The budget announcement laid it on thick. The National Health Protection Scheme (NHPS), or what the government has chosen to call Modicare, will soon provide health insurance with an annual cover of Rs 5 lakh ($7,813) for 100 million poor families. The scheme’s ambition did not just become living room conversation, it also turned heads in insurance companies’ boardrooms. Consider this. The health insurance industry underwrote premiums worth Rs 30,392 crore ($4.7 billion) in 2016-17, and if the NHPS delivers, it would add policies worth another Rs 30,000 crore ($4.7 billion), approximately. In a single shot.
It is not often that one scheme has the power to prevent a family from falling into the poverty trap and double the health insurance market, overnight. There had to be loopholes and fact-checked news headlines—Hardly a game changer, Modicare: All Sound and Fury… and National Health Protection Scheme or Scam?—pointed those out. The sheer number of uninsured poor are doubting the promise, but the Indian health insurers are on guard. Even if the money to finance the scheme is released, sooner or later, the struggle to realise the market potential will begin right there.
No one knows this better than India’s first standalone health insurer Star Health. Star had bagged the contract to provide health cover to a majority of the population for the first Indian health insurance scheme in 2007. Rajiv Arogyasri, funded by the Andhra Pradesh government, now covers three-fourths of the population of 49.67 million, largest cover for any state in the country.
“It was a very pleasant experience working with both the governments (Andhra Pradesh and Tamil Nadu). In AP, we lost some money. Loss or profit. We have to bear it in outsourcing, but the scheme had contributed a substantial part of the revenue when we started,” says V. Jagannathan—the chairman, managing director and CEO of Star—politely. The worth of the premiums grew from Rs 4.9 crore ($7,65,767) in FY 2007 to Rs 1,911 crore ($298 million) in FY 2017. But over the decade, it lost the contract when the state government decided to set up and manage a Trust with a corpus of funds, instead of outsourcing the job to an insurer. Today, Star Health covers about 10 million people. It once covered over 100 million across the two states. Jagannathan does not miss those 100 million.
“It [the government-funded policy] was a surgical policy. It is like comparing apples and oranges. We are not very interested anymore, it is a different ball game,” he says. Which is why Star Health is not keen on participating in any other state government’s bids, neither for their own state-specific schemes nor for the national scheme—Rashtriya Swasthya Bima Yojana (RSBY)—looking for the insurers.