By Anaita Singh*

Why Healthcare, at all?

 “If it were possible to evaluate the loss, which this country annually suffers through the avoidable waste of valuable human material and the lowering of human efficiency through malnutrition and preventable morbidity, we feel that the result would be so startling that the whole country would be aroused and would not rest until a radical change had been brought about”

– The Bhore Committee, 1946: `Health Survey and Development Committee Report’

The realization that there is a need to extend social security to the millions in India who do not have access to it, led to a wave of reforms being announced by the Prime Minister in 2007. The essence of a secured universal health care in India is the Public Health System. This system must act as the primary provider of promotive, preventive, and curative health services in India. It must not only reduce out-of-pocket expenditure but also improve quality of health care through a well-regulated integration of the private sector within the national health care system.

This article attempts to cover and review the National Insurance Healthcare Scheme- RSBY, which has adeptly targeted the Below Poverty Line (BPL) families and has widened the scope of National Rural Health Mission (NRHM). Besides, we also make a few recommendations based upon on-the-ground experience of implementation of the scheme. As of date (20 May 2013, Source:, 34.8 Million healthcare smart cards are in circulation across 28 states in India.

Rashtriya Swasthya Bima Yojana (RSBY)

Launched on April 1, 2008, RSBY is a policy initiative for the reforms to extend social security. The premise of RSBY lies in sustaining a fruitful partnership with the private sector, wherein basic market economics ensure efficient delivery of services to the poor. The United Nations Development Programme (UNDP) and International Labour Organization (ILO) have recognized it as one amongst top eighteen social security schemes in the world.

The Model

RSBY has been designed for BPL families, with an incentivized co-dependent chain to reduce the ever rising out-of-pocket expenditures on health, reduce the growing number of disease inflicted residents of the country, and bring efficiency in the system.


Based on a MoU signed, the center and state share the funding in the ratio of 3:1 (90% by the Center in J&K and North Eastern States).

Empanelment of Insurance Companies


The state identifies the BPL families in each district and floats tender documents where the insurance companies (private or public) bidding the lowest premium, and having appropriate coverage and capacity, are awarded the tender. This financial bid is the premium per household, the Insurance company will be paid for enrollments made each year. These insurance companies endeavor to enroll maximum number of identified BPL families and set up district and block level camps across an initial period of 4 months (or as agreed with the State Government).

Implementation and Services for the Beneficiary

The state appoints State Nodal Officers responsible for the implementation of RSBY. They issue Smart Cards, which are authenticated by the respective Field Key Officers (FKOs) in each district. Each Smart Card for the In-Patient Department (IPD) patients (issued biometrically entitles the enrolled head of the family, spouse, and three more dependents, to avail of health cover of INR 30,000 annually, at the empanelled public and private hospitals across the country along with travel expenses. The beneficiary pays a minimal sum of INR 30, mainly to create a sense of ownership. A fresh card is issued every year on the basis of a refreshed database shared with insurance companies.

With a sound model in place, the challenge was in implementing the policy to provide the desired healthcare coverage to the masses.

The Successful Rollout

The key successful execution mechanisms include :-

? Adaptation to a centralized software system uniformly across the country,

? Transparent bidding by insurance companies,

? Empanelment of organizations to provide services, and

? A limited, yet by and large effective, enhancement of capacity and necessary infrastructure in public as well as private hospital

Significant efforts have been invested in sensitization of the involved partnering agencies – insurance companies, software vendors, the direct beneficiaries, village panchayats, and hospital staff. While initially hostile, all states have now adopted the policy. Starting with IPD and then extending to OPD, further complemented by successful scale up of software and increased enrollment count, the RSBY has been successfully rolled out to levels thought by most to be unassailable.

Yet, a few key issues persist which require resolution – some which are being actively targeted by the Government and others which are still to receive its urgent attention.

Work in Progress

The initial hurdles which prevented large scale penetration included integrated software service and usage, finger print match under biometric verification, lack of awareness, absence of a grievance redressal committees, and ineffective audits on already empanelled hospitals.

However, a concerted effort, close monitoring and a proactive approach by the Government over the last five years is now beginning to yield results in the form of concrete action steps :

? The software, now directly under MOLE (Ministry Of Labor & Employment)has been upgraded and centralized;

? In case of a finger print mismatch the insurance company sends a finger print override code within an average time of 10 minutes;

? Grievance redressal committees have been setup promptly addressing any fraudulent activity brought to their notice and even de-empanelling hospitals;

? To increase awareness, access, and uptake of the RSBY in some of the poorest communities, Poorest Areas Civil Society (PACS) has begun a series of Training Of Trainer (TOT) workshops in Uttar Pradesh, West Bengal, Odisha, Bihar, and Jharkhand. Similar programmes have been undertaken to sensitize the involved partnering agencies

Recognizing the encouraging response and the need to increase coverage across masses, the FY-14 budget has envisioned the RSBY to extend to other categories such as rickshaw, auto-rickshaw and taxi drivers, sanitation workers, rag pickers and mine workers. The government has allocated INR 2100 crores to National Health Mission which covers NRHM and National Health Interview Survey (NHIS). There are plans to extend this scheme to Public Distribution System as well.

However, several shortcomings surfaced during our primary and secondary researches that need remedial action in order to fulfill the goal of healthcare coverage envisaged by the policy. Besides the technical and structural loose-ends, the absence of a prerogative from the Government to establish health infrastructure is hurting the far-reaching implementation.


Pitfalls of the RSBY Scheme

A) Infrastructural and Capacity Shortcomings

These review the challenges of capacity building at the grassroots as well as broader level of the scheme and problems faced in implementation due to lack of infrastructure.

1) Quality Checks and Infrastructure Development

The Ministry has initiated a quality check process in over 5 states already which will be supported by adequate and appropriate documentary evidence. However this needs to be extended to include all states. Continuous monitoring and, if necessary, separate cells must be setup in each state to ensure that basic quality standards are met at the empanelled hospitals. Monitoring and regulation must be supplemented by upgrading the existing infrastructure in hospitals and providing the same wherever lacking. A concerted effort must be made to upgrade healthcare facilities and amenities in empanelled public hospitals and aiding private hospitals to follow suit.

2) Information, Education and Communication, and Awareness

Though a number of camps, and Information, Education and Communication (IEC) drives are initiated, there is an acute need to have a holistic understanding of the advantages of the scheme to the beneficiaries. Also in Kerala, where Accredited Social Health Activists (ASHA) are not only fully involved but also parted education and software training, the importance given to the capacity in which they can serve has also assisted the successful implementation of the scheme there.

3) Cost Sustainability

The sustainability of the scheme is also being questioned on the ground that since the number of claims being made are on the rise, the premium amount will also rise, which in turn would make the scheme unviable in the long run.

4) Misappropriations, Funds Diversions, and Corruption

The recent scam in Kerala over two pharmacy employees duping the RSBY scheme of nearly INR 1,00,000 by manipulating the purchase bills has two differing points of view. One is to lay the blame on the implementation side of the scheme from the government for not bringing purchase of bills under the purview of the scheme and solely laying the responsibility on the pharmacy as per the orders signed by officials; the other being the frauds that are very much a part of the daily siphoning but are finally being brought to everybody’s attention through this scheme.

This again drives home the point that medical facilities and infrastructure related issues cannot be left out from the policy making process.

B) Technical Shortcomings

These shortcomings mainly cover system and software related issues of automation, incorrect data, payments charged to beneficiaries and those made to hospitals.

1) Software Upgradation

MOLE having recently undertaken centralisation of the software, has a long way to go to rectify all glitches. For instance under the OPD pilot, if a patient swipes a card as IPD and the next time comes as an OPD case, the software does not accept this change, leading to manual recordings in some cases or the patients being refused treatment in others Nonetheless, this is a welcome reform.

2) Data Updation

With the 2011 Census data still not officially out, beneficiaries have been identified on the basis of the 2001 census. Prompt migration to latest data sources is critical to reach the “right” segment of beneficiaries.


3) Needless Hysterectomies and Over-Billing

The current debate on needless hysterectomies on patients especially in the age group of 20-40 years across Bihar, Andhra Pradesh, Chhattisgarh and over blocking of cards due to unnecessarily billing of packages by doctors for un-availed treatments by the beneficiaries, are both loopholes used, to make quick and easy money from RSBY’s cashless insurance scheme. The Insurance Companies are becoming increasingly vigilant, and with a backend Claim Team setup if any discrepancy is found, based on certain criteria set, a meeting is organized with the grievance committee, and the concerned hospital if found guilty is de-empanelled. This issue could be resolved partly by providing the case history on each card, so that when the beneficiary goes to a different hospital not only does the doctor know the balance in his card but more importantly is aware of his patients background and thinks twice before over-billing.

4) Pending Payments

A flawless payment system has to be evolved under the aegis and close monitoring by MOLE. A process to ensure that delinquent and defaulting insurance companies clear all pending dues before they bid the following year, irrespective of the district the beneficiary is operated upon, has now been set. Despite this, there were several hospitals, especially private ones in Punjab, with cases of intra district payments, where different insurance companies have won the bids and payments have not been made to the concerned hospitals

C) Regulatory Shortcomings

Some of the key features of the scheme mentioned below demand close government scrutiny and regulation which is currently lacking. Proactive monitoring of insurance bids, infrastructure spend, and benefits included under the scheme, are required to overcome existing roadblocks.

1) Decisions on Insurance Premiums

It was seen, a number of districts within a state were categorized into blocks comprising minimum 5-6 districts (regardless of the number of BPL families or private/public hospitals in a district), so that insurance companies could keep the insurance premium amounts minimal while bidding, by incentivizing them with increased empanelment. The premiums ascertained should be a rational value, neither at the cost of deficient service nor at the cost of monopolizing cover under a single insurance company.

2) Monitoring of District Grievance Committee (DGC)

Grievance Committees have been setup at National, State and District level, where decisions for de-empanelment of hospitals are taken based on quality check violations or complaints received. It was found across few states that the local District Health Officers acquaintance with the owners of the hospitals has resulted in biased judgments. Third party mandatory representation from the State or Central Government, would ensure purposeful decision making.

3) Audit Function

During our study, within several districts in Punjab, it was felt that an audit team (third party agency) may be an appropriate extension to the Grief Redressal Committee for checks and balances- a dual mechanism (center-state) carried out at regular intervals to minimize the possibility of misuse of funds or medical infrastructure at each hierarchical level.

4) Objective Evaluation of Packages

Doctors across the country point out that the rates fixed for packages/treatments are extremely low and as a result, many-a-times, necessary treatment or facilities are not provided to the patients by the hospitals. For instance, we noted that several eye health care centers have pointed out that in Punjab several basic packages for eye check ups are not included and for that matter even providing spectacles is not covered under the scheme. Also, it was observed that the rates for packages were reviewed in the state in an arbitrary manner. There needs to be an expert committee comprising doctors, pharmaceutical suppliers and the government representatives to ensure a thorough review is done.

Conclusion and Challenges

Dalberg’s Universal Health Coverage Report observed that as the trend of adopting some form of universal coverage continues across countries, questions about the reach of coverage are likely to give way to questions about the quality and cost of care. The conundrum arises to keep the costs in check without compromising the quality of the service provided and, if this is possible without a concentrated government effort in capacitating healthcare facility providers.

“RSBY does not aspire to create a health infrastructure. It only aspires to put money in the hands of the patient so that he may not have to spend from his pocket if he finds a hospital.”Anil Swarup, Joint Secretary, Ministry of Labor and Employment, GOI (from Forbes India).

We question the viability of this vision, given the state of Indian medical system, and for how long the two can be kept mutually exclusive. With the enrollments under RSBY on the rise, inadequate medical and sanitation facilities in public and private hospitals, insufficient staff, and innate flaws in the Indian health system, leading to rising cost of healthcare services might prove as a big deterrent to ensure sustainability of this scheme.

The intention conveyed through the recent budgetary spends is definitely a step in the right direction. However, many a leap will have to be made and the shortfalls, as elaborated, so that the transition can be made from a moderate yet ambitious success story to a world-class model which truly serves the purpose of providing healthcare to the poor.

 * The Author has just completed her internship with the Health Department, Ministry of Punjab and is beginning work as a Political Researcher for a state election campaign. In the past she worked as a Graduate Management Associate with Citibank India.


  1. Chitvan Dhillon says:

    Dear Anaita,
    It is indeed a very informative write-up. I appreciate your writing style- lucid, simple and systematic. I got to learn a lot about this RSBY scheme from this article.
    Keep it up!


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