Modicare to cost about Rs 11,000 crore a year: Source

New Delhi: The government's flagship National Health Protection Scheme plan to provide health insurance for about half the country's population would require an estimated Rs 11,000 crore in central and state government funding each year, an official told Reuters.

The scheme, which the government dubs as "Modicare", was announced in Thursday's union budget for 2018 -19 and would provide 10 crores, or about 50 crores 5 poor people, with a health cover of Rs 5 lakh per year for free treatment of serious ailments.

In its budget, the government announced a central allocation of Rs 2,000 crore for the scheme in 2018-19, but officials say more funds would be made available as the programme is rolled out over the year.

Currently, a number of state governments offer some form of health insurance but these are generally small and poorly implemented.

Under the new scheme, the government estimates the cost of insuring each family would be about Rs 1,100, said the government official, who had direct knowledge of the matter and did not want to be named.

PM Modi faces general election next year and the health programme is seen as a signature initiative to woo voters in rural areas, many of whom struggle with high healthcare costs.

The government said the scheme would be "the world's largest government-funded healthcare programme" but critics have raised doubts whether a funding of Rs 2,000 by the central government is enough to support the programme for 2018-19.

However, the government official said of the Rs 11,000 crore in premiums required to fund the programme, the central government would contribute about 70,000 crores with the 29 states providing the rest.

The Rs 5,000 crore in central government funding on top of the Rs 2,000 crore allocated in the budget would be made available as the scheme details are worked out over the coming months, the official said.

"Government health insurance companies have readily agreed to fund the programme (at this cost)," the official said.

The measure is the latest attempt by Modi to reform India's public health system, which faces a shortage of hospitals and doctors. The government has also in recent years capped prices of critical drugs and medical devices and increased health funding.

Still, India spends only about 1 percent of its GDP on public health, among the world's lowest, and the health ministry estimates such funding leads to "catastrophic" expenses that push 7 percent of the population into poverty each year.

Modi government on Thursday also raised the federal health budget by 11.5 percent to Rs 54,667 crore for 2018-19.

A top official at a state-run insurance company said the government would take 4 to 6 months to finalize the contours of the health plan since it would take time to get hospitals on board.

Nevertheless, a government-sponsored health programme will come as a major boost for the private hospital sector in India. Overburdened public hospitals mean nearly 70 percent of healthcare delivery is in the hands of private players.

The scheme “will be a game changer”, said Prathap Reddy, chairman of Apollo Hospitals Enterprise Ltd.