high medical expenses. Eight states
introduced health insurance programmes for covering tertiary care need and over time as
expenditures increased, many of these States (Andhra Pradesh, Karnataka, Tamilnadu,
Maharashtra, etc.) moved to direct purchasing of care through Trusts and reserving some
services to be delivered only through public hospitals. The Central Government under the
Ministry of Labour & Employment, launched the Rashtriya Swasthya Bima Yojana (RSBY) in
2008. The population coverage under these various schemes increased from almost 55 million
people in 2003-04 to about 370 million in 2014 (almost one-fourth of the population). Nearly
two thirds (180 million) of this population are those in the Below Poverty Line (BPL) category.
Evaluations show that schemes such as the RSBY, have improved utilization of hospital services,
especially in private sector and among the poorest 20% of households and SC/ST households.
However there are other problems. One problem is low awareness among the beneficiaries
about the entitlement and how and when to use the RSBY card. Another is related to denial of
services by private hospitals for many categories of illnesses, and over supply of some services

Some hospitals, insurance companies and administrators have also resorted to various fraudulent
measures, including charging informal payments. Schemes that are governed and managed by
independent bodies have performed better than other schemes that are located in informal cells
within existing departments or when managed by insurance companies. The insurance schemes
vary widely in terms of benefit packages and have resulted in fragmentation of funds available
for health care; especially selective allocation to secondary and tertiary care over primary care
services. All National and State health insurance schemes need to be aligned into a single
insurance scheme and a single fund pool reducing fragmentation. The RSBY scheme has now
been shifted to the Ministry of Health & Family Welfare, helping the State and Central Ministry
move to a tax financed single payer system approach. The Ministry could now compare the
relative costs per patient for alternative routes of financing viz. purchase through insurance, or
direct purchase from private sector and from public sector or free care by public sector as a form
of tax based financing, and take the best decision for a given context.