ISLAMABAD: The Centre has rejected Punjab’s Rs400 billion health insurance scheme in its current form and size, which targeted the entire province’s population, including the rich and the poor, despite challenging engagements with international lending agencies to unlock external flows for the balance of payments and flood recovery.
At a recent meeting of the Central Development Working Party (CDWP), the project titled “Implementation of Universal Health Coverage under Health Insurance Programme in Punjab” was presented. However, the project was not approved due to strong opposition from the planning ministry, particularly Planning Secretary Zafar Ali Shah, based on feedback from lenders and donors about untargeted subsidies and wasteful expenditures.
Dawn was informed by reliable sources that Planning Minister Ahsan Iqbal, who presided over the meeting, informed Mr. Shah that during a few meetings at the Prime Minister’s Office and the economic affairs division (EAD) for coordination on flood-related pledges, lenders and donors remained primarily focused on spending funds on those who actually deserved and required external support, rather than on those who could afford but preferred public funds.
The four provinces are required to give the federal government Rs800 billion this year as a cash surplus under the ongoing IMF program, which is supported by the World Bank and other multilateral institutions. This is to keep the fiscal deficit and primary balance within the budgeted targets.
The meeting was informed that Punjab’s chief secretary should have withdrawn the summary for the universal health coverage scheme that was sent to the CDWP in August of last year because he was a participant in those donor meetings at EAD and PMO.
Interestingly, prior to the dissolution of the Punjab assembly, the provincial government sought approval to raise the project’s cost from Rs333 billion to Rs399.6 billion, primarily due to an increase in insurance premium costs and administrative costs.
As a result, Punjab was of the opinion that the Centre could not stop the project because it had already been approved by the CDWP and the Executive Committee of the National Economic Council (Ecnec) under the previous administration, and the new CDWP only needed to approve a 21 percent cost increase.
According to reports, the CDWP and Ecnec had previously approved the project for Rs333 billion, with an annual premium cost of Rs3,580 per family. State Life Insurance Corporation (SLIC), the sole bidder, initially offered a premium of Rs4,700 per family per year but later voluntarily decreased it to Rs4,350 per family per year, bringing the estimated total cost to Rs399.6 billion.
These guidelines had already been approved by the provincial cabinet, and approximately Rs60 billion had been allocated in the provincial government’s current year’s budget without any federal or foreign funding.
30 percent of the 36 districts in Punjab are covered by the project, which currently serves approximately 8.5 million families. However, the previous Punjab government planned to increase the number of hospitals in the province from the current 294 to over 400, with the goal of reaching 100 percent of the district’s population, or 29 million families.
Cashless indoor healthcare secondary and priority care services and admissions to daycare without regard to family size were planned as part of the project, which was reportedly developed using data from seven districts and later expanded to 36.
A priority care component of up to Rs400,000 per family per year and secondary care hospitalization of up to Rs60,000 were included in the basic benefit package. Similar amounts were also included for excess of loss and over excess of loss coverage, bringing the total annual benefit package for each family to Rs1 million.
The planning commission, on the other hand, pointed out that the social health insurance initiative had originally intended to only cover vulnerable individuals with a proxy means test (PMT) score of less than 32.5, or $2 per day, with the understanding that the policy, institutional, and legislative framework would be developed side by side to include the general population on a “contribution basis,” as is standard practice worldwide.
However, it appears that the proposed project did not account for any exclusions and envisioned equal premium payments from the development budget for the poor and wealthy.
Additionally, the planning ministry stated that the previous Ecnec approval was based on certain project implementation conditions that the provincial authorities had not addressed even after 13 months. In addition, it stated that Punjab had not yet conducted a study to evaluate the viability of two distinct streams of health financing schemes—building more public sector hospitals and universal health insurance—resulting in contradictory and duplicate facilities.
In a similar vein, the ministry stated that the health policy matrix had not been updated to include the interconnected components of the two parallel health financing streams, that there was no third-party inspection regime in place for the empanelled hospitals to ensure quality, that the removal of missing facilities and the quality of services had not been completed within the allotted time, and that the legislative framework had not been completed.
The CDWP ultimately decided, based on unresolved issues, to postpone approval and send the project expansion back for review and informed decision by elected representatives while addressing weaknesses, duplications, and contradictions. This would also necessitate the establishment of a legislative framework by the Punjab Assembly, which does not currently exist.
