ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Experiences with Government-sponsored Health Insurance Schemes in Indian States

A Fiscal Perspective

Experiences with Government-sponsored Health Insurance Schemes in Indian States

The implications of expanding government-sponsored health insurance schemes in India are analysed from a fiscal perspective. The experiences of two of the earliest and largest GSHI schemes of the country implemented in Andhra Pradesh and Tamil Nadu are examined. The results suggest that the expansion of the GSHI schemes may skew expenditure away from primary and secondary care towards tertiary care if the fiscal space is limited. A competitive public health system may help in containing costs and the corresponding fiscal burden. The effectiveness of public spending through such schemes is ambiguous.

 

India has taken a major stride in expanding government-sponsored health insurance (GSHI) schemes in the last decade. Several GSHI schemes have been initiated at the central and state government levels, of which the most recent and largest has been the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). The AB-PMJAY is a countrywide scheme that aims to significantly upscale the earlier initiatives. The scheme has been rolled out to cover 10 crore underprivileged households and offers a benefit package that is wider than any other scheme at the national level. This has opened up the possibility of a significant increase in public spending on GSHI schemes in India. However, not much is known about the fiscal implications of expanding GSHI schemes. This paper examines the experiences with two of the earliest and largest GSHI schemes implemented in India from a fiscal perspective.

The analysis assumes importance because the AB-PMJAY has been rolled out at a time when public spending on health receives a low priority, and fiscal space is limited at both levels of government. Although state governments bear only 40% of the cost of the scheme (the remaining is borne by the central government), the concentration of eligible beneficiaries in some of the resource-constrained states with low levels of public spending can potentially impose a substantial burden on their public resources. The increased fiscal burden may lead to compression of other health spending, particularly in fiscally constrained states. Although the initiatives examined here pertain to relatively less fiscally constrained states, they provide lessons on the potential fiscal implications of GSHI schemes in fiscally constrained states as well.

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Updated On : 4th Oct, 2021

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