The scheme has three inherited problems of inefficiency (reflected by
unnecessary admission and longer hospital stay), cost escalation (real term increase
of 14 percent per annum during 1988-1997) and inequity of per capita budget
subsidy (17). All players have no cost concerns; public hospitals have incentives to
over-charge in order to cross subsidize their MWS patients, for profit private hospitals
had motives to overcharge the scheme. When beneficiaries were faced with no price
tag, they were not cost conscious and took it for granted. Problems were compounded
by the fact that the Department of Comptroller General was neither capable to
counter-act overcharging nor able to introduce a reasonable policy intervention