The Pakistan Tehreek-i-Insaf (PTI) government is in the process of rolling out its flagship universal health insurance (UHI) scheme in Punjab, Gilgit Baltistan, Azad Kashmir, Islamabad and the merged districts of Khyber Pakhtunkhwa by the end of this year.

The Rs100 billion Sehat Sahulat Programme (SSP) aims to provide free health coverage of up to Rs1 million a year to around 32m families across these territories. The insurance coverage will be available only for hospitalisation but people will have a choice of using both public and private hospitals.

The PTI government in Khyber Pakhtunkhwa has already launched its own universal health insurance programme of Rs25-26bn to cover its entire population or approximately 6.5m families, barring the residents of its merged districts where a similar federal initiative is being implemented.

The Punjab government has earmarked Rs60bn from its annual development programme (ADP) for this initiative. The cost of providing free health coverage to the people of Gilgit Baltistan, Azad Kashmir, Islamabad, and the merged districts of Khyber Pakhtunkhwa will be borne by the federal government. Officials say the option of central contracting for hiring a health insurance provider for all territories by the ministry of national health services is being followed to meet the tight timelines for launching the scheme.

Many feel that the creation of a monopoly of State Life in health insurance will compromise the quality of services the government has promised to provide to people

The ministry has already shortlisted three competitors — the public sector State Life Insurance Corporation, and the two consortiums of private firms led by Jubilee Life Insurance Company and Adamjee Insurance Company — for awarding the contract for all the territories. Based on technical evaluation of their proposals, State Life has emerged as the top contender for the contract, which will be awarded after examination of their yet-to-be-called financial proposals. It has also won the contract for the entire Khyber Pakhtunkhwa.

The private competitors, however, complain that the entire contracting process is rigged in favour of the State Life. “The criteria for the selection of the contractor is developed in such a way that only the state-owned State Life can qualify for the final contract,” a senior executive of an insurance company, which is part of one of the two consortiums, told this correspondent on the condition of anonymity.

“If that happens, the State Life Insurance Corporation will ultimately cannibalise private-sector health insurance companies,” he argued. According to him, State Life’s health insurance exposure is around Rs27bn, similar to the private-sector companies’ combined. Private firms provide health insurance mostly to their corporate clients.

“Once the State Life gets a monopoly over the free public-sector health insurance programme, our customers will start leaving us. At best, we will be left with a small, niche market in the health insurance segment,” he contended.

According to officials, the consultants hired by the government are also of the view that the contract should not be given to a single company. But the health ministry believes that it is not possible to involve more than one firm in the project given the pressure for rolling out the scheme by the end of the year.

Many feel that the creation of a monopoly of State Life in health insurance will compromise the quality of services the government has promised to provide to people. “Competition is necessary for ensuring the quality of the services to be provided to people. Additionally, the government should be trying to deepen the country’s emerging health insurance market by encouraging private competition,” the anonymous executive quoted above insisted.

The private-sector companies are of the view that the territories, especially Punjab, where the government proposes to launch the health insurance initiative should be divided into several zones, giving the contracts for each of those zones to different insurance providers to create space for the private-sector companies.

“We have already forwarded this proposal to the government because we believe that it will encourage competition and help ensure quality health services for the beneficiaries of this scheme,” another insurance executive said, seeking anonymity. “This will help the health authorities to closely monitor the performance of each firm. Based on their performance, the government will be able to easily determine their future share.”

Published in Dawn, The Business and Finance Weekly, August 16th, 2021