New Delhi: To effectively implement the government’s ambitious mega health insurance scheme touted as “Modicare”, the centre and states need to work together under federal institutions like the GST (Goods and Services Tax) Council, finance minister Arun Jaitley said on Friday.

Speaking at a post-Budget event, Jaitley said there is no statutory mechanism at present like the GST Council wherein the centre and the states can coordinate when it comes to expenditures on health, agriculture and social sector which are in the concurrent list with legislative powers for both the states and the centre.

The idea was first mooted by chief economic adviser in the finance ministry Arvind Subramanian in his latest Economic Survey where he said the GST Council shows that cooperative federalism is a “technology” for reforms in several other areas.

“Can there be a way or a mechanism where centre’s spending is complemented by states. By coordinating the expenditure for healthcare, the centre and states can do a much better and bigger job,” he added.

The National Health Protection Scheme (NHPS) aims to offer health insurance up to Rs5 lakh per family per year, covering over 100 million vulnerable families, benefitting about 500 million people. Both secondary and tertiary care hospitalization will be covered.

Jaitley said the scheme was originally envisaged in the Niti Aayog by its member Dr Vinod Paul. Prior to joining the Niti Aayog, Paul was head of the Department of Pediatrics at the All India Institute of Medical Sciences (AIIMS).

The finance minister said the initial idea was for a universal healthcare scheme but given the huge costs involved it was decided to start with 100 million families out of the total 250 million Indian families. “It will be run under either a trust or an insurance model but not on a reimbursement model. The date of implementation will be sometime next financial year beginning 1 April. This will be entirely state-funded. I have already provided Rs2,000 crore for this,” he added.

Jaitley said the proposed mega merger of the three general insurance companies to create one big insurance company as announced in the Budget will come in handy, especially at a time when India is launching schemes like crop insurance and the mega health insurance scheme.