Ayushman Bharat and the False Promise of Universal Healthcare

What implications will a health insurance scheme that relies on private capital have for India’s healthcare system?


The COVID-19 pandemic has exposed numerous structural failures of the government. Among them is a failed healthcare system. The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY), launched in 2018, is the Bharatiya Janata Party’s flagship healthcare insurance scheme, stating its commitment to “leave no one behind” with the promise of providing health cover up to ₹5 lakh for over 10 crore people. This is to be done by relying upon private healthcare providers for service delivery. However, amidst the crisis caused by the coronavirus, this health cover has not proved effective. A recent report by the National Health Authority notes that average weekly claims under the scheme have dipped by 51% during the lockdown period. More worryingly, claims for cancer care and child deliveries fell by 64% and 26% respectively. 

While the central government has also announced that the AB PM-JAY scheme will be made available to migrant workers returning home, its efficacy remains uncertain. So far, only 300-odd COVID-19 treatments have fallen under the scheme. Notwithstanding the pandemic, it remains to be seen if the government can provide universal healthcare to its citizens. Previous attempts—such as the Rashtriya Swasthya Bima Yojana—are regarded as failures for following a flawed insurance-based approach that, like the AB PM-JAY, relies upon private health providers for medical care.

The World Health Organization defines universal healthcare as “all people and communities can use the promotive, preventive, curative, rehabilitative and palliative health services they need, of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship.” With the government’s decision to restart economic activity in the country, there has been a spike in the number of people testing positive for COVD-19. Returning migrants are also testing positive for the virus, which will place added stress on rural healthcare. This reading list looks at the AB PM-JAY’s ability to provide healthcare services for all, especially to those who cannot afford costly medical care, and considers the implications of privatising healthcare by no longer viewing it as the state’s responsibility to its citizens.

1) An Absence of Private Healthcare Infrastructure

Analysing data from the Registry of Hospitals in Network of Insurance (ROHINI), Mita Choudhury and Pritam Datta find that only 3% of private hospitals are eligible for the Ayushman Bharat scheme. By their estimation, on average, there are only 1.28 empanelled hospitals per one lakh population that can provide healthcare to patients under the scheme. Further, empanelled hospitals lack the infrastructure required to treat patients.

Bulk of the hospitals empanelled by insurance companies had a bed strength of less than 50. Of these, about two-thirds had less than 30 beds. At the all-India level, about 65% of hospitals in the data set had bed strength between 11–50 beds, 13% between 50–100 beds and the remaining 8% above 100 beds (Figure 4). This corresponds to the findings of a number of primary surveys which have pointed out that most private hospitals in the country are small establishments with less than 50 beds (Bhat 1993; Muraleedharan 1999).

Moreover, Choudhury and Datta contend that the concentration of empanelled hospitals is limited to the richer states of the country.

The strong correspondence between private hospitals empanelled by insurance companies and private hospitals empanelled in GSHI schemes in the states of Andhra Pradesh, Telangana, Tamil Nadu and Karnataka suggests that the potential for empanelment of private hospitals in AB-PMJAY may be low in relatively poor states of the country …  in states where the empanelment of private hospitals by insurance companies is low, the distribution of private hospitals is also concentrated in a few pockets. Also, the concentration of private hospitals increases as one moves more and more towards specialised health services, even in the relatively better-off states.

2) Problems on the Ground 

Shah Alam Khan writes that during the scheme’s first year of implementation, there were 1,200 cases of corruption related to AB PM-JAY beneficiaries.  

Investigations have been completed in 376 hospitals and first information reports (FIRs) filed against six hospitals. After the conclusion of investigations, a penalty of Rs 1.5 crore has been levied and 97 hospitals have been delisted from the scheme. Within the private sector, 71% of the hospitals empanelled have less than 25 beds and offer non-specialised care (Mani 2019). The document, “Lessons Learned in one year implementation of PM–JAY,” available on the AB–PMJAY website, enlists fraud as a challenge that needs to be tackled for better implementation (National Health Authority 2019). Thus, the potential problems of “profit-motivated” supplier-induced demand by private healthcare providers and corrupt practices are possible ethical burdens of the scheme (Gopichandran 2019).

Inequity in access is also a serious issue, especially for the poor who suffer from serious ailments. Khan notes that chronically ill patients are being denied treatment under the scheme as their illness is not “listed” among the medical packages AB PM-JAY provides for. This is despite having valid documentation.

These patients, it is reported, are also deprived of the benefits under the RAN [Rashtriya Arogya Nidhi] scheme since they are now AB–PMJAY cardholders (Saxena 2019). It has been noted that the AB–PMJAY scheme provides coverage of medicines post discharge up to 15 days only. A large number of patients, particularly cancer patients, require long-term medication on an outpatient basis. In the past, such patients could get medicines (on an outpatient basis) through the RAN scheme. The need for admission as a criterion to avail benefits under the AB–PMJAY is a big blow to this cohort of patients. This has not only restricted the reach of the benefits to the poorest of the poor, but has also worked against the principles of the RAN umbrella scheme, which is to give financial benefit to the poor in the treatment of cancer.

3) A Push towards the Privatisation of Healthcare

At present, the cover offered by AB PM-JAY covers less than 30% of hospital charges. Shailender Kumar Hooda argues that without substantial funding, the scheme is likely to fail. The insurance-based system to fund the scheme does not work on the principle of resource-pooling, but rather the government earmarks funds for the project. Consequently, out-of-pocket payments for medical care are not covered under the scheme, and near-poor and near middle-income families who are mostly unable to afford healthcare remain excluded from the insurance coverage. In the scheme’s current form, covering those in need would result in private capital monopolising healthcare.

If the public system fails to meet outpatient and other demands of the general population, the next level of argument would be to cover outpatient care under insurance. The fragile condition of the public system might force the government to cover all sections of society under the insurance umbrella to meet both inpatient and outpatient care demands. Political economy comes into play here, where the government feels a compulsion to ensure protection to the entire population and for all type of care. This will bring a fundamental transformation in the existing healthcare system where the rule of game will change in favour of privatisation with private sector expected to provide all types of care and treatments. The government’s role would be minimal, to provide financial protection. The changing nature of budgetary priority will minimise the political decision-making powers of the government on financing, management, operation and establishing a robust healthcare system through the input line budget, as different stakeholders will come into play in determining the budget.

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