‘Evidence shows that health insurance is no elixir for developing countries’
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What the evidence really says
The Economic Survey 2024-25, among other government reports, states that AB-PMJAY has resulted in over ₹1.25 lakh crore worth of savings in out-of-pocket (OOP) expenses. Studies on which such observations are premised infer that PFHI coverage has resulted in increased health-care utilisation and reduced catastrophic health expenditure (CHE) and OOP expenses on inpatient care. However, the findings below the surface are not as encouraging, particularly in the current context of budgetary allocation patterns. Persistent criticism of PFHI in India has been that it does not cover outpatient care, which accounts for the largest share of OOP expenses. Predictably, while schemes such as PFHI have reduced the financial burden of inpatient care, the concomitantly increased utilisation of outpatient care ensures that the scheme has had little impact on overall financial risk protection. CHE levels among insured households continue to be high, with no significant reductions in outpatient OOP expenses.
Frequently, inpatient care insurance is linked to financial risk protection while primary health-care provision is related with improving health outcomes. However, such distinctions are largely artificial, and while inpatient care has an acute role in distress financing, evidence shows that outpatient care costs also contribute majorly to financial hardships. Savings accrued from improved primary health care and social investments far outweigh those from hospitalisation insurance, particularly in the developing country context, and any assessments of financial risk protection must be holistic. While AB-PMJAY can be seemingly promising in terms of reducing inpatient costs among its beneficiaries, the bigger question of primary care stares at us as the National Health Mission (NHM) allocations continue to stagnate, even as health and wellness centres get ennobled under the rechristened title, “Ayushman Arogya Mandirs”.
Insidious challenges
Developing countries looking to provide universal health insurance typically encounter some burning questions, foremost among them being raising awareness, enrolling beneficiaries, and collecting premiums, which can be expensive exercises. Non-contributory entitlement-based programmes such as AB-PMJAY can seem to circumvent such questions, but only until they start providing coverage that is anywhere close to being universal. Where total OOP expenses amount to lakhs of crores, it is obvious how far a few thousand crores of public investment in AB-PMJAY can go. The measly share of PFHI in India’s total health spending is a telling fact. However, blanket prescriptions to increase spending are of no use. Increased spending demands commensurately robust institutions which can absorb them and produce health care, and this remains one of the major short- and medium-term challenges before PFHI even today. And once the utilisation of PFHI schemes enters an upward slope, its budgetary demands will grow rapidly and exponentially. A parallel strengthening of primary care institutions is very unlikely, if at all feasible, and can induce wasteful and sticky structural imbalances in health care.
The far better performance of other government health insurance schemes such as Employees State Insurance (ESI) and the Central Government Health Scheme (CGHS) at providing financial protection, which cover outpatient care, testify how Ayushman Bharat has a long way to go as far as delivering on its primary care promises is concerned. Nearly two-thirds of outpatient care is catered to by the private sector. Rapid rollout of universal health coverage (UHC) often entails contracting out services to the private sector through public private partnerships, as in the case of AB-PMJAY. The fact that such widespread partnerships in outpatient care remain improbable in the face of stagnant budgetary allocations to primary care paints a bleak future for UHC, where the gap between hospitalisation and primary care keeps widening increasingly. And the fact that increased AB-PMJAY allocations are likely to come at the expense of primary care is keenly dismaying.
A ray of hope
Some current statistics on India’s health spending patterns are indeed promising. The share of government health expenditure in total health expenditure has increased, and the share of OOP expenditure has seen a declining trend. Recent national surveys also indicate an increasing share of the public sector in overall health-care provision. Such developments clearly paint the imperative of investing in public health care, albeit addressing existing socio-economic and class disparities in health-care access. Evidence shows that health insurance, although at times seemingly the most feasible option, is no elixir for developing countries. The fact that when it comes to financial risk protection in health, some States with low PFHI coverage but higher per capita government health expenditure outperform their counterparts with higher PFHI coverage but lower per capita government expenditure is a felicitous example.
Dr. Soham D. Bhaduri is a public health specialist, independent researcher, and former editor of The Indian Practitioner
Published – March 18, 2025 04:00 am IST
