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How do you provide health care to handloom weavers, who occupy among the poorest segments in the unorganised sector? There are 6.5 million of them scattered across the country and are not always fixed in their occupation.
For the textile ministry that oversees their welfare, the answer was insurance cover - with a private company underwriting the risk. It was seen as a daring move when the scheme was launched three years ago, and has since become something of a trendsetter.
The Health Insurance Scheme for Weavers, launched in 2005, has a number of firsts to its credit. It provides medical assistance for a wide range of common ailments, which means Out Patient Department is covered, and also allows beneficiaries to use alternative systems of medicine.
According to an official of ICICI Lombard, which put in the winning bid, the scheme is path-breaking and not just because of its geographical spread. Says Sanjay Pande, head of the insurance firm Financial Inclusion Solutions Group, which deals with government schemes: "There were so many firsts in the scheme that we were petrified."
Progress, however, has been slow. So far 1.77 million weavers have been covered, but, given the challenges, it is "a hugely successful scheme", claims Meenu Kumar, chief enforcement officer with the Handloom Development Commissioner's office, who oversees the project. Among the tougher challenges: selling the scheme to the weavers and putting together a network of rural clinics and hospitals to meet the requirements of the scheme where 70 per cent of the treatment is cashless.
Because of malpractices and shortcomings, close to half of the 3,500 hospitals and clinics that were empanelled have been de-listed.
A more controversial issue though is the amount of the insurance cover: beneficiaries are entitled to treatment amounting to just Rs 15,000, a pittance compared to what other government schemes offer. Textile ministry officials tend to bristle at such criticism, with one ministry functionary claiming that "the amount may seem very little but is in fact a big improvement for weavers". A comparative analysis of health insurance schemes shows that the premium is by far the highest in the weavers' scheme compared to the benefits offered.
Yeshasvini, the pioneering scheme launched in 2003 for cooperative farmers in Karnataka, charges just Rs 120 annually for insurance cover of Rs 1,00,000. Farmers are entitled to treatment for everyday problems in the rural areas, such as snake bites, electric shocks and farm accidents, and for sophisticated heart surgeries at the best cardiac hospitals in the state. S R Naik, CEO of the Yeshasvini Cooperative Farmers Healthcare Trust, claims with some justification that "there is no such scheme in the whole world".
For one, it does not have an insurance company underwriting the risk and, for another, it does not use a single rupee from the premium for establishment costs. A small room with just a couple of tables and cupboards is the office of the trust where Naik, a retired official of the department of cooperatives, runs the show, backed by the machinery of the department and a third party administrator, Family Health Plan Ltd, which implements the scheme.
The TPA is paid a flat sum of Rs 50 lakh (Rs 5 million) a year. But the fact is that the scheme cannot run without government support. The subsidy has been increasing sharply and this year the Karnataka government's contribution (Rs 40 crore) has outstripped the premium collected so far (Rs 33.45 crore).
Numbers are crucial for health insurance schemes to remain viable. Pande maintains that ICICI Lombard is yet to make money on the weavers' scheme but hopes to do so when it reaches critical mass. Fortunately for the company, it was able to clinch the subsequent tender (2007-09) also, and the higher volumes are expected to provide profits in the fourth year of operations.
Companies though are willing to pay a price for their learning experience. ICICI Lombard claims it lost heavily on other projects, such as the one for Punjab cooperative farmers (premium collected Rs 5.2 crore, claims paid Rs 28 crore) and in Jammu & Kashmir (premium income Rs 7.2 crore, pay-outs Rs 41 crore). Yet, it is, like other companies in the business of health insurance, jockeying hard for a piece of the action. Most of the contracts for government schemes are said to be hard-fought battles with very narrow differences in the bids.
Says R Sasi Ganapathy, chief operating officer of Star Health and Allied Insurance Co, which covers the risk for AP's Rajiv Aarogyasri: "There are no big profits in this business just now. In Aarogyasri, we make very little money even though it's the largest of its kind in the world. For us, it is a stepping stone because the experience is helping us to gain a foothold in other states."
Star Health, India's first stand-alone health insurance firm, has invested around Rs 14 crore (Rs 140 million) in Aarogyasri. This may seem a large investment for a small firm but is small beer compared to the business it is expected to garner. The company has won the health insurance tender for three million state government employees in Tamil Nadu and is expecting more business from neighbouring states.
"The brand equity of Aarogyasri is very high and our costing will be tough for other companies to match," asserts Ganapathy. All the same, it may not be a cakewalk in other states, where the lack of data could make risk-profiling difficult. The big battles will be over the labour ministry's Rashtriya Swasthya Bima Yojana. This is being put to tender on a pilot basis, and so far just three states have awarded contracts for some districts. There is big business in the offing as 16 other states are preparing to seek bids.
