Modicare: Will it live up to its tag of being the biggest global healthcare plan?

By: Rukmini Chopra

Published On: February 17, 2018

We shed light on the benefits as well as the possible shortcomings of the newly introduced National  Health Protection Scheme aka ‘Modicare’

After taking the nation by a storm with the implementation of demonetization and GST (Goods and Services Tax), The BJP (Bhartiya Janta Party) government repeated history by introducing their most ambitious healthcare plan so far. 

The Union Budget on February 1, 2018, initiated the National Health Protection Scheme, which is being touted as the biggest global healthcare plan. Also popularly referred to as ‘Modicare’, this scheme has triggered a debate amongst politicians and mediapersons alike, on whether the BJP government is offering much more than it can afford. But before coming to that, let’s first discuss the benefits that Modicare is providing to the citizens.

What the Modicare offers:

Healthcare insurance to 100 million families: The government plans to extend its healthcare scheme to a 100 million families, providing a cover of Rs. 5 lakh for each. In total, the plan covers 500 million individuals, a quantity that constitutes nearly 41.3% of the total population.

Secondary care: NHPS will provide secondary care to citizens, which entails taking care of outpatients as well as those who are admitted to hospitals for a short span of time.  

Tertiary care: This type of care includes looking after patients that are suffering from terminal illnesses and are admitted in hospitals for longer periods of time. 

Establishing a national health agency: Modicare plans to come up with an agency, that will be responsible for the scheme’s smooth functioning at state-level.

Increasing the number of health and wellness centers: The government plans to come up with 1.5 lakh health and wellness centres under its Ayushman Bharat program. These centres will provide medical services to those suffering from non-communicable illnesses and will take care of young mothers and children. They will also supply free medication when essential. 

Instituting more medical colleges and hospitals: India suffers from a serious lack of these; at present there are 543 parliamentary constituencies and only 479 colleges affiliated to the MCI (Medical Council of India). The government’s goal is to have at least one medical college per three parliamentary constituencies. 

Criticism surrounding Modicare 

While some are hopeful that the BJP government will succeed with its big healthcare project, others are doubtful. From lack of details provided by Finance Minister Arun Jaitley to discrepancies in pricing, Modicare has come in the line of fire. 

Here are some points that have been brought up by critics: 

Only Rs. 2,000 crore to run the scheme?

The scheme aims to provide for 100 million families with a cover of Rs. 5 lakh per family. But only Rs. 2000, crore has been catered for in the 2018 budget.

The Hindu reports that going by the benefits being provided under Modicare, the government would need an annual budget of Rs.1 lakh crore ($15.38 billion) as opposed to mere Rs. 2,000 crore. 

The Economic Times estimates that the centre would have to shell out around Rs. 6,000-7,000 crore, while the states would have to spend Rs 4,000- 5,000 crore to run the programme smoothly. If and when the project scales up, ET estimates an annual budget of Rs.10,000 to 12,000 crore for the healthcare plan. 

What happened to the healthcare plan that was announced in budget 2016?

Healthcare expert T Sundaraman while writing for  Scroll, informed that a smaller version of Modicare was introduced in the 2016 budget. In that scheme, the sum of Rs. 30,000 that was being offered to cover each family of five under RSBY (Rashtriya Swasthya Bima Yojana), was raised to Rs.1.5 lakh per family, by the BJP government. 

He points out that two years after being introduced, the scheme is yet to become operational. He also highlights that not even 50% of the funds set aside for the existing healthcare plan, have been spent in the year gone by.

Will Modicare prove to be effective after RSBY’s failure?

The BJP with Modicare has raised the cover from 30,000 to Rs. 5 lakh per family, under the 2018 budget. But critics are not sure about the success of this step, owing to the poor performance of RSBY till 2014, that raised several questions. 

RSBY, a healthcare scheme that was launched in 2008 by the Congress, catered to families below poverty line and provided an insurance cover of Rs. 30,000 to them. 

A study conducted by Tata Institute of Social Sciences (TISS), Denoar last year, revealed that the RSBY scheme turned out to be a ‘complete failure.’ The study showed that a mere 11% of the of the BPL people were registered under the scheme, till 2014.

Also, the scheme that catered for outpatients, failed to reduce costs for their out-of-pocket expenses. MoneyLife reports that some of the families that enrolled in the RSBY scheme, weren’t even BPL.

Achievements under the BJP healthcare plan 

Where on one hand the BJP government has received backlash for its healthcare schemes, it has also been appreciated for its medical achievements. 

Eradication of polio: India was declared ‘polio-free’ by WHO (World Health Organization) in 2016, under the reign of the BJP government. The program to eradicate polio was implemented in 1995, when the virus was responsible for crippling more than 50,000 children every year, as reported by The Hindu.

According to a report by Forbes, the polio eradication plan was successful, thanks to the financial aids provided by the central and state governments, aside from WHO and Swedish International Development Agency, amongst others. 

Eradication of smallpox

India was declared free of smallpox by WHO, on April 23, 2014. The program to eradicate the disease was brought to action 10 years ago. Before declaring India smallpox-free, WHO spent two years, trying to detect a case of the disease, and luckily found none. 

The healthcare issues that Modicare needs to focus on 

From instituting medical centers to covering a 100 million families, the NHPS is ambitious by all means. But there are a few fundamental issues that Modicare needs to focus, to bring about the much needed change in India’s healthcare situation. 

Improvement in government hospitals

Statistics by NHFS (National Health and Family Survey) reveal that less than 42% of urban and 46% of rural population choose health services provided by the government. 

56% of the urban population opts for private healthcare and 49% of the rural population follows suit. 


The lack of facilities and medical attention prove to be the primary reasons behind half of India’s population resorting to private healthcare. The case of 23 children dying due to lack of oxygen at medical college, run by the Uttar Pradesh government, speaks volumes of the same.

As revealed by NFHS, 48.1% households also stated poor quality of medical care as the reason along with 44.6% pointing out the lack of nearby medical facilities. 40.9% of them said they avoid going to government hospitals due to the long awaiting lines. 

Need for subsidized treatment at private hospitals 

Private hospitals may be popular owing to their high-end medical care, but one has to pay a heavy price for them, quite literally.

The shocking case of a 7-year-old’s family being billed Rs.15 lakh for treatment at popular private hospital last year, revealed the ugly truth about the exorbitant prices charged by such healthcare institutions.

According to a Brookings analysis of data by NSSO (National Sample Survey Organization), the out-of-pocket expenses on medicines and hospital fees is in the highest in India, pushing 7 percent of the population below poverty line. 

Indranil Mukhopadhyay, health economist at Public Health Foundation of India informed The Week that the average cost of hospitalization in the private sector is Rs. 25,000 as opposed to Rs. 4,500 in the public sector. 

Going by these numbers, there indeed is a need for the government to subside private sector rates, especially in cases of cancer, organ transplants, etc. 

The need for lower GST rates 

Though the imposition of GST (Goods and Services Tax) was supposed to bring some relief to the healthcare sector in India, the opposite seems to have happened. 

The cost of hospital rooms and doctors’ fees may have been exempted from tax under the new GST bracket, but other medical facilities such as diagnostic equipment as well as medicines are being taxed. GST on equipment such as lead valve pacemaker and CRT-ICD has been raised from 5.5% to a whopping 18%. 

You can read more about this at our Medium blog here.
Universal Health Care: Mission impossible?

The plan to have a universal health coverage of citizens of India has begun and is likely to get enforced by 2030, as agreed upon by UN members states under United Nations Sustainable Development Goals. UHC will aim to provide affordable medicines and vaccines to all, along with other health-care facilities. 

UHC has seemed like a mission that is impossible to complete in India, owing to varied reasons ranging from the lack of importance given to healthcare in India to poor promotion of preventive healthcare (spreading awareness on essential vaccinations.

But is this dream really that hard to achieve? Read our take on this here