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On Publicly-Financed Health Insurance Schemes

It is a methodological fl aw to conclude from data which shows a rise in the incidence of out-of-pocket medical expenses that the Rashtriya Swasthya Bima Yojana is ineffective. A response to Sakthivel Selvaraj, Anup K Karan, "Why Publicly- Financed Health Insurance Schemes Are Ineffective in Providing Financial Risk Protection" (EPW, 17 March 2012).


On Publicly-Financed Health Insurance Schemes

Is the Analysis Premature?

T R Dilip

It is a methodological fl aw to conclude from data which shows a rise in the incidence of out-of-pocket medical expenses that the Rashtriya Swasthya Bima Yojana is ineffective. A response to Sakthivel Selvaraj, Anup K Karan, “Why Publicly-Financed Health Insurance Schemes Are Ineffective in Providing Financial Risk Protection” (EPW, 17 March 2012).

T R Dilip ( was part of the team that developed the National Health Accounts at the Ministry of Health and Family Welfare, New Delhi.

he Rashtriya Swasthya Bima Y ojana (RSBY) as on March 2012 covers 28 million households in India, which constitutes approximately 11% of the total number of households in the country. The scheme is expected to ultimately provide health insurance protection against hospitalisation to about 130 million people in the country. There is a need to re-examine the manner in which a national scheme of this magnitude has been evaluated by Selvaraj and Karan (EPW, 17 March 2012) and was certified as a failure in terms of providing financial risk protection against c atastrophic healthcare expenditure by households in India. The reported analysis which does not go beyond very basic descriptive statistics at the highly aggregated national level, is regrettably r eplete with methodological fl aws.

The authors have compared the National Sample Survey Offi ce’s (NSSO) consumer expenditure survey data for 2004-05 (pre-RSBY period) and 2009-10 (post-RSBY period) and found an increase in mean per capita household outof-pocket (OOP) hospitalisation expenditure and in the prevalence of catastrophic health expenditure due to hospitalisation. The increase in these indicators between these two-time points was directly attributed to the lack of effectiveness of the RSBY in providing fi nancial risk protection to the households. Such crude and un-standardised comparisons are permissible only if the authors can ensure that: (1) a substantial proportion of the households was covered by the RSBY during this inter-survey period, so that the NSSO consu mer expenditure survey would have been able to capture the differentials investigated in the paper, and (2) the proportion of households consuming/seeking inpatient care remains unchanged at the time of these two cross-sectional NSSO surveys (a variation in proportion calls for the need to make a standardised comparison of OOP expenditure estimates).

Now let us examine what proportion of households in India was covered by the RSBY in 2009-10. There are two data sources available in the public domain which provide data on the coverage by RSBY for the latter period in which this evaluation was performed. Jain (2011) reports that 22.5 million households had enrolled for RSBY by the end of December 2010, which constitute 9% of households in India. The PHFI (2011) study reports that 80 million benefi ciaries were covered under the RSBY, which translates to around 7% of the country’s population. So will this RSBY coverage of 7-9% be enough for the NSSO consumer expenditure survey to capture the RSBY’s impact on OOP expenditure on hospitalisation in Indian households? The annual hospitalisation rate in India is 25 per 1,000 population (NSSO 2006). Due to this sample size constraint, the authors are in no position to attribute the increase in OOP expenses (Table 2 of their article) and that in the proportion of households facing catastrophic expenses (Table 4 of their article) to the inability of the RSBY to provide fi nancial protection against risk of hospitalisation. I n patient care is consumed by a small proportion of households in a year and hence the authors will have to wait for the coverage of RSBY to reach at least 30% in order to apply such methodologies. Such high coverage levels are needed for comparison, as programme statistics indicate that one out of eight households among RSBY beneficiaries are reporting hospitalisations during a one-year reference period. Further Dror and Vellakkal (2012) have shown that the coverage of RSBY within the BPL households had touched 28% as on 31 March 2011. The midpoint which the 2009-10 NSSO data refer to is 1 January 2010 and RSBY coverage level here among BPL households is expected to be much less than the 28% estimated as of March 2011.

Economic & Political Weekly

may 5, 2012 vol xlvii no 18


The second and more serious issue India. Apart from medical infl ation restricted to that part of the analysis in while comparing household-level OOP which is a global phenomenon, the in-the paper OOP expenses on hospitalisaexpenses on hospitalisation between crease in OOP expenses on hospita-tion. The manner in which a fl agship two surveys is the nature of variation in lisation is mainly triggered by the ever programme of the government like RSBY the proportion of households incurring increasing demand for modern medical has been evaluated by the authors was these expenses between the two survey care which was once physically and unfair not only to RSBY but also to the points. Table 1 shows that the proportion financially inaccessible to a vast majority rich national-level data sets. The authors of households reporting OOP hospitalisa-of the population in the country. In the should have tested the signifi cance as tion expenses has increased from 9% in present health system setting, the well as confidence interval of differen

tials observed and should have attempt-Per Capita Consumer Expenditure (MPCE) Quintiles ed standardised comparisons before

Table 1: Percentage of Households Reporting Out-of-Pocket Hospitalisation Expenses by Monthly

MPCE Quintile 2004-05 2009-10

arriving at such strong conclusions. Other

Rural Urban Total Rural Urban Total

wise the paper will send wrong sig-

Poorest 3.6 6.4 4.4 8.6 9.8 8.9

nals to public health planners (Planning

Second poorest 5.2 10.5 6.7 9.1 12.8 10.2

Commission 2012) who are still search-

Middle 7.4 9.8 8.1 11.2 15.7 12.6

ing for strategies and models for provid-

Second richest 10.7 10.0 10.5 15.4 16.3 15.6 Richest 17.8 12.2 16.3 19.9 15.3 18.5 ing universal access to essential health-

All 9.0 9.8 9.2 12.8 14.0 13.2 care and medicines in the country.
Richest/poorest ratio 4.9 1.9 3.7 2.3 1.6 2.1
Sample households (N) 79,298 45,346 1,24,644 59,097 41,697 1,00,855 References

Source: Unit records of the NSSO Consumer Expenditure Surveys in 2004-05 and 2009-10.

2004-05 to 13% in 2009-10. Such an increase also limits the crude comparison of OOP expenses and catastrophic spending on hospitalisation reported by the authors. This sharp increase is noted to be very high in the poorest quintile and lowest in the richest quintile. The richpoor gap in the proportion of households incurring OOP expenses narrowed down during the fi ve-year period. An increase in the proportion of households reporting OOP expenses is more pronounced in the rural than urban areas of the country. This increase in this proportion noted here could be largely due to two reasons:

(1) a larger share of households/persons sought medical care in 2009-10 than in 2004-05, due to improvements in access to healthcare and/or (2) a rise in the share of hospitalisation care providers where OOP expenses are unavoidable, due to marginalisation of public hospitals, growth of the private healthcare sector and promotion of public-private partnerships. This issue cannot be settled due to the absence of information on RSBY participation, the household/individual level risk of hospitalisation and the source of healthcare provider in the NSSO survey that has been analysed. However the authors seem to be in a hurry to attribute every increase in burden of hospitalisation expenses to RSBY ineffi ciency.

As is known, the healthcare sector is one of the rapidly growing sectors in demand for healthcare will increase in the coming years with an increase in exposure to modern medical care. As a result, the health conditions which were probably undetected in the earlier years due to a lack of access to medical facilities and which the public considers serious and seek medical attention have increased mainly due to expansion of healthcare markets. The authors have adopted a narrow view of attributing every change in OOP expenses on hospitalisation to RSBY ineffectiveness. The changes noted in OOP expenses should be analysed with respect to the broader contextual changes in the health system including the RSBY.

The RSBY covers hospitalisation expenses of households and that was the reason why this rejoinder has been

Dror, D M and S Vellakkal (2012): “Is RSBY Platform to Implementing Universal Hospital Insurance”, Indian Journal of Medical Research,

135: 56-63.

Jain, N (2011): “A Descriptive Analysis of the RSBY Data for the First Phase” in Palacios et al (ed.), India’s Health Insurance Scheme for the Poor: Evidence from Early Experience of RSBY (New Delhi: Centre for Policy Research), pp 38-64.

National Sample Survey Office (2006): “Morbidity Health Care and Condition of Aged”, Report No 507 (60/25/0/1) (New Delhi: National Sample Survey Office), Ministry of Statistics and Programme Implementation, Government of India.

Planning Commission (2012): “Report of the Steering Committee on Health for Twelfth Five-Year Plan”, Health Division, Planning Commission of India, New Delhi.

Public Health Foundation of India (2011): “A Critical Assessment of Existing Health Insurance Models in India”, a report submitted to the Planning Commission, Government of India, New Delhi.

Selvaraj, S and A K Karan (2012): “Why Publicly-Financed Health Insurance Schemes Are Ineffective in Providing Financial Risk Protection”, Economic & Political Weekly, Vol XLVII (11): 61-68.


January 28, 2012

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Institutional and Policy Aspects of Punjab Agriculture: A Smallholder Perspective – Sukhpal Singh
Khap Panchayats: A Socio-Historical Overview – Ajay Kumar
Rural Water Access: Governance and Contestation

in a Semi-Arid Watershed in Udaipur, Rajasthan – N C Narayanan, Lalitha Kamath Panchayat Finances and the Need for Devolutions from the State Government – Anand Sahasranaman Temporary and Seasonal Migration:

Regional Pattern, Characteristics and Associated Factors – Kunal Keshri, R B Bhagat

For copies write to: Circulation Manager,

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320-321, A to Z Industrial Estate, Ganpatrao Kadam Marg, Lower Parel, Mumbai 400 013. email:

may 5, 2012 vol xlvii no 18

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