ISLAMABAD: Amid challenging engagements with international lending agencies to unlock external flows for the balance of payments and flood recovery, the Centre has cast off Punjab’s Rs400 billion health insurance scheme in its present form and size, targeting the entire population of the province, including the rich and the poor.

The project, named “Implementation of Universal Health Coverage under Health Insurance Programme in Punjab”, was presented at a recent meeting of the Central Development Working Party (CDWP) but was not approved after the planning ministry, particularly Planning Secretary Zafar Ali Shah, put up a strong opposition based on feedback from lenders and donors on untargeted subsidies and wasteful expenditures.

Informed sources told Dawn that Mr Shah told the meeting, presided over by Planning Minister Ahsan Iqbal, that during a couple of meetings at the Prime Minister’s Office and the economic affairs division (EAD) for coordination on flood-related pledges, the most critical emphasis from lenders and donors remained on spending funds on those who actually deserve and in need of external support but not on those who can afford but prefer public funds.

Under the ongoing International Monetary Fund’s (IMF) programme supported by the World Bank and other multilateral institutions, the four provinces are required to surrender Rs800bn to the federal government as cash surplus this year to contain fiscal deficit and primary balance within budgeted targets.

The meeting was told that Punjab’s chief secretary had been part of those donor meetings at EAD and PMO and should have withdrawn the summary that was moved to the CDWP in August last year for the universal health coverage scheme.

Interestingly, before the Punjab assembly’s dissolution, the provincial government sought approval to increase the project cost from Rs333bn to Rs399.6bn mainly because of a jump in insurance premium costs and administrative expenses of the project.

Therefore, Punjab believed the Centre could not thwart the project that was already approved by the CDWP and the Executive Committee of the National Economic Council (Ecnec) in the previous government and the fresh CDWP’s approval was required only to the extent of about 21pc cost escalation.

It was reported that the CDWP and Ecnec had previously cleared the project at Rs333bn on the estimated premium cost of Rs3,580 per family per year. The single bidder — State Life Insurance Corporation (SLIC) — quoted a premium of Rs4,700 per family per year and later voluntarily reduced it to Rs4,350 per family per year, taking the total estimated cost to Rs399.6bn.

These parameters had already been approved by the provincial cabinet and about Rs60bn had been allocated in the current year’s budget of the provincial government, involving no foreign funding or federal liability.

The project, already in place, covers 30pc population of 36 districts of Punjab (about 8.5 million families). However, the previous Punjab government wanted this to be expanded to 100pc population of these districts, covering about 29m families, and also envisaged the empanelment of hospitals from existing 294 to more than 400 hospitals across the province.

The project — reportedly designed based on data from seven districts and later expanded to 36 — envisaged cashless indoor healthcare secondary and priority care services and daycare admissions without any limit on family size.

The basic benefit package involved secondary care hospitalisation of up to Rs60,000 and a priority care component of up to Rs400,000 per family per year, with provision for similar amounts for excess of loss and over excess of loss coverage, taking the total annual benefit package to the tune of Rs1m per family.

The planning commission, however, pointed out that the initiative of the social health insurance had originally envisaged only vulnerable population having a proxy means test (PMT) score of below 32.5 — $2 per day — with the understanding that policy institutional and legislative framework would be worked out side by side to bring in the general population on a “contribution basis”, as per global practice.

However, the proposed project apparently did not take into account any exclusion and envisaged premium payments from the development budget for the vulnerable and the affluent without any difference.

The planning ministry also put on record that the previous Ecnec approval was based on certain conditions for project implementation, which had not been addressed by the provincial authorities even after 13 months. Besides, it said Punjab had not yet conducted a study to assess the sustainability of two parallel streams of health financing schemes — universal health insurance and building more public sector hospitals — leading to contradictory and duplicate facilities.

Similarly, the update of the health policy matrix of interlinked elements of both parallel health financing streams was missing, there was no third-party inspection regime for the empanelled hospitals for quality assurance, quality of services and removal of missing facilities had not been completed in stipulated time and legislative framework had not been completed, the ministry said.

Based on unresolved issues, the CDWP finally decided to defer the approval and send back the project expansion for review and well-informed decision by the elected representatives while addressing the weaknesses, duplications and contradictions since that would also require a legislative framework to be put in place by the Punjab Assembly, which is currently non-existent.

Published in Dawn, February 6th, 2023