IAS/UPSC Coaching Institute  

17 Mar 2025 : From insurance-driven private health care to equity

Editorial 2: From insurance-driven private health care to equity

Context

The government should prioritize investment in preventive, community-based healthcare that is accessible to everyone.

 

Introduction

India, as the world's largest democracy, has long aimed to provide ‘Health for All’ under the World Health Organization's (WHO) Universal Health Coverage (UHC) framework. This approach focuses on primary health care (PHC) and reducing out-of-pocket expenses (OOPE) for medical treatment.

  • Over time, India’s health policies have influenced budget allocations and shaped healthcare services.
  • The Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) helps reduce OOPE by covering hospitalization, surgeries, and advanced treatments.
  • However, this insurance-based system prioritizes tertiary care while neglecting the UHC goal of strengthening primary healthcare.
  • Although AB-PMJAY improves financial protection, it discourages people from using primary healthcare, weakens public health infrastructure, and strengthens private-sector healthcare, which is driven by market forces.

 

Neglect of primary health-care systems

  • Reduces the burden on secondary and tertiary care.
  • Ensures cost-effective healthcare by focusing on prevention and early treatment.
  • When health is recognized as a citizen’s right, the government must provide accessible and affordable PHC, whether through public services or strong support systems.

 

Challenges with AB-PMJAY

  • Hospitalization-based reimbursement shifts focus away from preventive and community-based healthcare.
  • Increases long-term costs and dependence on private hospitals.
  • Fails to effectively reduce out-of-pocket expenses (OOPE).
  • Contradicts the Bhore Committee’s vision of a pyramid-shaped health system with a strong PHC base leading to secondary and tertiary care.
  • Since 2018, the Ayushman Bharat Digital Mission dashboard reports:
    • Over 36 crore Ayushman cards issued.
    • More than 31,000 hospitals empaneled.

 

Concerns Over Budget and Privatization

  • Despite health being a state subject, PM-JAY shifts funds to private insurance companies, reducing state control.
  • The 2025 Budget allocates ₹9,406 crore to AB-PMJAY—₹2,000 crore more than the previous year—promoting privatization and insurance-based financing.
  • Uncertainty remains on whether this funding will:
    • Reduce health costs for marginalized groups.
    • Support primary healthcare to lower OOPE for Below Poverty Line (BPL) cardholders.

 

Health Budget and Policy Changes: Impact on Public Healthcare

Category

Details

Budget Allocation

₹95,957.87 crore for Department of Health & Family Welfare and ₹3,900.69 crore for Department of Health Research.

Priority Shift

Focus on medical digital infrastructure and medical education expansion, while Primary Health Care (PHC) gets less attention.

Declining Support for National Health Mission (NHM)

NHM, crucial for grassroots healthcare, receives a smaller share, indicating a reduced government role in universal healthcare. This increases reliance on private sector players.

Impact on Citizens

Insurance-based models consolidate wealth while increasing public healthcare costs, shifting the burden to individuals.

FDI Increase in Insurance

FDI cap raised to 100% (previously 74% in 2021) to boost India’s low insurance penetration, particularly in rural areas, and attract new market players.

Goal of ‘Insurance for All’ (2047)

The Insurance Regulatory and Development Authority of India (IRDAI) expects this move to bring in capital and expand coverage.

Concerns for Informal Workers

Millions of informal sector workers lack health security due to the absence of universal health coverage (UHC).

Barriers to Insurance Access

Insurance illiteracy forces many, especially migrants and non-literate workers, to depend on middlemen, leading to exploitation.

Rising Out-of-Pocket Expenditure (OOPE)

Without strict regulation, medical costs may rise, leaving essential items uncovered and increasing expenses for patients.

Uncertain Coverage for Health Workers

The inclusion of ASHA workers and grassroots healthcare providers in health coverage remains unclear.

Data Gaps Hindering Policy Planning

Outdated data (last Census in 2011, last labour survey in 2020-21) makes it difficult to allocate resources efficiently for social protection schemes.

 

Lessons from global models

  1. Risks of Private Insurance Dominance
    • In the U.S., reliance on insurance has led to high healthcare costs, increasing inequalities, and restricted access for uninsured individuals.
    • Public backlash over claim denials highlights the dangers of corporate-controlled healthcare.
  2. Lessons from Global Models
    • Thailand’s Tax-Funded Universal Coverage Scheme:
      • Funded through general taxation.
      • Focuses on strong public health investments.
      • Regulates private insurance while prioritizing primary and community-based care.
    • Costa Rica’s Mandatory Insurance System (Caja Costarricense de Seguro Social):
      • Ensures universal coverage for all citizens.
      • Strengthens public healthcare infrastructure over private-sector dominance.
      • Emphasizes preventive and community healthcare services.
  3. India’s Policy Priorities
    • India must reassess its healthcare approach, shifting focus away from tertiary private insurance models.
    • Increased investment in preventive and community-based healthcare is necessary to ensure universal access.
  4. Addressing Healthcare Gaps
    • Policies must cater to informal workers, unemployed individuals, migrants, and vulnerable populations.
    • With rising climate-related health risks, India must adopt resilient and inclusive healthcare strategies.

 

Conclusion

To achieve universal health coverage (UHC), comprehensive public health benefit packages, cost-control measures, and programs to reduce out-of-pocket expenses (OOPE) are essential. Safeguards must be implemented to prevent private insurance from inflating healthcare costs, ensuring that India's commitment to "Health for All" is a reality, not just a slogan.