Analyses of enrolment, dropout and effectiveness of RSBY in northern rural India

In 2008, the Government of India initiated the Rashtriya Swasthya Bima Yojana (RSBY) to provide inpatient insurance coverage to all below-poverty-line (BPL) households in India. It is one of the most ambitious social protection programmes in the country. Using household level panel data from Uttar Pradesh and Bihar collected in 2012-2013, this paper investigates the determinants of enrolling in and dropping out of the scheme. In addition, we investigate whether participating in the RSBY is associated with a higher probability of using inpatient care and increased financial protection. We find that by the end of our survey period, close to half of our sample is enrolled in RSBY (41% in Bihar, 68% in UP). RSBY coverage is more concentrated among the poor in Bihar, as compared to UP. We find that the presence of chronic illnesses, lower socioeconomic status, belonging to scheduled-castes or tribes (SCST), insurance related awareness and proximity to healthcare facilities are positively correlated with enrolment. SCST households and households with members who have chronic conditions are less likely to drop out. The associations between RSBY membership and healthcare use and financial protection vary across the states. While we do not find that RSBY is associated with increased rates of utilization across the board, we do find insured households in Bihar experience lower out-of-pocket payments and debt following hospitalization. Nearly all hospitalizations among insured patients lead to positive OOP spending. Overall, we conclude that though the RSBY does appear to be pro-poor and is inclusive of disadvantaged minorities such as the SCST, the scheme suffers from adverse selection. The fact that drop-out rates are low might suggest good perceived value for the insured. The RSBY has the potential to play an important role in India’s move towards Universal Health Coverage. However, our analyses suggests that scheme awareness should be increased; that the targeting of the scheme could be improved, and that the programme is not yet providing cashless inpatient care. The differences in effectiveness between both states might be related to the recent development efforts made by the Bihar government, and suggestive of the need for addressing supply side constraints prior to launching an insurance scheme.