Health Insurance for the Poor

For people living below poverty line, an illness not only represents a permanent threat to their income earning capacity, in many cases it could result in the family falling into a debt trap. When the need to get the treatment arises for poor families they often ignore it because of lack of resources, fearing wage loss, or wait till the last moment when itís too late. Even if they do decide to get the desired health care it consumes their savings, forces them to sell their assets and property or cut other important spending like childrenís education. Alternatively they have to take on huge debts. Ignoring the treatment may lead to unnecessary suffering and death while selling property or taking debts may end a familyís hope of ever escaping poverty.

These tragic outcomes can be avoided through a health insurance which shares the risk of a major health shock across many households by pooling them together. A well designed and implemented health insurance may both increase access to healthcare and may even improve its quality over time.


Genesis of RSBY

In the past Government have tried to provide a health insurance cover to selected beneficiaries either at the State level or National level. However, most of these schemes were not able to achieve their intended objectives. Often there were issues with either the design and/ or implementation of these schemes.

Keeping this background in mind, Government of India decided to design a health insurance scheme which not only avoids the pitfalls of the earlier schemes but goes a step beyond and provides a world class model. A critical review of the existing and earlier health insurance schemes was done with the objective of learning from their good practices as well as seeks lessons from the mistakes. After taking all this into account and also reviewing other successful models of health insurance in the world in similar settings, Rashtriya Swasthya Bima Yojna was designed.


What is RSBY?

Ministry of Labour and Employment, Government of India has launched a health insurance scheme for BPL families which is called Rashtriya Swasthya Bima Yojana (RSBY). The beneficiary is any Below Poverty Line (BPL) family, whose information is included in the district BPL list prepared by the State government. Rashtriya Swasthya Bima Yojana provides cover for hospitalization expenses upto Rs. 30,000/- for a family of five on a floater basis. Transportation charges are also covered upto a maximum of Rs. 1,000/- with Rs. 100/- per visit.


Beneficiaries need to pay Rs. 30 per family at the time of enrollment. Government pays the premium for RSBY. Central Government pays 75% of the total premium (90% in case of Jammu & Kashmir and North east States) while State Government pays the remaining premium. In case of new policy, the Scheme shall commence operation from the 1st of the succeeding month in which the smart card is issued. Thus, for example, if the initial smart cards are issued anytime during the month of April in a particular district the scheme will commence from 1st of May. The scheme will last for one year till 30th of April of next year. In the case of renewal, the policy will start from first of the next month in which the earlier policy will expire. Therefore, for example, if the earlier policy is getting over on 30th April and card is renewed in the month of April then the new policy will start only from the 1st May and will finish on 30th April of next year.


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