HT Explainer: Why Punjab is opposing Modicare ?

Punjab on Monday created ripples by staging a walkout from a meeting held at Shimla to sign a memorandum of understanding (MoU) among northern states and the Union health and family welfare ministry for the launch of much-hyped ‘Aayushmaan Bharat’ health insurance scheme, popularly known as ‘Modicare’.

Punjab, a Congress-ruled state, is the first state in the country to protest against the scheme, which is to be financed at a ratio of 60:40 by the Centre and states. Punjab has claimed that the Centre wants to financially burden states to get political benefit from Modicare in the coming Lok Sabha polls.

Hindustan Times explains what the scheme is all about and why Punjab is opposing it.

What is the scheme ?

Announced in the Union budget this year, the scheme aims to target 50 crore poor beneficiaries. The scheme will provide a benefit cover of Rs 5 lakh per family per year. This cover will take care of almost all secondary care and most tertiary care procedures. There is no cap on family size and age in the scheme, ensuring that nobody is left out. The scheme also covers pre- and post-hospitalisation expenses. Prime Minister Narendra Modi is expected to launch the scheme on August 15 or October 2 this year.

Why there is a row over contribution by the Centre?

As per the norms finalised by NITI Ayog, the Centre will release its 60% share under the scheme and states will contribute 40%. But Punjab claims that the Centre will release 60% as a premium contribution determined through an open tendering process, subject to the national ‘ceiling rates’ determined by the central government itself. Therefore, the state government argues that the Centre will not contribute 60% of the actual premium rate.

“The Centre plans to cover 10 crore households nationally under the scheme. The rate of premium calculated by them cannot match with a small state like Punjab where the premiuim will be much higher as we have to deal with around 15 lakh families only,” claims a health official.

Why Punjab says state’s expenses in the scheme are “open-ended”?

The Punjab government says the liability of a state is not fixed at 40%, but it is open-ended as it would be driven by the actual premium rates achieved through open tendering process, whereas the Centre’s liability is fixed on pre-determined ceiling rates.

The Centre has also not clarified as to whether it will share the cost of hiring a huge workforce of ‘Ayushman Mitras’, the nodal officers, who will have to to be appointed in all empanelled hospitals to implement the scheme.

Health minister Brahm Mohindra says, “We have 200 government and 500 private empanelled hospitals. Who will bear monthly salaries of 700 employees is not clear.”

Why Punjab calls it an ‘assurance’ scheme rather than insurance scheme?

The biggest objection of the Punjab government is to the clause in the MoU which makes it mandatory for states to pay for claims exceeding 115% of the premium. State’s liability is not only limited to its share of premium amount but also extends to the claim outgo, claims Mohindra.

“As per the prescribed package rates proposed by the Centre for treatment of bypass surgery under this scheme, the payment claims should not exceed Rs 90,000. No hospital in Punjab will perform this surgery within the prescribed cost limit. In that case, state will have to bear the extra cost. Similarly, as per rates fixed for treatment of other ailments too, in case of exceeding of claims, state will have to shed hundreds of crores of rupees to pay full claim to patients,” said a senior official.

“The present form of the scheme is only offering an assurance, not the full insurance,” claimed Mohindra. Meanwhile, officials said Punjab is already struggling to pay over Rs 70-crore arrears due to the insurance companies running various state schemes.

Why Punjab wants to look into existing health insurance schemes before implementing Modicare?

Punjab is already paying a health insurance of up to Rs 50,000 to below the poverty line (BPL) families under the Bhagat Puran Singh Sehat Bima Yojana. For Modicare, the Centre has taken the data of Social Economic and Caste Census (SECC), under which Punjab will have to cover 15 lakh families. The health officials claim that most of the families to be covered under Modicare are already covered under Bhagat Puran Singh scheme.

“We respect the SECC data, but the state government considers all BPL families equally deserving to get benefits. The implementation of Modicare will create a divide. Those covered under this scheme will get cover of Rs 5 lakh per annum, whereas those under the state scheme will get Rs 50,000. The Centre is silent on exploring the possibility of amalgamation of existing schemes,” an official said. Even the BJP-ruled states, which are also already running health insurance schemes, are facing a similar problem, but they are silent due to the fear of the Prime Minister, he added.

What is the Centre’s response?

Responding to Punjab’s opposition, Union health minister JP Nadda had stated in Shimla that the Centre is open to look at the scheme from all angles. Nadda has reportedly invited the Punjab health minister to Delhi to discuss the state’s reservations on the scheme. The states that have signed the memorandum are Himachal Pradesh, Uttarakhand, Jammu and Kashmir and Haryana, besides the union territory of Chandigarh.