A status check of universal health coverage in India

‘Evidence shows that health insurance is no elixir for developing countries’
| Photo Credit: Getty Images

A little over six years ago, what has been proclaimed as the world’s largest health assurance scheme, namely, the Centre’s Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), was rolled out in the face of hitherto scarce evidence of publicly funded health insurance (PFHI) affording significant levels of financial risk protection, particularly to the marginalised. Another point of contention was that the scheme would gobble up already scarce resources meant for primary health care and channel them to feed commercial interests. Ever since then, two conspicuous features have characterised AB-PMJAY’s trajectory: first, the poor, yet lately improving, utilisation of central budgetary allocations to the scheme; and second, a spirited scramble on the part of government and quasi-government structures to demonstrate evidence of financial risk protection in favour of AB-PMJAY. As the Economic Survey 2024-25 celebrates the achievements of AB-PMJAY and the Union Budget 2024-25 has notched up its allocation for the scheme, a quick status appraisal is merited.

What the evidence really says

The Economic Survey 2024-25, among other government reports, states that AB-PMJAY has resulted in over ₹1.25 lakh crore worth of savings in out-of-pocket (OOP) expenses. Studies on which such observations are premised infer that PFHI coverage has resulted in increased health-care utilisation and reduced catastrophic health expenditure (CHE) and OOP expenses on inpatient care. However, the findings below the surface are not as encouraging, particularly in the current context of budgetary allocation patterns. Persistent criticism of PFHI in India has been that it does not cover outpatient care, which accounts for the largest share of OOP expenses. Predictably, while schemes such as PFHI have reduced the financial burden of inpatient care, the concomitantly increased utilisation of outpatient care ensures that the scheme has had little impact on overall financial risk protection. CHE levels among insured households continue to be high, with no significant reductions in outpatient OOP expenses.

Frequently, inpatient care insurance is linked to financial risk protection while primary health-care provision is related with improving health outcomes. However, such distinctions are largely artificial, and while inpatient care has an acute role in distress financing, evidence shows that outpatient care costs also contribute majorly to financial hardships. Savings accrued from improved primary health care and social investments far outweigh those from hospitalisation insurance, particularly in the developing country context, and any assessments of financial risk protection must be holistic. While AB-PMJAY can be seemingly promising in terms of reducing inpatient costs among its beneficiaries, the bigger question of primary care stares at us as the National Health Mission (NHM) allocations continue to stagnate, even as health and wellness centres get ennobled under the rechristened title, “Ayushman Arogya Mandirs”.

Insidious challenges

Developing countries looking to provide universal health insurance typically encounter some burning questions, foremost among them being raising awareness, enrolling beneficiaries, and collecting premiums, which can be expensive exercises. Non-contributory entitlement-based programmes such as AB-PMJAY can seem to circumvent such questions, but only until they start providing coverage that is anywhere close to being universal. Where total OOP expenses amount to lakhs of crores, it is obvious how far a few thousand crores of public investment in AB-PMJAY can go. The measly share of PFHI in India’s total health spending is a telling fact. However, blanket prescriptions to increase spending are of no use. Increased spending demands commensurately robust institutions which can absorb them and produce health care, and this remains one of the major short- and medium-term challenges before PFHI even today. And once the utilisation of PFHI schemes enters an upward slope, its budgetary demands will grow rapidly and exponentially. A parallel strengthening of primary care institutions is very unlikely, if at all feasible, and can induce wasteful and sticky structural imbalances in health care.

The far better performance of other government health insurance schemes such as Employees State Insurance (ESI) and the Central Government Health Scheme (CGHS) at providing financial protection, which cover outpatient care, testify how Ayushman Bharat has a long way to go as far as delivering on its primary care promises is concerned. Nearly two-thirds of outpatient care is catered to by the private sector. Rapid rollout of universal health coverage (UHC) often entails contracting out services to the private sector through public private partnerships, as in the case of AB-PMJAY. The fact that such widespread partnerships in outpatient care remain improbable in the face of stagnant budgetary allocations to primary care paints a bleak future for UHC, where the gap between hospitalisation and primary care keeps widening increasingly. And the fact that increased AB-PMJAY allocations are likely to come at the expense of primary care is keenly dismaying.

A ray of hope

Some current statistics on India’s health spending patterns are indeed promising. The share of government health expenditure in total health expenditure has increased, and the share of OOP expenditure has seen a declining trend. Recent national surveys also indicate an increasing share of the public sector in overall health-care provision. Such developments clearly paint the imperative of investing in public health care, albeit addressing existing socio-economic and class disparities in health-care access. Evidence shows that health insurance, although at times seemingly the most feasible option, is no elixir for developing countries. The fact that when it comes to financial risk protection in health, some States with low PFHI coverage but higher per capita government health expenditure outperform their counterparts with higher PFHI coverage but lower per capita government expenditure is a felicitous example.

Dr. Soham D. Bhaduri is a public health specialist, independent researcher, and former editor of The Indian Practitioner