Extending health insurance to the poor in India: An impact evaluation of Rashtriya Swasthya Bima Yojana on out of pocket spending for healthcare
Anup Karan, Winnie Yip, Ajay Mahal
Social Science & Medicine · 2017 · DOI: 10.1016/j.socscimed.2017.03.053
Countries: India
What Was Studied
Using three nationally representative waves of India's National Sample Survey Organisation (NSSO) Consumer Expenditure Surveys (1999-2000, 2004-05, 2011-12; N=346,615 households), combined with district-level RSBY enrolment records, the authors evaluated the causal impact of Rashtriya Swasthya Bima Yojana (RSBY) — India's national health insurance scheme launched in 2008, covering hospitalisation costs up to INR 30,000/year for below-poverty-line (BPL) families — on household out-of-pocket (OOP) healthcare spending. They used difference-in-differences (DiD) methods combined with propensity-score matching of RSBY and non-RSBY districts, exploiting the staggered district-level rollout of the scheme to distinguish 'early' (enrolled by March 2010) and 'late' (April 2010-March 2012) treatment districts, and explicitly tested the parallel-trends assumption using two pre-intervention survey waves (2000 and 2005).
What They Found
RSBY did not significantly affect the level or share of inpatient OOP spending, nor the probability of catastrophic inpatient spending (OOP exceeding 10% of household consumption expenditure), in either early- or late-treatment districts. However, the probability of a household incurring any out-of-pocket spending (inpatient and outpatient combined) rose by 30% in early-treatment districts due to RSBY, a statistically significant effect. The probability of incurring outpatient OOP spending also rose by 23% in early-treatment districts, while conditional outpatient OOP spending per person fell by about 5%; both effects were statistically significant. RSBY raised household non-medical spending by 5% in early-treatment districts. A supplementary utilisation analysis found that of 35.5 million families (about 130 million people) enrolled in RSBY between 2008 and 2013, the scheme funded only about 5.8 million hospitalisations — far below the roughly 50 million hospitalisations that would be expected annually among the covered population based on independent national survey data.
What This Means for Nepal
Nepal's Health Insurance Board (HIB) is expanding the National Health Insurance Programme (NHIP) to all 753 local governments while confronting a 2026 solvency crisis — arrears exceeding Rs 16 billion owed to providers and a Third Amendment (2083) benefit package that cuts reimbursement rates — even as active enrolment remains only about 16% (FY2022/23) against Nepal's persistently high 54.2% OOP burden. RSBY's experience is a direct warning: rapid geographic and enrolment expansion (RSBY reached roughly 150 million people) did not translate into reduced financial burden, because the scheme excluded outpatient/chronic care and providers could pass costs onto patients regardless of coverage. Two concrete recommendations follow: (1) HIB should commission a quasi-experimental impact evaluation of NHIP's own staggered geographic rollout — from the 2016 pilot in Kailali, Baglung and Ilam, to nationwide district coverage by 2021, to all 753 local governments by around 2024 — using a difference-in-differences design analogous to this study, to determine whether NHIP enrolment has actually reduced household OOP and catastrophic spending rather than assuming enrolment growth alone signals success; (2) given that NCDs cause 66-71% of deaths in Nepal and RSBY's OOP burden persisted mainly through uncovered outpatient/chronic-care costs, HIB should prioritise extending NHIP's benefit package to essential outpatient and chronic NCD care rather than further narrowing inpatient benefits under the 2026 amendment.
Contextualisation
Nepal's National Health Insurance Programme (NHIP) shares RSBY's core goal — protecting low-income households from high out-of-pocket (OOP) healthcare costs, which stood at 54.2% of current health expenditure in FY2019/20, among the highest in South Asia. This rigorous quasi-experimental evaluation of RSBY — India's national insurance scheme for below-poverty-line families, which had enrolled roughly 150 million people by 2016 — found that enrolment did not reduce inpatient OOP or catastrophic spending, and actually raised the likelihood of any OOP spending by 30%. This is a direct cautionary signal for Nepal's Health Insurance Board (HIB) as NHIP — now facing a 2026 arrears crisis of more than Rs 16 billion owed to providers and a benefit-cutting Third Amendment (2083) — expands coverage while active enrolment remains only about 16% (FY2022/23): geographic rollout and enrolment growth are not proof of financial protection.