6 days ago
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The announcement of a new health insurance scheme with an enhanced insurance cover of ₹25 lakh for all families in the name of former Chief Minister Oommen Chandy is being met with much scepticism, going by the State’s previous experience with Karunya Arogya Suraksha Padhati (KASP), the health financing scheme launched by the previous Left Democratic Front government in integration with the Centre’s Ayushman Bharat scheme.
However, the KASP lesson will be a huge learning experience for the new government when the new scheme is launched, it is pointed out.
“The new Oommen Chandy health insurance scheme is not something that can be implemented overnight. An expert committee will have to draw up the scheme design, beneficiary packages, and do costing evaluations before announcing the details. The ₹10 crore allocation is for the preliminary work,” according to sources.
Kerala had been successfully running health insurance schemes like Rashtriya Swasthya Bima Yojana since 2008, which was later expanded to the unorganised sector to cover over 20 lakh additional families, apart from the BPL families.
In 2019, the LDF government rolled out KASP, converging all previous health protection schemes. The State Health Agency (SHA) was created as an institutional mechanism to run the scheme. In the initial year, KASP was being run in the insurance mode, with Reliance General Insurance as the insurance provider.
However, KASP’s troubles began in 2020-21, when on the recommendation of SHA, the scheme transitioned from the insurance model to the trust or assurance model, wherein the financial liability of settling claims falls directly on the government.
The claims expenditure, which used to be contained at around ₹700 crore in the insurance mode in the initial year, crossed ₹1,600 crore in the subsequent years.
The problem, as many health financing experts pointed out, was not KASP as such. The scheme became a drain on the exchequer because it was run without any checks and balances, without a tight claims monitoring mechanism or financial discipline, as a CAG report pointed out in 2023. It bled public hospitals dry as the government was unable to check the huge claims overrun or reimburse the huge treatment expenditure of hospitals.
KASP liabilities stood close to ₹1,800 crore as per the last statement presented in the Assembly, of which ₹1,200 crore was owed to public hospitals .
The government now faces the onerous task of paying off the arrears due to public and private hospitals accumulated by KASP, while running the scheme like a tight ship till the new scheme is finalised.
Health insurance schemes traditionally cover only acute hospitalisation expenses, whereas drugs, diagnostics and outpatient consultations constitute a chunk of the out-of-pocket expenditure on health, which is the highest in Kerala.
Unless the care provisions, service delivery and drugs availability in public hospitals are improved alongside the provision of health insurance cover for inpatient care, the burden of health-care costs on people cannot be eased.
This will be the State’s imminent challenge because financing chronic disease management in a huge population of elderly as well as adults involves substantial, recurring expenditure for medicines, diagnostics or home-based healthcare, which traditional insurance schemes do not cover.
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