Hello User
Sign in
Hello
Sign Out
Subscribe
Save BIG. Mint+The Economist at ₹3999Claim Now!
Next Story
Business News/ Insurance / Beyond health cover: Why Ayushman Bharat has still not aced its true test

Beyond health cover: Why Ayushman Bharat has still not aced its true test

  • The government’s decision to provide health cover to the elderly is timely as India’s population will start ageing. But the scheme needs a redesign to cater to the health demands of the elderly and make it more attractive for private players.

For Ayushman Bharat to have a real impact, a revamp of India's primary healthcare network is essential to complement the scheme's health insurance component. (Mint)
Gift this article

Among the raft of Cabinet decisions announced last week, the one to extend the Ayushman Bharat health insurance scheme to all citizens aged 70 years and above, irrespective of income, was the biggest headline-grabber.

Among the raft of Cabinet decisions announced last week, the one to extend the Ayushman Bharat health insurance scheme to all citizens aged 70 years and above, irrespective of income, was the biggest headline-grabber.

The Pradhan Mantri Jan Arogya Yojana currently provides a 5 lakh health cover to the bottom 40% of India’s population. The Centre reckons that the expansion will benefit around 60 million senior citizens, with an outlay pegged at 3,437 crore.

The Pradhan Mantri Jan Arogya Yojana currently provides a 5 lakh health cover to the bottom 40% of India’s population. The Centre reckons that the expansion will benefit around 60 million senior citizens, with an outlay pegged at 3,437 crore.

The move comes at a time when India’s population is set to grey faster than ever before. An estimated 4.3% of India’s population is over 70, with the share projected to rise to 9.7% by 2050, according to the United Nations.

Health events occur at a more rapid rate among the elderly. As they are more likely to have pre-existing conditions, insurance companies charge them a hefty premium and cover them with more exclusions. All of this makes the government’s move timely.

Since its inception in 2018, the Ayushman Bharat health insurance scheme has catered to 68.6 million hospital admissions worth 90,204 crore, according to the health ministry, with nearly an equal split between men and women, and 30,510 empanelled hospitals, as per official data.

Yet, for all its claimed successes, cracks are visible. The scheme has suffered consistent gross underutilization of funds, and the claims settlement ratio has fallen from 97.5% after launch to 81.7% in 2023-24, government data show. This raises questions on whether the scheme can effectively handle an additional volume of beneficiaries.

Disconcerting issues

The Ayushman Bharat scheme faced teething implementation issues, such as the exclusion of eligible beneficiaries and delayed claim processing, as highlighted by the Comptroller and Auditor General and a parliamentary panel on health. Beneficiaries, in some cases, were forced to pay for treatment despite the scheme providing cashless services, the CAG observed.

Experts point out that the success of the scheme hinges on timely payments to hospitals and competitive rates to lure private providers. Delayed payments have disincentivised empanelled private providers, prompting them to curtail services to beneficiaries, Mint had earlier reported.

Also read: Ayushman Bharat: Govt gets more ambitious with its health insurance scheme

A drawback of the Ayushman Bharat scheme is that it offers only free inpatient care; outpatient hospitalisation services are not covered although this has a far greater demand and need.

Medicines accounted for about 29% of the out-of-pocket expenditure for inpatients and 60% for outpatients in India, according to a 2022 study led by Mayanka Ambade of the International Institute for Population Sciences.

Experience from ageing countries globally also shows that the need for outpatient care—and consequently expenses—is higher for vulnerable populations such as the elderly and chronically ill. As non-communicable diseases shoot up in India, outpatient visits could take up a big pie of health expenditures for the elderly rather than hospitalisation.

Two to tango

Insurance cover is only one of two components of the Ayushman Bharat scheme, the other being a revamp of existing primary healthcare centres to encourage disease prevention. The scheme can succeed only when both components complement each other well. Public health experts point out that insurance payouts will increase without a concurrent reduction in morbidity unless the primary health aspect is strengthened.

Studies have shown a mixed impact of the Ayushman Bharat insurance cover on out-of-pocket expenditure.

A study in Chhattisgarh by the State Health Resource Centre, a technical agency providing support to the state government, showed “little difference in OOPE for patients enrolled in the scheme and the non-insured", with private hospitals being more expensive.

Another study based on National Family Health Survey data found minimal impact of health insurance on health outcomes for hypertensive Indians. This is because having health cover alone cannot guarantee improved care—a reality any extension of the scheme must acknowledge.

ABOUT THE AUTHOR

Nandita Venkatesan

Nandita Venkatesan is a data journalist at Mint. She has a keen interest in simplifying public data sets to help drive sound discourse and policymaking. Her work experience spans across journalism and public health research. She was part of Time magazine's "Time100 Next Leaders" list for her work in making essential generic pharmaceutical drugs cheaper.
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
Get the latest financial, economic and market news, instantly.