Rashtriya Swasthya Bima Yojana is no longer a reasonable scheme due to unreasonable rates that big players have quoted.
Launched by the labour ministry to offer a health cover to those families who stand below poverty line, the Rashtriya Swasthya Bima Yojana has 36.9 million cards in use. Competition for this state-sponsored group health insurance scheme is driving down bids to un-viable levels by Insurance companies.
A senior executive of a private general insurance company said that several companies have gone ‘slow’ in this area. Each bid is getting participation from many companies and prices that do not make business sense are quoted by some players.
Five members of the family including the head of the household, spouse and three dependents are covered under the Rashtriya Swasthya Bima Yojana. They get up to Rs 30, 000 for most diseases that need hospitalisation. Hospital rates are set by the government for a large number of treatments. There is no age bar for existing ailments and they are covered from day one.
Registration by beneficiaries is done with Rs 30 and the insurers who are chosen through bids get paid the policy premium by the government. 6,761,583 cases of hospitalisation were registered till 28th Feb, 2014 those are covered under this scheme.
Rashtriya Swasthya Bima Yojana builds the brands of insurers in countryside according to the chief executive officer of a mid-size general insurance company. He said that for newer players, this scheme is a platform to introduce their brands to rural India. Several insurers have bid for districts in South and North India. It is no longer a feasible model as big players have quoted unreasonable rates so the smaller insurers have decided to sit it out for a while.
75 paise of every rupee of policy premium for RSBY is paid by the Centre and rest is paid by the states. Only 10% of the premium is paid by the northeast states and jammu & Kashmir.
Finance Minister P Chidambaram in his budget speech for 2013-14 had said that the scheme would also cover workers like rickshaw pullers, auto-rickshaw and taxi drivers, rag-pickers, sanitation workers and miners. Taxi and auto-rickshaw drivers would pay half the policy premium.
Heavy discounts that are offered by insurers are an area of concern in group health insurance in India. Because of these discounts, many companies have switched insurers. IRDA would study possible distortions in premiums for group and health policies according to the Chairman T S Vijayan.
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