Why in news?
India’s health‑care policy has pivoted towards publicly funded insurance schemes such as Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (PMJAY) and various state programmes. In late August and early September 2025 several commentators warned that this insurance‑centric approach, though well‑meaning, may entrench inequalities and undermine investment in public health infrastructure.
Background
The Bhore Committee in 1946 envisioned universal health care funded by the state. However, India’s public health expenditure has remained around 1.3 per cent of GDP, far below the global average. To improve financial protection, the government launched PMJAY in 2018, offering coverage of ₹5 lakh per family for hospitalisation. By 2024–25 the scheme had enrolled nearly 59 crore people with a budget of about ₹12,000 crore. State health insurance programmes together add another ₹16,000 crore, and officials claim that about 80 per cent of the population is covered.
Benefits and features
- Tax‑funded premiums: PMJAY and state schemes are financed through public funds rather than individual premiums, ensuring that the poorest can enrol without paying.
- Coverage limits: Beneficiary families receive up to ₹5 lakh annually for secondary and tertiary hospital care. Outpatient services and medicines are generally not covered.
- Network of hospitals: Roughly half of the empanelled hospitals are private and half are public. Cashless treatment is promised at listed facilities.
- Rapid expansion: The schemes now include the elderly and have expanded to cover high‑cost procedures such as organ transplants.
Key challenges
- Profit‑driven healthcare: Two‑thirds of insurance reimbursements go to private hospitals. Critics say this encourages unnecessary admissions and expensive procedures, as providers chase payments.
- Neglect of primary care: Insurance money flows to hospital care while primary health centres remain underfunded. Preventive services, screenings and basic medicine stocks are still inadequate.
- Low utilisation and awareness: Surveys suggest that only about one‑third of eligible families have used their insurance benefits. Complex paperwork, lack of information and reluctance of some hospitals to accept PMJAY patients limit access.
- Discrimination and exclusion: Some private hospitals prefer fee‑paying patients over insured ones. Public hospitals may prioritise insured patients to earn reimbursements, leaving the uninsured worse off.
- Provider grievances: Delayed payments and low reimbursement rates have led more than 600 hospitals to withdraw from PMJAY. As of 2025, pending dues exceeded ₹12,000 crore.
- Corruption and fraud: The National Health Authority has flagged over 3,000 hospitals for fraudulent claims, such as billing ghost patients or performing unnecessary surgeries. Weak audits enable malpractice.
- Structural weakness: Relying on insurance without building public hospitals makes the system vulnerable. Health insurance is a financial mechanism, not a substitute for doctors, nurses or clinics.
Way forward
- Strengthen public health: Increase government spending to 2–3 per cent of GDP, upgrade primary health centres and hire more health workers. Integrated Health and Wellness Centres under Ayushman Bharat should provide comprehensive care.
- Regulate private providers: Enforce standard treatment protocols, transparent pricing and timely claim settlements. Penalise hospitals that deny services or indulge in fraud.
- Improve awareness: Simplify enrolment and claim procedures. Use community health workers and digital platforms to inform beneficiaries of their rights.
- Promote social health insurance: Look at models such as Canada and Thailand where public hospitals and non‑profit insurers deliver universal care. Insurance should complement, not replace, a strong public system.
- Adopt technology for monitoring: Real‑time audit systems and AI‑based analytics can detect anomalies early and reduce fraud.
Insurance can protect families from catastrophic expenses, but it must be embedded in a well‑funded public health system. Without structural reforms the current expansion risks creating a two‑tier system where only those who can navigate the process receive care.