Kerala’s Karunya Arogya Suraksha Padhathi | A scheme that is bleeding hospitals dry Premium

The Karunya Arogya Suraksha Padhati has become a burden for the government

Public hospitals in Kerala are paying a heavy price for the State government’s administrative inefficiency in running Ayushman Bharat-Karunya Arogya Suraksha Padhathi (KASP), the health insurance scheme covering nearly 42 lakh families.

The scheme that wins Kerala laurels from the Union Health Ministry every year for providing free medical treatment to the maximum number of people is draining the State’s coffers and leaving public hospitals severely short of funds. According to a statement by the government in the Assembly last week, it owes private and public hospitals ₹1,128.69 crore as reimbursement for free treatment given to KASP beneficiaries.

The State’s finances have been in the red for several months now. Public hospitals have been experiencing an acute shortage of drugs, consumables, and implants such as stents, as pending payments running into hundreds of crores have forced pharma companies to stop all supplies to public hospitals. Private hospitals are exiting the scheme in the face of mounting bills that the government is yet to reimburse.

Earlier, public hospitals could tide over such exigencies by utilising a hospital development society’s funds for the local purchase of drugs. But now, due to the fiscal crisis in the State and the overdues from the government under KASP, hospitals have no funds to purchase drugs or for development activities.

Superintendents of hospitals say they are helpless as patients are forced to buy medicines from private outlets. Even the government’s Karunya fair price medical shops do not have adequate stock.

According to the latest edition of National Health Accounts (2019-20), Kerala has the highest per capita out-of-pocket expenditure (OOPE) in the country at ₹7,206 despite being one of the States with the highest per capita government expenditure on health. KASP, a scheme meant to free people from the burden of healthcare expenditure, is now an indirect cause of increased OOPE in Kerala primarily because the government has not paid due diligence to the model of health financing it adopted. It also did little to ensure that the State Health Agency (SHA) had the necessary technical expertise to run KASP, or that there were adequate checks and balances.

The Comptroller and Auditor General’s recent audit report on Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) pointed out that KASP was being run by SHA without proper medical, death, or claim audits and no financial discipline, resulting in huge cost overruns and a high rate of overdue claims.