'Modicare' to initially cost less than Rs 12,000 cr a year: Report

With the debate on the fiscal burden of the National Health Protection Scheme (NHPS) continuing, a report has pegged the cost of the new healthcare plan under Rs 12,000 crore citing the likely low claim ratio in the first few years.

The Budget has proposed the NHPS to address health holistically by catering to the primary, secondary and tertiary care needs of the poor.

The scheme is aimed to cover over 10 crore poor and vulnerable families (about 50 crore beneficiaries) providing an annual Rs 5 lakh cover per family for secondary and tertiary care hospitalisation.


SBI Research in a report today said, "the initial cost under the scheme will be less than the market estimate of Rs 12,000 crore (the Budget has already provided Rs 2,000 crore and Rs 11,000 crore is proposed to be mobilised through a cess) because the claim ratio in the first few years will be low as it generally takes time for awareness to increase".

The analysts at SBI Research have arrived at this figure based on the assumed average premium across the states.

The report notes that while there is a lot of debate that the scheme would increase fiscal deficit by 10-15 bps, the new initiative is the need of the hour as many developed and developing countries have already started universal healthcare scheme in the early 40s of the last century.

Out of the 33 developed countries, 32 have universal healthcare.