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Published in Mint on 2nd February, 2018.

The budget 2018 focussed on senior citizens and people from the lower-income group. While increasing the tax deduction should encourage individuals to buy more health insurance, the flagship National Health Protection Scheme that the budget 2018 announced will cover over 10 crore poor and vulnerable families or about 50 crore beneficiaries. This scheme will be an improvement over the Rashtriya Swasthya Bima Yojana (RSBY) that provided a cover or sum insured of Rs30,000. The new health insurance scheme offers a sum insured of Rs5 lakh and will work like a floater policy much like the RSBY. A floater policy considers the entire family as a unit. So, if one member of the family makes use of the cover, the sum insured will reduce by that much amount.

“We are still awaiting details but this is a great move which will most likely replace the RSBY. The sum insured of Rs5 lakh is higher than the average sum insured in the retail segment. However, implementation of this scheme and tacking fraud could prove to be a challenge,” said said K. G. Krishnamoorthy Rao, managing director and chief executive officer, Future Generali India Insurance Co. Ltd. How much the premium will be and what will be the extend of the coverage, whether it will cover out-patient treatment—is not known yet, but if RSBY is anything to go by, both State and the Centre pay the premium and policyholders pay Rs30 as enrolment fee.

“It’s difficult to go into depth, but the intention is excellent to cover people at or below the poverty line. We are yet to understand what will be the premium, given that the sum insured is Rs5 lakh, but hopefully it will be at a level where everyone can participate,” said Anonty Jacob, chief executive officer, Apollo Munich Health Insurance Co. Ltd. For the industry, the impact will be huge. “It’s will have a huge impact in terms of the premium that will come to the industry. It will likely throw up opportunity to build infrastructure which will be a huge step up for the industry,” said Kapil Mehta, co-founder, According to Pushan Mahapatra, managing director and chief executive officer, SBI General Insurance Co. Ltd, this will mean that customers don’t have to borrow or burn their savings.

“This will have a positive impact on insurance penetration. We have seen a similar uptick through the crop insurance scheme and the Pradhan mantri schemes that provide life and personal accident insurance,” he added.