Context

• India, as the world’s largest democracy, has long been committed to the principle of ‘Health for All’ under the World Health Organisation’s Universal Health Coverage (UHC)
• This framework emphasizes primary health care (PHC) and aims to reduce out-of-pocket expenditure (OOPE) for medical services.
• However, while policies like the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) have sought to address OOPE through insurance-based models, they have inadvertently shifted focus away from PHC, weakening public health infrastructure and increasing dependence on private health care.

The Challenges of an Insurance-Based Health Model

• Weakening of Primary Health Care (PHC)
  • A strong PHC system is the foundation of an efficient health-care system, ensuring early diagnosis, preventive care, and lower long-term medical costs.
  • However, AB-PMJAY focuses primarily on hospitalization reimbursement, diverting funds and attention away from preventive and community-based care.
  • This shift contradicts the Bhore Committee's recommendation of a pyramid-shaped health system, where PHC forms the base, followed by secondary and tertiary care.
  • Delayed medical interventions – Without strong PHC, many patients seek medical help only at later stages of illness, increasing reliance on costly tertiary care.
  • Hospitals become overcrowded with patients who could have been treated at the primary level, leading to longer wait times and higher medical costs.
  • Preventive care is cheaper and more effective than curative care. Without strong PHC, diseases that could have been managed at an early stage become more severe and expensive to treat.
• Increased Long-Term Costs and Rising OOPE
  • While AB-PMJAY aims to reduce OOPE, it primarily covers hospital-based treatments rather than outpatient consultations, diagnostic tests, or medicines, which account for a significant portion of health expenses for low-income households.
  • Since the scheme mainly reimburses hospital admissions, it discourages early-stage medical consultations, forcing patients to seek hospital-based treatments even for manageable conditions.
  • With increasing demand, private hospitals may inflate charges for procedures and consumables, passing the burden onto patients.
  • Expenses for medications, diagnostics, and follow-up treatments often remain uncovered, forcing patients to pay out of pocket.
• Strengthening of Market-Driven Private Health Care
  • AB-PMJAY’s insurance-based approach has led to a rapid expansion of private health care, reducing the role of government-run hospitals and PHC centres.
  • The increasing privatisation of health care raises concerns about profit-driven motives.
  • Private hospitals operate for profit and may overcharge or prescribe unnecessary treatments to maximize insurance claims.
  • Many private hospitals are urban-centred, leaving rural areas underserved. This forces rural patients to travel long distances for treatment, increasing financial and logistical burdens.
• Exclusion of Informal Workers and Vulnerable Populations
  • India has a large informal workforce, including migrant labourers, daily wage earners, and gig workers, many of whom lack proper documentation to access insurance-based schemes.
  • AB-PMJAY’s digital and formal enrolment process creates barriers for these groups, leading to:
  • Many informal workers do not fully understand the scheme, leading to low enrolment rates and reliance on middlemen for insurance claims.
  • The scheme covers individual hospitalization expenses but does not adequately address the medical needs of entire families.
  • Vulnerable populations, particularly pregnant women and children, require continuous, preventive care rather than hospitalization-focused interventions.

Budgetary Trends: Privatisation and Insurance Expansion

• The 2025 health budget reflects a clear shift towards privatisation and an insurance-driven approach to health care.
• With ₹95,957.87 crore allocated to the Department of Health and Family Welfare and ₹3,900.69 crore to Health Research, there is a strong emphasis on expanding digital medical infrastructure and medical education rather than reinforcing grass-root PHC systems.
• Further, FDI in insurance has been raised to 100% in a bid to improve insurance penetration, particularly in rural areas.
• While this aims to attract private investment and expand coverage, it also raises concerns about:
  • Complexity and Accessibility: Insurance illiteracy prevents vulnerable groups, such as migrant workers and the urban poor, from availing proper benefits, often making them dependent on middlemen.
  • Unregulated Private Sector: Without strong regulations, OOPE may rise due to inflated medical costs and non-covered consumables.

Lessons from Global Models

• India can learn from international experiences in designing effective universal health care systems.
• United States: Over-reliance on private insurance has led to rising medical costs and widening inequalities, leaving uninsured individuals with limited access to essential care.
• Thailand and Costa Rica: These countries rely on general tax revenue, strong public investments, and regulated private insurance to maintain affordable and community-based health care.
• To ensure that India's UHC commitment translates into actual benefits, it is crucial to strengthen public health-care systems rather than disproportionately relying on tertiary-level private insurance models.

Policy Recommendations to Achieve Sustainable and Inclusive Health Care

• Strengthening Primary Health Care: Increased investment in preventive and community-based health services will reduce long-term costs and minimize OOPE.
• Regulating Private Insurance: Safeguards should be put in place to prevent private players from inflating medical costs, ensuring fair pricing and transparent claims processing.
• Comprehensive Health Benefit Packages: Expanding public health-care benefits for informal workers, migrant populations, and the unemployed will ensure true universal access.
• Data-Driven Policy Implementation: With India’s last Census conducted in 2011, outdated population data hinders efficient resource allocation. Periodic updates are necessary to track evolving health-care needs.

Conclusion

• India stands at a critical juncture in its health-care policy; while initiatives like AB-PMJAY have improved financial protection for hospital-based treatments, they fall short of ensuring equitable access to primary and preventive care.
• A balanced approach, focusing on public health investment, regulation of private insurance, and cost-effective community care, is essential for India to uphold its commitment to ‘Health for All.’