Syllabus: Economy
Source: TH
Context: The debate on India’s path to Universal Health Care (UHC) has intensified with rising budgets for PMJAY and State Health Insurance Programmes (SHIPs). Critics argue that these insurance-driven models reinforce for-profit healthcare and neglect public health infrastructure.
About The Rise and Risks of Health Insurance in India:
Introduction:
Universal Health Care (UHC), envisioned by the Bhore Committee (1946), remains distant for India even after eight decades. While PMJAY and SHIPs have expanded formal coverage to over 80% of the population, they raise questions about sustainability, equity, and the future of India’s public health system.
Growth of Health Insurance in India:
- PMJAY (2018): Provides ₹5 lakh cover per household per year for inpatient care, covering 58.8 crore individuals (2023-24).
- State Schemes (SHIPs): Most states run parallel programmes, together covering a similar population with budgets of ~₹16,000 crore.
- Combined Expenditure: ~₹28,000 crore annually, growing at 8–25% in real terms (2018–2024).
- Coverage vs Utilisation: While official coverage is high, only 35% of insured hospital patients could actually use the schemes (HCES 2022-23).
Fault Lines in Health Insurance Expansion
- For-Profit Medicine Bias
- ~2/3 of PMJAY funds flow to private hospitals, reinforcing commercialised healthcare.
- Lack of strong regulation leads to overcharging, unnecessary procedures, and ethical compromises.
- Neglect of Primary Care
- Insurance skews resources towards hospitalisation, ignoring primary and preventive health services.
- With India’s ageing population, tertiary care costs risk crowding out investments in rural PHCs and OPD services.
- Utilisation Challenges
- Awareness gaps: beneficiaries often do not know how to use coverage.
- Private hospitals discourage insurance patients due to low reimbursement rates.
- Disadvantaged groups face greater barriers.
- Discrimination in Care
- Public hospitals prefer insured patients (extra funds).
- Private hospitals prefer uninsured patients (higher billing).
- Leads to inequity within the healthcare system.
- Financial Sustainability & Provider Exit
- Pending dues under PMJAY: ₹12,161 crore, exceeding its budget.
- Over 600 hospitals have exited PMJAY due to delays in reimbursements.
- Fraud & Corruption
- NHA flagged 3,200 hospitals for fraudulent activities (ghost patients, inflated bills, unnecessary surgeries).
- Weak audit systems, lack of transparency in scheme portals.
Structural Risks for UHC
- Underfunded Public Health: India’s public expenditure on health is just 1.3% of GDP (2022) vs world average 6.1%.
- Profit-Driven System: Insurance strengthens private sector dominance without addressing quality gaps.
- Exclusionary Tendencies: Despite high coverage, out-of-pocket expenditure remains one of the highest globally.
International Comparisons
- Thailand, Canada: Social health insurance is a part of UHC but built on non-profit providers, universal coverage, and strong regulation.
- India’s Difference: Insurance is targeted, profit-oriented, and poorly regulated, unlike successful models abroad.
Policy Way Forward
- Strengthen Public Health Infrastructure
- Expand primary health centres, diagnostics, OPD services, and rural health workforce.
- Prioritise preventive care over hospitalisation-centric funding.
- Regulate Private Sector
- Enforce standard treatment protocols, price caps, and strict monitoring of empanelled hospitals.
- Improve Utilisation & Awareness
- Community outreach and digital literacy to help beneficiaries navigate schemes.
- Simplify claims and grievance redressal systems.
- Financial Sustainability
- Ensure timely reimbursement; explore direct budgetary allocations instead of insurance intermediaries.
- Towards True UHC
- Raise public health spending to 2.5% of GDP (National Health Policy 2017 target).
- Move from insurance-driven patchwork to publicly funded, universally accessible healthcare.
Conclusion:
Health insurance schemes such as PMJAY and SHIPs provide temporary relief but risk institutionalising a profit-driven, hospitalisation-heavy system. True UHC requires public investment in primary care, regulation of private providers, and equity-focused reforms. Without these, health insurance remains a painkiller, not a cure, for India’s ailing healthcare system.
