PMJAY: The promises and challenges of a bold experiment


  • The Ayushman Bharat—Pradhan Mantri Jan Arogya Yojana (PMJAY), a health insurance scheme announced in the last budget, was launched on 23 September, towards the fag end of this government’s tenure. It will take a couple of years before this programme can be objectively assessed.
  • However, the promises and possible challenges deserve close scrutiny as it is arguably the most ambitious social health insurance (SHI) programme ever launched anywhere in the world.
  • Such an ex-ante scrutiny need not be purely speculative as the main components of the programme are now known and there is a wealth of SHI experience from many other countries.

The Significance:

  • The significance of PMJAY has to be seen in the context of existing health conditions and health service delivery systems in India.
  • With an average life expectancy of 68.3 years, India trails all its Asian neighbours barring Afghanistan, Pakistan, Myanmar and Laos.

Healthcare an Important Factor:

  • Healthcare is one important factor among several that determine health outcomes along with income, nutrition, and hygiene
  • The World Health Organization recommends that a country should spend at least 4% of its gross domestic product (GDP) on health
  • India’s health expenditure at 3.9% of GDP is comparable to this norm
  • However, the health ministry’s National Health Accounts show that total government health expenditure is only an appalling 1.1% of GDP
  • Well over 70% of health expenditure is privately financed
  • More than 62% is direct out of pocket (OOP) spending by patients as against the WHO-recommended OOP ceiling of 40%.

Preventive Health Spending:

  • Preventive health spending is more equitable and much more cost effective in improving health standards
  •  But less than a quarter of India’s meagre public health expenditure is allocated to preventive care
  • There is thus the continuing high incidence of communicable diseases
  • There is a rising incidence of non-communicable diseases with income growth, lifestyle changes and environmental degradation, resulting in a rising total burden of disease.

Challenges to PMJAY

  • Unknown financial cost of the programme
  1. No actuarial database is available to yield a probability distribution of the expected number of different health episodes requiring different treatments at varying costs
  2. Without such a database, insurance agencies cannot estimate the required premium to adequately cover the pooled risk —the ultimate cost of the programme
  • Coverage erosion
  1. A pattern observed in several countries is that when costs escalate, the package covered by SHI is shrunk and co-payments and coverage caps are introduced, thereby raising the burden of OOP spending
  2. Some private providers might be pushing high-cost treatments not covered by SHI to enhance their profit margins, thereby further raising the OOP burden on patients
  • Implementation failure
  1. PMJAY will ride on the first tier of Ayushman Bharat, a network of 150,000 HWCs spread throughout the country
  2. Fixing this weak primary care foundation of India’s public healthcare system is more urgently needed than providing insurance for secondary and tertiary care

Way forward

  1. These challenges do not imply that PMJAY will fail but that it is only a first step on the road to universal SHI
  2. As a follower country, India can learn from the experiences of others
  3. The Thai model with excellent SHI coverage and OOP spending down to 18% is increasingly seen as the global best practice.


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