Bringing ‘Smart Insurance’ to India´s Poor
Anjali Devi has come a long way from her home in rural Punjab to the public hospital in Mohali, the capital of the district. The three hour bus ride to the hospital has led her and her husband get up early in the morning to make sure that they can make it back home the same day. After Anjali had suffered from stabbing pain in her stomach for more than ten days her husband Karam decided to interrupt his job as a daily worker to bring his wife to a doctor for examination. Although Karam does not have the money needed to attend a doctor, his wife gets treated right away after showing up their RSBY smart card. This card that carries both Karam´s fingerprints and biometric photo, allows him, his wife and daughter to receive free inpatient treatment of up to INR 30,000 (around €350) at any hospital under the state-led national health insurance scheme RSBY. And not only this, the scheme also covers transportation costs and drugs required during hospitalization.
A market based approach to development…
Karam and his family is no single case. To date 35.35 million families (around 176.75 million people) in India are enrolled under the Rashtriya Swasthya Bima Yojana (RSBY) which is Hindi for national health insurance scheme. Established by prime-minister Manmohan Singh in 2008, its aim is to provide access to health care to all 300 million poor people living below the poverty line in India. Most of the beneficiaries are workers in the informal sector and their families who only have to make a small payment for card registration or renewal.
The idea may sound familiar and is similar to other health insurance schemes in the emerging or developing world. However, with the implementation of the RSBY the government of India has taken up a new path: by using a market-based approach involving both public and private partners it empowers poor people to get access to health care.
How does this work? Who are the stakeholders involved? And how does the RSBY as a government intervention promote inclusive business and contribute to development?
The newly published report “Inclusive Business Policies – How Governments can Engage Companies in Meeting Development Goals” wants to shed light on these questions. The report – which was developed by Endeva and funded by the German Ministry for Economic Cooperation and Development - introduces policy options for supporting inclusive business activities and shows how policies can best be implemented. Based on a review of 158 existing examples, 19 concrete instruments have been identified, that can be clustered along three policy approaches: enabling, encouraging and empowering .
…building on collaboration, incentives, innovation and empirical information
The report investigates the design and implementation of the RSBY along the four success factors for inclusive business policymaking – dialogue, alignment, political entrepreneurship and practical evidence. Here are the most interesting outcomes:
Dialogue: due to its boundary-spanning approach policymaking for inclusive business first of all requires dialogue among all actors involved.
Right from the beginning, multiple actors have been involved in the design of the RSBY to ensure both internal and external buy-in. Under the lead of the Ministry of Labour and Employment (MoLE) – which was given primary responsibility for the implementation of the scheme – relevant public agencies as well as donor agencies, insurance companies and civil society organisations (CSOs) have been consulted and provided expertise on how to design and roll out the scheme.
Alignment: if inclusive business policies are to be implemented successfully and sustained over time, clear incentives must be provided to all partners involved.
The most prominent feature of the RSBY is that it follows a public-private partnership approach. This partnership aligns the interests and resources of public and private-sector organisations in the provision of health care: The central government (under MoLE’s leadership) covers 75% of the insurance premiums and provides top-down guidance. States contribute 25% of premium costs in the state, raise awareness among potential beneficiaries and contract with insurance companies. Insurers also act to raise awareness and enrol beneficiaries at the village level. As they receive premium payments based on the number of enrolled families, they have an incentive to recruit as many people as possible. Insurers are also responsible for bringing hospitals into the programme and monitoring them once participating, just as they are responsible for properly managing claims. As beneficiaries can choose which hospital to access, both public and private hospitals are given incentives to bring in more patients by offering better care. CSOs help spread awareness of the scheme among specific target groups, and assess the impact of RSBY while international development organisations provide technical assistance and conduct evaluations.
Political entrepreneurship: Developing inclusive business policies requires policymakers to adopt entrepreneurial thinking and innovative solutions.
With the use of a biometric smart-card technology allowing for both cash- and paperless transactions the government could efficiently bring the RSBY to scale where it today delivers health care to millions of people. And more than that: the government is able to monitor the card usage on an ongoing basis, thereby generating important health data on the target group, which in turn helps to adapt the scheme to their needs further.
Practical evidence: Inclusive business policymaking must be grounded in practical evidence and objective facts so as to transcend differences between participants’ worldviews.
Empirical data and monitoring plays a crucial role in the continuous improvement of the RSBY scheme. Thanks to the extensive use of technology, the government is able to obtain timely data on the use of the scheme, which helps detect anomalies and make adaptations as needed. In addition, external evaluation, field visits and patient surveys are conducted on a regular basis.
So far, evaluations show remarkable results: A total of 15 insurance companies and 12,600 hospitals are involved in the scheme. Around 5.65 million hospitalisation cases have been subsidized since the inception of RSBY. While out-of-pocket health care expenditures among the poor are decreasing the scheme has increased beneficiaries’ power of choice. Data shows that RSBY patients have increasingly been treated by private hospitals, at a higher rate than non-enrolled people. This means that RSBY is increasingly empowering poor people to receive treatment from private hospitals which they would otherwise not be able to afford.
RSBY has also proven successful in promoting inclusive business activities. By setting clear incentives for all private partners involved, it makes poor people interesting clients within the health sector. Most insurance companies and hospitals participating in the scheme come from the private sector. A broad range of smartcard and IT providers have built business on RSBY. For these companies, RSBY offers a “high-volume opportunity” to approach India’s low-income market by sharing transaction costs with the government.
The rise of new business opportunities has also led to general improvement in India’s broader health care ecosystem. Private hospitals have expanded their capacities or built new facilities so as to offer more beds to RSBY clients – often in areas where medical infrastructure was previously lacking. Public hospitals gain additional income, which can then be used to upgrade the often ill-equipped facilities and improve the education of unskilled medical staff. Moreover, the scheme has contributed to the spread of health-oriented micro-insurance offers in India, including alternative insurance forms such as mutuals or self-help groups.
…but yet to improve
Despite these positive outcomes, RSBY still faces several challenges that threaten its longer-term sustainability and impact. First, below-poverty lists are often outdated and incomplete, leaving many poor households without access to the scheme. Second, many beneficiaries remain ill-informed with respect to their benefits and rights. Insurance companies have an incentive to sign people up, but not to make them use the scheme. In this case, state governments or participating hospitals need to do more to raise awareness. Third, fraud remains an issue. Patients need greater control over the money charged to their cards, and insurance companies need better monitoring systems.
Overall, RSBY is a big step forward in providing health insurance to the poor, demonstrating that effective task-sharing between public- and private-sector actors can be a smart step for governments in the promotion of inclusive business. However, tackling the challenges will critically determine the further scale and impact of the scheme. Here, governments will play a crucial role if the RSBY is to really make a difference.
In any case, for Anjali, the RSBY has already made a big difference. Thanks to scheme she could afford a surgery to remove her kidney stones. Though she couldn’t go home the same day she is happy that she can now go back to normal live.
What do you think about the RSBY as an instrument to promote inclusive business? What other policies do you know?
Share your ideas or feedback here or with the author at [email protected].
For more information on this case and other examples of inclusive business policies, you can download the complete report under: Inclusive Business Policies - How Governments Can Engage Companies in Meeting Development Goals