The Rashtriya Swasthya Bima Yojana, which was formally launched on the 1 October last year, was put into operation today. The scheme provides a smart card-based cashless health insurance cover up to Rs30,000 to all below poverty line (BPL) families in the unorganised sector in the next five years.

An initial allocation of Rs250 crore has been made in the Union Budget for 2008-09. The centre will contribute 75 per cent of the annual premium with the remaining coming from the states.

The government has set itself a target of covering an estimated six crore BPL from all the 600 districts in the country at one lakh workers per district, at the rate of 120 district per year starting from this financial year.

The central government has already issued guidelines and a draft tender document has been prepared and sent to all the states, wjhile the draft memorandum of understanding between the centre and the states has also been finalised. The draft contract agreement between insurance companies and state governments has been finalised and medical procedures and their costs have been standardised by a group of experts.

Guidelines for smart card hardware and the operating software as also the software for issuing smart card have been released, while the specifications for smart card handling devices have been finalised with assistance from the World Bank.

To guard against duplicate or fake smart cards being issued, the National Informatics Centre has developed a key management system (KMS) and a certification system has been put in place for the software to be used. Preparations are underway for a back-end data base management. All these tasks are highly technical in nature and time consuming but these are imperative for smart card operation. When fully operational, these would make the scheme paperless.

Under the scheme, each BPL family would be entitled for a total cover of Rs30,000 per family, per annum, on a family floater basis. It would operate through cashless transactions and would cover hospitalisation expenses, taking care of most of the illnesses with as least exclusions as possible.

The central government will assist the states in preparation of projects and monitor and evaluate the implementation of the project, through  a technical cell and the states would put in place an institution for implementing the health insurance programme.

The government feels that the use of smart card would provide interoperability to facilitate its use by migrant labourers and use of IT applications on such a large scale for the poorest of the poor make this scheme unique in nature. The scheme would use both public and private service providers for delivering the insurance package. It would also seek the contribution of Rs30, by way of registration fee, from the BPL beneficiary with a view to inculcating a sense of ownership in them.