A Tough Pill to Swallow

Dr. Dhairya Shrivastava

By Dr. Dhairya Shrivastava, MBBS, MBA

Dr Dhairya Shrivastava discusses India’s Universal Insurance Program – Ayushman Bharat

In my last blog I outlined the embedded inequities in the Indian healthcare system. This blog will deep dive into the government’s flagship policy, Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB – PMJAY) which aims to provide universal health coverage to citizens of India and bridge health inequities. I will talk about how the policy has been unable to provide quality health services to eligible populations despite its lofty commitments.

Background about AB – PMJAY

The transliteration of the policy’s name is Live Long India – Prime Minister People’s Health Plan. Launched in September 2018 by the Ministry of Health and Family Welfare under the aegis of Prime Minister Modi, the scheme is the Indian government’s national public health insurance fund, which is jointly funded by both union and state budgets. The broad aim of the scheme is to provide the lowest income sub-population free access to health insurance coverage. It is touted to be the largest government sponsored healthcare program globally, as it offers services to 500 million people or 100 million households.


Under the AB – JAY, a family is provided coverage of USD 6,600 (INR 500,000) annually for medical treatment. This can be availed in both public and private empaneled hospitals. The scheme offers cashless payment and paperless recordkeeping through the hospitals. A commendable point is that aims to serve the “poor, deprived rural families” and people in the urban occupational categories of beggars, rag pickers, domestic helps, and street vendors. The 2011 socio-economic and caste census served as the basis of selection of beneficiaries. Among the broader objectives of PM – JAY, the scheme wanted to decrease health-related out-of-pocket expenditures and catastrophic expenditures, as well as accentuate the use of institution-provided health services in the poorest sections.

Shortcomings of AB – PMJAY

Paucity of funds: For 2021-22, the central government allocated USD 860 million (INR 6,400 crore) to the scheme, but after revisions, it has been cut to USD 430 million (INR 3,200 crore). As healthcare is a chronically underfunded space in India, such reductions not only ignore the current supply gaps, but also delay healthcare infrastructure and capacity. A layman can also understand that even if 5% of the enrolled (5 million households) claim 20% of their eligible USD 6,600 (INR 500,000) annually, the scheme would require a budget of USD 6720 million (INR 50,000 crores).


Lack of outpatient coverage: Very surprisingly, the AB – PMJAY does not cover outpatient expenditures, whether or not they are healthcare related. As the main beneficiaries of the AB – PMJAY are daily wage earners, they often don’t get hospitalized for fear of losing income. Also, there is no data captured by the National Statistical Office (NSO) Health Survey on the usage of outpatient facilities. This clearly portrays the policy’s failure to address the grassroot issues that its beneficiaries face.


No significant reduction in out-of-pocket expenditure: In a 2020 study, Garg et al found out that in the state of Chattisgarh, AB – PMJAY was unable to mend the shortcomings of previous government funded health insurance schemes. The scheme has not decreased health-related out-of-pocket expenditures or substantially increased the use of hospital care. In 2019,

Public facilitiesPrivate facilities
PM-JAY enrolledINR 3,078INR 19,375
Not enrolled at allINR 2,974INR 20,261

Table showing the Average Out-of-Pocket Expenditure for Hospitalization in Chattisgarh


Fraudulent activities: Many health facilities have been known to engage in unscrupulous activities and profit from public funds. Many instances of fraud have emerged under the scheme. For example, some hospitals have recorded surgeries being conducted on patients who were already discharged, and there are records of dialysis occurring in hospitals where no such facilities existed in the first place.  

Reinventing the wheel...

The scheme is essentially trying to reinvent the wheel, as India already has government-funded healthcare services, in addition to private entities supplying healthcare services. AB – PMJAY has just added another layer of  protection to the bottom-most rung against unforeseen hospitalizations in private and public hospitals.


This added layer of protection is good, however, no yardsticks have been put forth regarding the quality of the services being dished out under the scheme. Quality of healthcare services, especially in the interiors of the country, has always been an issue.


Further, supply of secondary and tertiary care in rural areas and the interiors is very constrained. No doubt, the AB – PMJAY is the largest scheme globally, but serious lessons need to be learned if the grand aspirations of quality healthcare are to be materialized, starting with adequate funding of the scheme.


Additionally, services need to be given in accordance with the needs of the beneficiary populations, like outpatient services, and independent third-party quality councils need to be set up for curbing corruption. 

What's next on A Tough Pill to Swallow

Inequities exist not only in access and affordability but also in the availability of drugs in the first place. In the next blog I take on the case of orphan drugs in India and how legislations related to it influence the development of drugs for rare diseases.

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