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The Smart Card Insurance Revolution in India

Posted on Apr 22, 2014 by Ailee Slater ()  | Tags: India, health care India, health insurance India, RSBY, Rashtriya Swasthya Bima Yojana, health insurance Asia, low-income health insurance, smart card health insurance, smart cards

What is a smart card? You probably have one in your wallet – it’s your credit card, your subway pass, your mobile phone SIM. A smart card is small enough to fit in your pocket but big enough to process data and store information, thanks to an embedded circuit chip. Smart cards have already proven invaluable to banking, transportation and identity documents, and if India is any indication, smart cards might provide the next revolution in health care. 

In 2008, the Indian government rolled out a new a new health insurance scheme to help provide for more than 120 million Indian citizens with no health coverage, and little financial means of paying for health care. The Rashtriya Swasthya Bima Yojana scheme (or RSBY) provides insurance – in the form of a smart card – to anyone below the poverty line. An Indian citizen holding an RSBY smart card can receive 30,000 rupees of medical care per year, which amounts to around $700 U.S. dollars in services. 

US$700 worth of health might not seem like a lot, but for families with no disposable income and little government support, the RSBY health insurance card has literally meant the difference between life and death – or at least between life, and financial ruin. Before the RSBY scheme less than 5 percent of people in India held any kind of health insurance, and since the failure of a previous program to offer universal coverage, the majority of families have paid all health care costs out of pocket. 

With the RSBY scheme, all of that is changing; for India’s poorest citizens, at least. An RSBY smart card costs 30 rubles (50 US cents) up front, and once in possession of the card, a holder can visit any of the public or private health care facilities participating in the scheme to receive inpatient services: dental surgery, treatment for a fracture or broken bone, kidney stone removal and so on. Since 2009, the RSBY card has also extended coverage to all maternity services, including delivery charges and the cost of transportation to a hospital. 

In a country where just over 1.5 percent of GDP is spent on public health (as opposed to global averages such as 3 percent in China, 5 percent in Argentina and 9 percent in France), the RSBY smart card scheme has been lauded as a significant, long-coming program that could revolutionize India’s ability to keep its populace healthy. Indeed, other developing and developed countries have shown a big interest in bringing the smart card system to their own national health and insurance programs: smart cards have the potential to reduce administrative costs and improve patient care through digitized and easily transferable medical records. Smart cards could even save lives by reducing doctors’ errors: with a smart card, a patient’s medical history and allergies will more readily available, meaning physicians can act quickly when given instantaneous access to this information in the ER. 

And yet, despite India’s technological leap into the future of medical technology with its new smart cards, there are plenty who say that the RSBY scheme isn’t doing nearly enough. 

Firstly, there’s the inpatient/outpatient problem. The RSBY card only provides coverage for inpatient treatment; treatment that takes place in a hospital over a period of 24 hours or more. Card holders in need of preventative care, wellness visits or any other outpatient services must still pay for that care out of pocket. 

This failure of the RSBY scheme to provide outpatient care has garnered much criticism: patients are hospitalized with serious health issues that could have prevented (with less money spent and less hardship to the patient) through early intervention with an outpatient physician. Additionally, there’s evidence that because the RSBY only pays for inpatient care lasting at least one day, some doctors are keeping patients in the hospital for longer than necessary in order to guarantee payment through the RSBY scheme – a practice that ends up costing everyone more money, as well as unnecessarily keeping the patient from work or family. 

In response to the RSBY’s lack of provision for outpatient services, a pilot RSBY outpatient program has been slowly coming into effect. Researchers report that by 2013, more than 100,000 beneficiaries throughout India have received medical assistance through the new outpatient scheme, which allows some RSBY card-holders to visit physicians outside of hospitals and receive drugs, all using their smart card. At the moment, however, only two districts can access outpatient care with their RSBY card, although developers of the outpatient program hope that new initiatives will lead to further out-of-hospital health care access for low-income Indians around the country. 

But besides the need for extended outpatient services, critics also say that the RSBY scheme must do more to help Indian families who are living below the poverty line but not registered as doing so on the 2002 census. In India, people with a very low income are registered on an official Below Poverty Line list – unfortunately, the most recent of these lists was compiled more than a decade ago. If a family is not on a Below Poverty Line list, they do not qualify to hold an RSBY card, even if their current income is demonstratively less than the poverty line. What’s more, some advocates say that even an up-to-date Below Poverty Line list might miss out on many families who are very, very poor, living in remote rural areas, and won’t be contacted by researchers compiling the census. 

The RSBY program has also faced criticism for its use of public funds. Although the smart card scheme may sound like a fully public policy, it actually diverts a large amount of money back into private enterprise. Insurance companies are given the task of promoting the RSBY scheme to low-income Indians and handing out the RSBY smart cards with instructions on how they are to be used. The government will then pay the families’ premiums (which differ depending on where the family lives) to the insurance company, at which point the patient is free to use his smart card as needed, for up to 30,000 rupees in annual care. 

Why involve insurance companies in the RSBY health care program? Critics say that government spending should be directed toward public hospitals, or put into a national health insurance scheme that would keep private enterprise out of health care. Critics point out that insurers benefit when card holders use fewer services; therefore, these insurance companies might fail to inform new card holders about what services they can access. Advocates for low-income Indians are recommending that better accountability and transparency measures be put into place to ensure that insurance companies are fully explaining the RSBY scheme when they hand out smart cards to first-time users. 

Despite skepticism, most policy experts and health advocates agree that the RSBY program is the best health policy India has seen in a long time: its problems are manageable and fixable, and more importantly, the government has proved eager to develop and advance this large-scale insurance scheme. The RSBY program is by no means perfect, and close to 90 percent of people in India are still living without any health insurance, but RSBY – and its easy-to-use, technologically progressive smart cards – is an important step in the right direction.


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