State-Sponsored Insurance and Ayushman Bharat

State-Sponsored Insurance and Ayushman Bharat

Ayushman Bharat: Government funded healthcare program

  • India takes a giant leap towards providing accessible and affordable healthcare to the common man with the launch of Ayushman Bharat -Pradhan Mantri Jan Aarogya Yojana (AB-PMJAY)
  • Ayushman Bharat – Pradhan Mantri Jan AarogyaYojana (AB-PMJAY) is a paradigm shift from sectorial, segmented and fragmented approach of service delivery through various national and State schemes to a bigger, more comprehensive and better converged and need based service delivery of secondary and tertiary care.
  • Ayushman Bharat, for instance, has enhanced the Rashtriya Swasthya Bima Yojana (RSBY), to cover around 11 crore families with a yearly coverage of Rs.5 lakh.
  • Experts estimate this will require Rs.25,000 crore per year, when fully implemented.

Flows of present insurance model

  • Insurance works on the principle of pooling the risk of policy holders. If an individual, corporation or a Government can bear a certain quantum of risk by themselves, it is not financially sensible to insure with an insurance company.
  • This is because administrative overheads and profit margins of insurance companies are included in insurance premium costs.
  • For instance, Last year, insurance companies made a bumper profit of 85% to the tune of Rs. 15,029 Cr on crop insurance premium under the Pradhan Mantri Fasal Bima Yojana.

Costs baring by the insurance companies

  • Typical insurance company costs include;
    • designing insurance products to suit customer needs
    • actuarial input to assess and manage risk
    • advertising and marketing
    • empanelment (of approved service providers such as hospitals)
    • administrative expenses to provide prior approval of claims and
    • processing, which includes functions such as fraud detection.
Location: Thiruvananthapuram, Kerala, India

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