- 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 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
- No actuarial database is available to yield a probability distribution of the expected number of different health episodes requiring different treatments at varying costs
- 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
- 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
- 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
- PMJAY will ride on the first tier of Ayushman Bharat, a network of 150,000 HWCs spread throughout the country
- Fixing this weak primary care foundation of India’s public healthcare system is more urgently needed than providing insurance for secondary and tertiary care
- These challenges do not imply that PMJAY will fail but that it is only a first step on the road to universal SHI
- As a follower country, India can learn from the experiences of others
- The Thai model with excellent SHI coverage and OOP spending down to 18% is increasingly seen as the global best practice.