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Modicare-Is it good for insurers or not?

On this coming independence day when we will be celebrating 72 years of independent India, The prime minsiter of India already have some great plans in the list. And one of such plans is – The ‘Ayushman Bharat – National Health Protection Mission’ that is popular by the name of Modicare. It is expected to be announced by the prime minister on 15 August 2018. As per the name suggest, it would be a great health protection scheme for the citizens but when it comes to insurance companies, it will not bring much opportunities for them. Around 23 states of the country have decided to take the ‘trust model instead of buying a group cover from insurers.

According to the chairman of the New India Assurance, “A trust, which will get the money allotted for the premium, will take over the job of the insurance company. If there is a shortfall in funds allocated, the government — probably  the state government — will have to make good as there is no entity that takes on the risk like in an insurance model.”

Some of such 23 states are going for a hybrid model under which they would invest a small amount of Rs 50000 per family to get the cover of 500000 under the scheme which insurance companies describes as the burning layer or a part of the sum assured under which the maximum claims occur.
Gujarat, West Bengal and Tamil Nadu are in the list which are going for hybrid model.

According to the New India, the AB-NHPM could trigger the growth when it comes to health insurance in two ways. First, by creating an aspiration among those who are not covered under the scheme and, second, by creating additional private healthcare capacity in rural areas.

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