When I first heard about the National Health Protection Scheme (NHPS), I was intrigued by it’s claims and I admit I was a little pleased that something was being done in a perennially ignored healthcare sector in India. My happiness was short lived as I sat down to look closely at what it meant. I realized how unrealistic and backward thinking the move is and we are nowhere close to universal health coverage (UHC) in the near future.
Let us do some back of the envelope calculations for NHPS….
The government has proposed a 5 lakh cover per family per year. In the present market a ₹5 lakh health cover would command at least about ₹5,000/ annum. However given the high volume of people covered under the scheme, say the government negotiates for annual premium of ₹2000 per family (which would be the best case scenario). This would amount to an annual premium of about ₹20,000 crores. Some estimates put this amount to ₹100,000 crores- Mega health plan announced in Budget to cost Rs1 trillion, says research paper. To put those numbers in perspective, the total annual outlay for MOHFW and MAYUSH in this year’s annual budget is ₹55,000 crore with only marginal increase ₹2000 crore compared to last year. Let’s go with my modest estimate of ₹20,000. So the government has a deficit of ₹20,000 – ₹2000 =₹18,000 crore on the premium payments itself.
So where is this ₹18,000 crore deficit going to come from? The argument by pro-government sources is that increase of 1% in healthcare and education cess will bring in ₹2750 crores. Also that the central government will fund only 60% with the state government footing 40% of the share. So ₹12,000 crores need to be paid by central government to insurance companies and expecting the state governments to make good the difference of another ₹8000 crores. Even if they shift all the new taxes raised towards insurance premium payments, they will still struggle to make sure the premiums are paid for. What is more likely to happen is that state governments are going to default on premium payments which will give private insurance companies enough leeway to not make payments for claims. This then results in private hospitals refusing to treat under NHPS.
You would now ask why I’m cynical about this even before the scheme is launched? That is because this same charade has been going on since the first union budget in 2015. The previous iteration of the NHPS, the Rashtriya Swasthya Bima Yojana (RSBY) scheme, an annual coverage of ₹30,000 for 1 crore families was announced in 2015 which was then increased to ₹1 lakh coverage in 2016. The payments to private hospitals for this scheme has not been made for at least 2 years. The government owes many of these hospitals payments worth several crores, so these hospitals have stopped offering treatment under this scheme. If a government cannot sustain a smaller version of a healthcare program, what has changed this year that they will be successful in much larger programme?
Every year the annual budget for healthcare has been slowly decreasing as a percentage of annual GDP and this year too the trend continues. It now stands at 1.3% of GDP. Only a few west African countries and some of our poor Asian neighbors are below us in healthcare expenditure. The National Healthcare Policy 2017 laid the roadmap for increase of healthcare expenditure to 2.5% of GDP by 2025 (which is still pretty low and too little, too late). However, if the the current trend in healthcare funding continues, they may not even match that by 2025. 
Paying insurance companies with public money and using private hospitals to deliver medical care which should actually be done by public hospitals has been proved time and again to be highly inefficient way to spend tax-payer money.
There are 4 public sector insurance companies in India which have formed a insurance cartel called GIPSA who have colluded with some private and corporate hospitals to ensure that empanelment into insurance schemes are restricted to few hospitals. In the last 4–5 years since this trend has started, very few new hospitals have been empanelled under GIPSA. Crores of rupees change hands- the agents, insurance company management and hospitals have filled their overflowing coffers. Since empanelments remain in a few hospitals, these hospitals have absolute monopoly on the public money that has been spent on insurance premiums. This cartel comprising of insurance companies and corporate hospitals negotiate treatment and surgery prices among themselves and keep smaller establishments out by requiring a NABH/NABL accreditation to be empanelled. The NABH/NABL certifications are exorbitantly expensive to obtain for smaller hospitals. Patients lose autonomy in having a choice where to get treatment as there are only few accredited hospitals. Even the Delhi government- which is doing many things right in healthcare-is not immune to this accreditation-insurance culture-Delhi govt ties up with private hospitals to address surgery delay – ET HealthWorld. Delhi government hospitals have been forced to send patients to accredited private hospitals because the government schemes specify NABH accreditation for availing treatment. 
Trying to bring in first world medical regulation into a third world healthcare system makes millions of sick and poor people falling through the cracks without treatment. This is India and not Switzerland.
So the NHPS needs to be seen in the larger context of this background development and looks like this was designed to line the pockets of insurance companies and private hospitals while keeping the country’s health at the mercy of this cartel. Just imagine if those ₹20,000 crores (to be spent on insurance premiums) were spent in improving public medical infrastructure, improve sanitation, reduce pollution, provide safe drinking water and create more jobs in healthcare. So many of the current problems problems that plague the poorest in our country would be alleviated.
The hard truth actually is that we have one of the worst healthcare indices in the world. Those are the numbers we should actually be looking at. We lead the world in Infant Mortality Rate (IMR), Under – 5 mortality rate (U-5 MR) and Maternal Mortality Rates (MMR) in the world. Those numbers will not change with insurance schemes aimed at tertiary level care in private hospitals. Things will only change with improvement in sanitation, pollution control, access to safe drinking water, immunization, strengthening of public infrastructure in rural and urban areas. Infact this NHPS comes at the cost of National Health Mission (NHM) and National Rural Health Mission (NRHM)- both concentrating on primary care whose funds have been reduced this year. 
Instead of useless rhetorical statements like “Largest government sponsored healthcare scheme in the world”, the real fact is we have “The largest number of people in the world dying needlessly due to government apathy and inefficiency?”
I also request you to read Kiran Kumbhar’s excellent answer to the same question for some more perspective- Kiran Kumbhar’s answer to What do people think about the Modi government’s decision to have a national healthcare scheme?
This post was originally sourced from Quora user