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Network and Operations Ltd or FINO Fintech Foundation do not necessarily subscribe to the same.

2010

[ FINO WORKING

PAPER 1310]

The paper highlights importance of technology in

public service delivery. It discusses the role of FINO

and biometric smart card technology in the delivery

of Rashtriya Swasthya Bima Yojana across various

states in India

Financial Information Network and Operations Ltd, Mumbai www.fino.co.in

2

FINO DRIVEN HEALTH

MICROINSURANCE IN

UNORGANISED SECTOR:

CASE OF RASHTRIYA

SWASTHYA BIMA YOJANA

Jatinder Handoo1

1.0 HEALTH OF THE HEALTH IN INDIA

A healthy labour force is fuel for GDP of

a country. In other words, health status

of both the financial and labour markets

1 Jatinder Handoo is part of the business strategy

team at FINO based out at corporate office Navi

Mumbai.Due acknowledgement to Ms. Bela Arora –

Management trainee @FINO for the research work

carried out for the study.

are positively correlated. In a country

like India where 86 per cent of the total

labour force exists in unorganised sector

and contributes to around 50 per cent to

the national GDP (NCEUS

Report,2008), health of labour force

becomes a vital area of investment for

private and public sector stakeholders.

This becomes even more interesting

when just around 2 per cent of the total

population of India is covered by health

insurance (Chandraseker

Hemalatha, 2009) and public spending

on healthcare is just 0.9 percent of the

GDP2. In this context, it is in the larger

interest of the economy to invest in the

labour health and well being.

Policy response to the issue, by the

Government of India came in the year

2008 consequent of Government’s

commitment to the National common

minimum programme and the

recommendations made by National

Commission for Enterprises in the

unorganised sector (NCEUS), the

2 Bali Vishal,2009

http://ibnlive.in.com/blogs/vishalbali/2516/53669/h

ealthcare-sector-needs-urgent-reforms.html

FINO is one of the primary

stakeholders involved in

conceptualizing and designing

biometric smart card based delivery

system for health insurance services in

India. Initially carried out as a pilot for

product design along with a leading

private sector GIC in Manipal,

Karnataka which was not implemented

on field, the concept was later on

employed in the delivery system of

RSBY . This paper takes an overview

of the implementation part and

discusses how FINO has contributed

in the whole process from design to

implementation part of the scheme.


3

Government launched one of the world’s

largest mass health insurance schemes

called Rashtriya Swasthiya Bima Yojna

(RSBY) which is very different from its

predecessors and contemporaries in

service delivery and

implementation efficiency.

What makes the difference

is the delivery and

implementation model

based on biometric smart

card platform and role of

implementing agencies like

FINO fintech

foundation(F^3).

2.0 FINO’s RESEARCH & DEVELOPMENT:

UNLOCKING THE POTENTIAL OF HEALTH

INSURANCE IN UNORGANISED SECTOR

Initial research and development for the

use of biometric smart card technology

to deliver health insurance to poor was

done by FINO team along with a leading

private general insurance company as a

pilot at manipal (Karnataka state) but

the same was not implemented in the

field .Later on the concept was

presented to the World Bank. The bank

was convinced about the usability of the

technology and finally FINO contributed

in consultations on behalf of the World

Bank to to the Ministry of Labour and

Employment (MoLE) Govt. of India (GoI)

for the project on health

Insurance

(RSBY). It is

estimated

that round

4% of BPL

population

requires

hospitalisation

every year

and the cost

per episode (at 1995-96 prices) was

estimated at Rs. 2,100 Ahuja,ICRIER

2004). Health insurance market in India

is estimated to be around Rs 5000Cr

which covers around 2 per cent of the

country’s population at present3.

Biometric smartcard based delivery

system spearheaded by F^F has

brought a turnaround by unlocking the

business potential of around Rs 4500

3 Chandrasekhar .H,2009

FINO not only unlocked Rs 4500

crore potential micro insurance

market for health insurance

companies, it has also

empowered poor to choose her

health service provider and thus

created an incentive mechanism

for health service providers to

offer quality health services in

India.


4

Crore4 for health insurance companies

and other stakeholders especially 37.5

crore BPL5 (100 per cent) members .It is

based on the premise If, instead of

directly bearing the cost of medical

treatment, government provides them

health insurance, the demand on

government funds may come down

significantly as insurance helps in

resource mobilisation from various

sources. In RSBY, Govt. pays an

average premium of Rs. 600 per BPL

house hold (family of five members) and

in order to provide health coverage to

6.0 crore households over a period of

five years (2008-2013) government will

need to finance Rs. 3600 Crores per

year6. Government even considers to

extend RSBY to all households under

BPL.

4 BPL population of India is around 37.5 Crore(2004-

05) according to the report of expert group headed

by Sh. Suresh Tendulkar, the planning commission of

India. Assuming the premium paid by Govt is on an

average Rs 600/card for a family of five. The market

size crosses Rs 4500Cr . 55

BPL population (2004-05),as per Planning

commission of India. 6 6 Crore House Holds (assuming 1 HH is a unit of 5

members). 5 * 60 crore= 3000Crore

Also INR 30 *6 crore = 1,80 Crore is mobilized

through people as registration fee per year.

Another indirect benefit of the efficient

delivery of the RSBY is the evolution of

the Public Health Delivery System

(PHDS). Public health delivery system in

India is generally considered as being

implanted with low quality and poor

service delivery. This pushes off

patients to private hospitals for

treatment which are usually quite

expensive and this leads to greater out-

of-pocket expenses. This in turn leads to

greater impoverishment and indebtness

for the poor. In India, 65% of poor get

into debt trap and 1% below the poverty

line every year because of illness

(NSSO, 2004). In RSBY both public and

private hospitals can be empanelled and

public hospitals are given incentives to

treat beneficiaries as the money would

flow directly from an insurer to the public

hospital which they can use for their

own purpose like improving the

infrastructure and bringing in modern

technology in the hospital. Thus, the

design of RSBY scheme is also an

attempt to develop the entire ecosystem

of health care of the country.

Financial Information Network and Operations Ltd, Mumbai

3.0 FINO’s CONTRIBUTION IN MAKING RSBY

DIFFERENT FROM PREVIOUS

GOVERNMENT SPONSORED HEALTH

INSURANCE PROGRAMMES:

FINO’s inputs for the use of

smart card technology based delivery

apparatus and its contribution in

standardization of delivery

differentiates RSBY from its

predecessors and contemporaries. A

beneficiary is given a pre loaded

biometric smart card and Point

(POS) machines installed are at

network hospitals for carrying out

transactions, robust back end

is maintained for claim management,

customer service and for facilitating

monitoring & evaluation (M&E)

scheme. While designing this scheme

lot of efforts were made to spell out in

detail the roles and responsibilities of

each of the stakeholder. FINO was

involved in the RSBY programme righ

from its get-go stage and thus

understands the programme dynamics

much better.


’s CONTRIBUTION IN MAKING RSBY

HEALTH

se of biometric

based delivery

contribution in

delivery platform

from its

nd contemporaries. A

pre loaded

Point-of-Sales

(POS) machines installed are at the

hospitals for carrying out

back end database

for claim management,

r service and for facilitating

valuation (M&E) of the

While designing this scheme

to spell out in

detail the roles and responsibilities of

each of the stakeholder. FINO was

involved in the RSBY programme right

go stage and thus

understands the programme dynamics

3.1 DESIGNING AND INITIAL

In the design phase, the

standardization was considered to be

the most challenging task, considering

the scale of the programme and the

number of players involved. By

through the standardized platform

design, backend DBMS

maintenance format and

operability of cards in network of

hospitals across the country

possible.

7 Database management systems.

8 Specifications in card design, process flow, backend

platform, enrollment and card issuance, district

Kiosk and server specifications smart card layout,

RSBY card renewal specifications were deigned by

FINO , that too in very short span of 3

That is why it became operationalised in 4 months

after the launch of the scheme. Also, FINO

conducted state level and district level workshops to

explain the programme. Moreover, for early rollout

of the scheme FINO had provided the enrollment

5

DESIGNING AND INITIAL ROLLOUT:

gn phase, the

standardization was considered to be

nging task, considering

of the programme and the

number of players involved. By putting

he standardized platform - card

design, backend DBMS7, the data

and the inter-

operability of cards in network of

hospitals across the country8 was made

Database management systems.

pecifications in card design, process flow, backend

platform, enrollment and card issuance, district

Kiosk and server specifications smart card layout,

RSBY card renewal specifications were deigned by

that too in very short span of 3-4 months.

is why it became operationalised in 4 months

after the launch of the scheme. Also, FINO

conducted state level and district level workshops to

explain the programme. Moreover, for early rollout

of the scheme FINO had provided the enrollment


6

The technical specifications for this

project were designed in a very short

span of 4 months. This in turn made

interoperability of cards feasible in the

network of hospitals across country.

FINO contributed in designing following

initial components of the scheme.

• Process flow for RSBY,

• State level workshops were

organized,

• Enrollment & Card Issuance

specifications,

• Transaction system specifications

• District kiosk and server

guidelines,

• RSBY card renewal

specifications,

• Smart Card layout.

FINO’s technical application was the

first one to get certification from

Standardization, Quality and

Technical Certification (SQTC). In

order to expedite the RSBY scheme

considering the huge target, initial

enrollment software was provided by

software to the Government of India that is then

provided to other vendors.

government to various insurance

companies. The card used for RSBY

is designed in such a manner that it

can be used as a multi application

card i.e. the card is enough flexible to

add on other services like PDS,

education vouchers or any other

scheme if introduced later on. The

front end is designed for the

enrollment process is such that it

appears very simple and user friendly

but a robust back end is maintained

for claim management, customer

service using which FINO provides

services to insurance companies.

Financial Information Network and Operations Ltd, Mumbai

3.2 IMPLEMENTATION: RESULTS FROM

HARYANA

FINO fintech foundation was

among all service provide

country to start enrollment of

beneficiaries of RSBY in february

By May 31st 2009, it had completed the

enrollment process in all 20 districts of

Haryana with more than 65% of

beneficiaries linked with RSBY scheme.

Success of such schemes depends

largely upon the level of penetration in

the rural pockets of the country i.e. the

number of villages where enrollment

process is carried out so that

number beneficiaries could

under the ambit of the scheme.

(The chart 1.1 is a comparison of BPL

families covered in various states wher

more than six districts are covered

under RSBY scheme started in 2008. In

Haryana, FINO has worked whereas

other implementation partners have

provided services in rest of the states)

As depicted in the chart 1.1 F^3

was the implementation partner

Haryana has brought the services to

more than 65% of beneficaries


IMPLEMENTATION: RESULTS FROM

was the first

among all service providers in the

country to start enrollment of

RSBY in february 2008.

completed the

enrollment process in all 20 districts of

Haryana with more than 65% of

beneficiaries linked with RSBY scheme.

Success of such schemes depends

upon the level of penetration in

pockets of the country i.e. the

number of villages where enrollment

process is carried out so that maximum

be brought

under the ambit of the scheme.

is a comparison of BPL

families covered in various states where

more than six districts are covered

under RSBY scheme started in 2008. In

Haryana, FINO has worked whereas

ther implementation partners have

provided services in rest of the states)

As depicted in the chart 1.1 F^3 which

was the implementation partner in

has brought the services to

than 65% of beneficaries with a

penetration of more than 95% (

than 95% of villages were covered).

The highest percentage is

compared to other service providers in

other states.

3.3 MODUS OPERHANDI: THE FINO STY

There are multiple factors attributed to

FINO’s high performance which has

now become the hall mark of

handled projects. Not

Haryana but at other locations as

well.The pre-enrollment process

or less similar and involves

awareness creation, call for enrollments

by munadi (intimation)

finally beneficiary enrollments. D

0

10

20

30

40

50

60

70

Bihar Jharkhand Kerala

Pe

rce

nta

ge

En

roll

me

nt

Chart 1.1 Enrollment Percentage F^3

viz-a-viz others

7

penetration of more than 95% (i.e. more

re covered).

percentage is in Haryana as

to other service providers in

: THE FINO STYLE

factors attributed to

NO’s high performance which has

become the hall mark of FINO

Not specifically in

but at other locations as

process is more

involves RSBY

call for enrollments

by munadi (intimation) manager and

beneficiary enrollments. During

65%

Kerala Punjab Haryana

Chart 1.1 Enrollment Percentage F^3

viz others

F

I

N

O


8

the pre-enrollment phase, awareness

programme is organized in the area

about the scheme and demonstration

about use of the card is carried out.

This is carried out two-three days prior

to the enrollment process, and

enrollment team’s arrival in the village,

Generally ,the sarpanch of panchayat

is intimated about the programme and

local people are alerted through

announcements, pamphlets, door-to-

door canvassing, ‘munadi’-(traditional

method of spreading news through

beating drum and announcing the

news). On the day of enrollment FINO

team visits the site early in the morning,

(as most of the people are available in

the morning), with their enrollment kits

that include laptops, web cameras,

fingerprint grabbing device, on site

printers and biometric smart cards and

generators to carry out enrollment and

issuance of the smart card on site.

Finally, FINO’s experience of working in

the rural areas and understanding of

customer requirements helps to serve

BOP segment of the society in a better

way.

4.0 Conclusion

In view of the gaps prevalent in previous

systems of delivering health insurance

schemes, FINO’s end to end service as

an implementation partner is

appreciated by stakeholders and

adopted by the Government of India to

implement one of the largest mass

health insurance programmes in the

world. The key is the use of bio-metric

cards a common panacea for common

loopholes. By laying out this platform,

the government is financing public

health both economically and

expeditiously. Also, this has established

a delivery channel which could

potentially be leveraged by the

Government to deliver more services

like subsidy, education vouchers, PDS

etc in future. For the first time,

mammoth volume of data is being

stored which can be analyzed to deliver

very relevant information for the

government, insurance companies and

pharmaceutical companies etc.

The FINO designed technology platform

delivering health insurance helps

insurance companies to obviate moral

hazards, thus making the product viable


9

for them. Moreover, at the same time

the use of card and the technology

reduces the administrative hassles

involved by doing away with paper work

once and for all. This would eventually

bring the cost down as it is scaled up.

The efficient implementation of the

scheme has resulted in greater

convenience and empowerment of the

poor by providing them the choice of

health service provider. The card is also

an instrument of identification for the

BPL poor. Already the RSBY health

insurance scheme has made news in

the Wall Street and Business World

magazines. What remains to be seen is

how many countries would emulate this

unique service model.

References

Ahuja, R., & Jutting, J. (January 2004).

Are the poor too poor to demand Health

Insurance? New delhi: Indian Council for

research on International Economic

relations.

Ahuja Rajeev(2004),Health Insurance

for Poor in India,ICRIER.

Associates, B. F. (2006). Scoping on the

Payment of Social transfers through the

financial system. UK: Department of

International Development.

Devadasan, N., Manoharan, S., Menon,

N., Thekaekara, M., & Thekaekara, S.

(2004). ACCORD Communoty Healt

Insurance: Increasing Acess to Health

Care. Economic and Political Weekly ,

3189-3194.

Dror, D. M. (2006). Health Insurance for

the poor : Myths and Realities.

Economic and Political weekly , 4541-

4544.

Dror, D. M., Kuren, R., ost, A.,

ErrikaBinnendijk, Vellakal, s., & Dannis,

M. (2006, December 4). Health

insurance benefit packages priortized by

low-income clients in India : Three

criterias to estimate effectiveness of

choice. Social Science and Medicine ,

pp. 884-896.

Gumber, A., & Arora, G. A. (2006).

Health Insurance :still a long way to go.

Securing the insecure : a symposium on

extending social security to unprotected

workers.


10

Johnson, D. (2008). Case Study on the

Use of Smart Cards to Deliver

Government Benefits in Andra Pradesh,

India. Chennai: Centre for Microfinance.

Khan, D. I. Health Ecosystem :

Achieving Impact in Community Health

with Public Private Partnership. Centre

for Insurance and risk Management,

Institute for Financial Management and

Research.

Mishra, R., Chatterjee, R., & Rao, S.

(2003). Changing the Indian Health

System : Current Issues, Future

Directions. New Delhi: Oxford University

Press.

NCEUS Task force (2008) Contribution of the unorganized sector to GDP Report of the Sub Committee of a NCEUS

Peters, D. H., yazbeck, A. S., Sharma,

R. R., H.pritchett, L., & Wagstaff, A.

(2002). Better Health system for India's

Poor:Findings, Analysis and Options.

Washington DC: world bank.

(2009). Presentation on Information and

Health Care : A Randomized

Experiment in India. iiG

workshop,Oxford university;LSE.


11

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