What is Modicare? It's definitely not the same as Obamacare

Clarity needs to emerge on the architecture of Ayushman Bharat before a comprehensive comparison can be made between Modicare and Obamacare.

By BusinessToday.in  
Friday, February 2, 2018

The Modi government's launch of National Protection Health Scheme in the Budget 2018 has drawn immediate comparisons of the program with the former US President Barack Obama's Patient Protection and Affordable Care - also known as Obamacare - which promised affordable health coverage to all Americans. But how similar are these two healthcare missions of the two of the world's biggest democracies? It's perhaps a bit too early to say. Clarity needs to emerge on the architecture of Ayushman Bharat before a comprehensive comparison can be made between the two schemes. But, some obvious similarities and differences can't be missed:  

Cost

The total cost under 'Modicare' to cover 10 crore households has been estimated at Rs 4,000 crore. Centre has confirmed allocation of Rs 2,000 crore for the scheme. According to people familiar with the matter, Centre will look at states to pitch in with the remaining Rs 2,000 crore. The expenditure on the scheme, however, could see a significant rise if the government turns the program into a universal healthcare scheme with benefits for all citizens in the country.

"Eventually, the government plans to make this universal healthcare covering all 24.49 crore households in India within 3 years. This will cost an additional Rs 1070 crore," a source told Business Today.

Meanwhile, in 2010, former President Obama said that it would cost $940 billion in next 10 years. However, two years later, the Congressional Budget Office came out with an estimated cost of $1.76 trillion.

Benfeiciaries

'Modicare' is specifically targeted at India's poor while Obamacare was for the poor but also benefited middle class Americans. Obamacare made it mandatory for every citizen to buy insurance cover and offered government subsidy on the premiums. However, there have been criticisms over recent increase in premiums and continuous debate over whether it should be scrapped, including President Trump's efforts to repeal the Act.

In respect to the number of people the two schemes cover, Modicare will provide cover to a much larger population as compared to Obamacare. For Modicare, 10 crore families have been identified on the basis of the lowest earning 10 crore poor, BPL and APL families as per the Socio-Economic & Caste Census of 2011. Arun Jaitley in his budget speech said 50 crore people would benefit from the scheme.

Obamacare till 2016 brought around 2 crore 40 lakh citizens under the insurance protection scheme.

Premium

Under the Modi care, government will invite bids from insurance companies to cover these 10 crore families. These insurance companies will tie up with healthcare chains where the insured will be treated. It's highly unlikely the poor will have to pay premiums since it's a promise to provide a cover of up to Rs 5 lakh per family for secondary and tertiary care hospitalisation.

Under the Obamacare Act, the United States government pays subsidy in the premium to those whose income fall between 100-400 per cent of the Federal Poverty Line. In comparison to Modicare's Rs 5 lakh limit, in Obamacare there is no such limit or cap for essential health benefits. The US Affordable Care Act also ensures that in case of chronic illness, policyholders get health cover even if they have run out of coverage.

India's total health spending

Currently, India's public health budget is 1.15 per cent of GDP and it expects to raise it to 2.5 per cent of the GDP by 2025. However, the United States spends around 18 per cent of its GDP on healthcare.

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