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Budget 2018: Mega health plan to cost Rs 1 lakh crore

The mega healthcare plan for the poor, as announced in the Budget, will cost about Rs 1,00,000 crore annually and curtail states' autonomy to design their own policies in the sector, says a research paper, authored by a professor at economic think tank NIPFP.
The paper's estimate is 10 times higher than the one made last week by Niti Aayog adviser Alok Kumar, who had said that the National Health Protection Scheme (NHPS) will cost around Rs 10,000-12,000 crore annually.
National Institute of Public Finance and Policy (NIPFP) Assistant Professor Mita Choudhury said in the paper -- 'The National Health Protection Scheme in the Union Budget 2018: Is it in the Right Direction?' -- that resource requirements for implementing NHPS are likely to be very high.
Not only would such a scheme impose a heavy burden on both the Union and the states' exchequers, it will also curtail states' autonomy to design their own policies in a sector that is constitutionally mandated to be in their domain," said the paper.
It added that even if one assumes a "conservative 2 percent rate of premium on the insured sum, the scheme would cost about Rs 100 thousand crores annually".
It further said: "Assuming that 60 percent of this burden would be borne by the Union Government and the rest passed on to the States, the Union Government would still need to fork out an additional Rs 60 thousand crores annually."
To put this in perspective, the paper pointed out, the combined allocation for the Ministry of Health and Family Welfare and Ministry of AYUSH is only around Rs 55,000 crore.
Even if the entire Rs 11,000 crore generated through 1 percent additional cess imposed for education and health is directed to the scheme, "the shortfall will be substantial," it said.
Niti Aayog member and architect of the scheme Vinod Kumar Paul has said that the additional 1 percent health and education cess would be sufficient to meet the cost of the scheme.
The paper also said that evidence around the world has shown that such insurance-based health care provision, is an expensive model of financing health care for the government.
In the Union Budget 2018-19, Finance Minister Arun Jaitley has provided an initial corpus of Rs 2,000 crore for the NHPS that aims to provide medical cover of Rs 5 lakh to over 10 crore poor and vulnerable families, constituting 40 percent of the population.
Jaitley had also promised more funds depending on the rollout requirement.

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