Context

• The idea of Universal Health Care (UHC) has long been central to the vision of human development in India.
• The gap between aspiration and reality has led to increasing reliance on health insurance schemes as a perceived route to UHC.
• Yet, this approach, dominated by the Pradhan Mantri Jan Arogya Yojana (PMJAY) and various State Health Insurance Programmes (SHIPs), raises significant concerns about equity, efficiency, and sustainability.

The Expansion of Health Insurance in India

• In recent years, health insurance has emerged as the primary strategy for expanding access to health care in India.
• PMJAY, launched in 2018 under Ayushman Bharat, and its state-level counterparts offer annual coverage of up to ₹5 lakh per household, focusing exclusively on in-patient hospitalisation.
• By 2023–24, PMJAY covered nearly 58.8 crore individuals with an annual budget of ₹12,000 crore, while SHIPs together accounted for another ₹16,000 crore.
• Despite forming only a fraction of India’s total health expenditure, these schemes have grown rapidly, with budgets expanding by up to 25% annually in some states.
• While insurance has provided some relief to patients facing overcrowded or underperforming public facilities, its structural weaknesses threaten to deepen the fault lines of India’s health-care system.

Structural Weaknesses of the Insurance Model

• The Idea of Profiteering
  • One of the most serious problems with insurance-led health care is the promotion of for-profit medicine.
  • Evidence shows that about two-thirds of the PMJAY budget flows to private hospitals, many of which operate with minimal regulation.
  • Instead of correcting the dominance of profit-seeking providers, health insurance reinforces it.
  • This commercialisation is particularly troubling because the pursuit of profit often conflicts with patient welfare and leads to unnecessary or inflated treatments.
• Distortion of Health Priorities
  • Insurance schemes disproportionately channel resources toward hospitalisation and tertiary care, while neglecting primary and outpatient services.
  • For a country where many citizens still struggle with basic access to preventive and community-level care, this imbalance risks worsening inefficiency and inequity.
  • The inclusion of all elderly citizens in PMJAY, while seemingly progressive, could further skew expenditure toward costly hospital care at the expense of essential services.
• Utilisation Challenges
  • Although official figures claim coverage for nearly 80% of the population, surveys show that only about one-third of insured patients successfully use their benefits.
  • Lack of awareness, bureaucratic hurdles, and discouragement by hospitals reduce the practical impact of insurance.
  • Consequently, out-of-pocket spending remains high, undermining the schemes’ core purpose of financial protection.

Some Other Problematic Aspects of Targeted Health Insurance

• Inequities and Discrimination
  • Targeted health insurance also creates new forms of inequality.
  • Private hospitals often prefer uninsured patients who can be charged higher fees, while public hospitals favour insured patients who bring additional revenue.
  • This results in discriminatory treatment, with patients pressured to enrol on the spot or denied services altogether.
  • Even among the insured, marginalised groups face the greatest obstacles in accessing benefits, reproducing existing social disparities in health outcomes.
• Administrative and Ethical Failures
  • The implementation of health insurance schemes has been plagued by financial and ethical challenges.
  • Hospitals frequently complain of delayed payments, with pending dues under PMJAY alone exceeding ₹12,000 crore, more than the scheme’s annual budget.
  • This has led many hospitals to suspend services or withdraw from the programme altogether.
  • Additionally, widespread fraud and corruption, from unnecessary procedures to outright denial of eligible treatments, compromise both patient safety and public trust.
  • Weak monitoring and the lack of transparent audit reports further exacerbate these problems, leaving irregularities unchecked.

The Deeper Crisis: Underinvestment in Public Health

• Ultimately, the reliance on insurance schemes reflects a deeper structural problem: chronic underinvestment in India’s public health system.
• At just 1.3% of GDP in 2022, India’s public health spending is among the lowest in the world, far below the global average of 6.1%.
• No country has achieved genuine UHC without strong public health infrastructure, and India’s continued neglect of this sector undermines any insurance-led strategy.
• Some states have taken steps to strengthen public services, with positive outcomes, but progress remains uneven and insufficient to meet national needs.

Conclusion

• Health insurance, as currently implemented in India, functions more as a temporary painkiller than as a cure for the systemic ills of the health sector.
• While schemes like PMJAY and SHIPs offer some relief to patients, they cannot substitute for a robust and accessible public health system.
• The over-reliance on profit-driven private providers, the neglect of primary care, barriers to utilisation, and rampant inefficiencies all highlight the inadequacy of an insurance-centric approach.
• For India to move meaningfully toward UHC, it must confront the underlying deficit in public health investment and reorient its strategy toward equitable, non-profit, and preventive care.