Supported by Dr. Virendra Rawat ( Advocate ) 
Rashtriya Swasthya Bima Yojana - Providing Health Insurance Cover to the Poor
Shri Anil Swarup**
One of the most urgent and vexing problems in the developing world, more so in India, is how to finance and provide health care for more than a billion persons, most of whom are impoverished or belong to low income group. In most Asian countries, health care is financed by out-of-pocket (OOP) payments by individuals. These expenditures result in jeopardizing an equitable health system in developing countries. In the absence of financial risk pooling, the poor have to meet the costs of health care from their own pocket, pushing them further down the abyss. The common dilemma facing policy makers in India is with regard to the need for a Government sponsored health insurance cover when health services are being provided ‘free’ by the Government itself. However, the fact is that the ‘free’ government health services are not meeting the needs of the community. This is the reason why a lot of out-of-pocket expenses are still taking place which in turn lead to indebtedness. It is also evident that the poorest bear the brunt of it. Moreover, 94% of the workforce in India is in the unorganized sector and, hence, does not have the desired social security cover.
Target Group The unorganized sector workers below poverty line (BPL) and their families are proposed to be covered under Rashtriya Swasthya Bima Yojana (RSBY). Understanding the characteristics of the target group was found to be absolutely imperative in evolving a scheme that could have a meaningful impact. An analysis of this group reveals that they are primarily three types : Poor; Illiterate; Migratory Thus, the scheme had to be cashless because there was no way in which the beneficiary could raise the financial resources and then claim reimbursement from any agency. A large number of workers in India migrate from one State to the other in search of employment. So far, none of the health insurance schemes, for that matter any other scheme, addresses this aspect. An added complexity emerges when only some in the family migrate and rest of them stay back. On account of illiteracy, repeated documentation cannot be resorted to and, in this sense, the cashless system was the only alternative.
Benefits The beneficiary, under RSBY, is eligible for the following minimum benefits: Total sum insured of Rs 30,000 per BPL family per annum on a family floater basis; Pre-existing conditions to be covered; Cashless coverage of all health services related to hospitalization, including maternity benefit and such services of a surgical nature which can be provided on a daycare basis. (Though OPD facilities are not covered under the scheme, OPD consultation is free); Provision for pre and post-hospitalization expenses for one day prior and 5 days after hospitalization and Provision for transport allowance.
Funding Funding is done through contribution by the Government - 75% (90% in case of the States in the North-East and J&K) of the estimated annual premium. Additionally, the cost of the smart cards to be borne by the Central Government @ Rs.60 per card. The Contribution by the respective State Governments is 25% (10% in case of the States in the North-East and J&K) of the annual premium and Rs30 per annum as registration/renewal fee by the beneficiary.
Roll-Out of The Scheme The State Governments are required to select one or more health insurance service providers on a periodic basis according to a tender process which would take account of both the price of the insurance package and technical merit of the proposal. The tender is open to both public and private insurers who meet the standards fixed by Insurance Regulatory Development Authority (IRDA). The selected insurance company has to have back to back arrangement with: Health service providers, Smart card service providers and Intermediaries. Only such health service providers are empanelled by the insurance company as are able to meet the predefined criteria. The hospitals have also to agree to a predetermined package of medical and surgical procedures and the costs thereof to obviate subjectivity. No preauthorization is required in case of predetermined packages. Majority of the ailments fall within these packages. However, in case the ailment does not fall in such packages, the procedure for preauthorization has been prescribed.
Information Technology Application Smart Card is central to RSBY as it enables cashless transaction as well as inter-compatibility in network hospitals throughout the country. It also enables foolproof biometric identification of the beneficiary. The cards are printed on the spot and delivered by the Insurance Company at the time of enrolment itself. In view of the possible migration of BPL workers, there is a facility of split card under the scheme. A new card can be issued in case of loss of smart card. However, the beneficiary will have to bear the cost of duplicate card. As the details of the family are available in the database, the card can be issued at the district kiosk. The hospitals are mandated to possess necessary hardware of predetermined specifications to read and operate the data on the smart card. Transaction software, based on the specifications, is to be prepared by the service provider for use in the hospitals. A back-end data base management is in place for transmission from hospitals to a designated server and for electronic settlement of claims to make the scheme not only cashless but also paperless. An elaborate MIS has been developed for close supervision and monitoring at various levels.
Security With a view to imparting security to the entire process of issuing and use of smart card, an elaborate key management system (KMS) has been evolved by the National Informatics Centre (NIC). A Central Key Generation Authority (CKGA) has been set up for creating root keys and to manage the entire key management system at the Central level. The district keys are generated by CKGA. Thereafter, the keys for field key officers (FKOs) are generated at the district level. The district keys are transferred by the CKGA to the district key managers.
Role of Intermediaries The Intermediaries between the insurance companies and the beneficiary have a very important role in carrying the scheme to beneficiaries. These intermediaries can be in the form of TPA, NGOs, MFIs, Panchayati Raj Institutions or a combination of these depending upon the requirement in each region and the capacity and capability of the intermediaries. However, without such ‘social aggregators’ it will be virtually impossible to roll out the scheme.
Unique Features Of The Scheme IT tools for poorest of the poor: In all 60 million cards will be issued under RSBY to the BPL families. This will be the biggest ever exercise involving IT applications in India or anywhere else in the world. So far, IT applications had been used primarily in the urban areas. The smart card is now traveling to rural areas on such a large scale. Empowering Below Poverty Line families: Unlike the previous Government sponsored schemes, where the beneficiaries did not have option to select the service delivery point, under RSBY, the beneficiary can choose the hospitals from a list of network hospitals, including private hospitals, for seeking treatment. RSBY operates on a business model: In view of the numbers and the fund involved, there are business opportunities for all the key players, like Insurance Companies, Hospitals, Smart Card Service Providers and the Intermediaries. On an average, around Rs.50 million (US $ 1.2 million) is being pumped in each district every year. This has created business opportunity as there would be incentive for private sector health providers to set up health related infrastructure. Similarly, on account of sheer volumes, smart card service providers will have the incentive to deliver the cards even in the rural areas. The insurance companies obviously can also make decent money on account of the proposed volumes. Security of Cards : A key management system has been evolved by National Informatics Centre to ensure that the smart cards are fully secure. There would be no scope of cards being duplicated or being misused. The smart card also envisages use of biometrics (finger print verification).
RSBY Gets Going The response of the State Governments and other stakeholders has been very encouraging. The Scheme became operational from 1.4.08. So far, 26 out of 29 State Governments have initiated steps to implement the scheme. Smart cards have started rolling out in 22 of them. By 20.07.10, more than 17 million cards, providing health insurance cover to around 70 million persons, have already been issued. Around 700,000 persons have already availed of free hospitalization facility. A decision has been taken to extend the scheme to categories beyond BPL. Thus the benefits have now been extended to the building and other construction workers. The Finance Minister has also announced extension of RSBY benefits to such MNREGA beneficiaries as have worked for 15 days or more during the previous year. The Railway Minister has announced similar benefits for railway coolies and vendors. The scheme has come in for appreciation both within and outside the country. The World Bank has called it “one of the most promising efforts in India”. It has commented that “the program is now internationally recognized for its innovative approach to harnessing information technology to reach the poor.” The UNDP has selected the scheme as a Social Protection Floor success story to be published in its document “Sharing Innovative Experiences: Social Protection Floor success stories”. The initial evaluations of the scheme have revealed some very encouraging trends in terms of beneficiary satisfaction.
The Challenges Reaching out to such huge numbers in far flung areas is a stupendous task. Evolving communication modules and delivering them on such a scale continues to test the capacity and capabilities of the Insurance Companies whose task is to sell this product. And finally, the challenge is not merely of quantity but also of quality of service by various service providers.
*Director General (Labour Welfare), Ministry of Labour and Employment
Supported by Dr. Virendra Rawat ( Advocate ) 
Supported by VVKAS Legal & Advisory LLP
