Victoria Fan

A Working Model for Health Insurance for the Poor: Learning from the early success of India’s RSBY

India’s finance minister Chidambaram recently announced that Anil Swarup, the leader behind the Ministry of Labour’s health insurance program for the poor, had been assigned to head a panel to identify and get results for 215 large and long-stalled projects. While this big news of Swarup’s transfer was anticipated, just five years ago it was hardly imaginable that Swarup and his team would start India’s health insurance program for the poor – Rashtriya Swasthya Bima Yojana (RSBY) – and grow this fledgling to be one of India’s increasingly important vehicles of social protection and health coverage.

While the evidence on RSBY is still developing, early results are encouraging: increased health care utilization and hospitalization; some indication of reduced out-of-pocket payments for health care; and a “smart card” system to identify covered patients. (See more benefits here). In a new essay, I explore several of the key features of RSBY’s early success – including the right leadership, the novel and systematic use of information and biometric technology, the aligning of incentives for hospitals and insurance companies, the smart use of additional payments rather than targets, and a constructive state-to-center relationship.

While Swarup’s departure from RSBY represents a unfortunate loss, RSBY’s future remains promising. The organization continues to experiment with outpatient services, the progressive inclusion of other populations (not only those below the poverty line), the use of the RSBY smart card platform for other public welfare benefits, and the use of the rich data for disease surveillance.

But RSBY also faces many formidable operational challenges ahead for which it has received considerable criticism: the challenge that all public programs in India face of educating its beneficiaries, improving targeting, and improving the quality of care.

Moreover, as Indian programs are notorious for stagnation after losing critical leadership, greater attention to the institutions, human resource management and incentives are needed to ensure continuous improvement. It remains an open question of how effectively Swarup’s successor can maintain the great progress already achieved by RSBY.

Finally, universal health programs in all countries must control costs and get better value for money as citizens grow wealthier and increase their demand for health care. In India too, amidst inevitable growth in health-care expenditures, RSBY will need to expand its benefit package to meet evolving demand, all while ensuring smart, efficient, and sustainable public spending. In the near future, India will need to design and implement fair priority-setting institutions to ensure that public dollars for health are spent in the most cost-effective and equitable manner. My colleagues Amanda Glassman and Kalipso Chalkidou have proposed an agenda to improve priority setting, which offers instructive advice for RSBY and the Ministry of Labour & Employment.

RSBY has an exciting future with many challenges ahead and much work ahead of it. The dream of access to affordable, quality health-care is not yet realized for many more millions of Indians. I welcome your comments on my essay publicly (below) or privately.

Victoria Fan is a research fellow at the Center for Global Development. Follow her on Twitter @fanvictoria.

Editor’s Note: this post was originally posted on the Center for Global Development’s Global Health Policy blog. It is republished with permission.

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