Instead, either they are employing public sector insurance companies or setting up a trust to implement the Pradhan Mantri Jan Arogya Yojana (AB-PMJAY).
While only nine states have opted for a pure health insurance model, seven states have chosen mixed or hybrid models, in which a majority of insurers are from the public sector. 17 states have deployed the trust model.
Part of the reason, say experts, is that most state governments want to ensure an effective roll out, more so as it is an election season, and avoid any bad press due to faulty implementation.
“It isn’t a surprise that few states have chosen the insurance model. RSBY used an insurance model and it had a number of problems, such as states choosing the company that bid the lowest premium. But that gave the insurance company strong incentives to suppress utilization for insurance by failing to do marketing and denying claims," said Anup Malani, the principal investigator on the Indian Health Insurance Experiment, a 12,000 household study of health insurance in Karnataka, which contributed to the Ayushman Bharat project in India.
“The choice is up to the states. Most states have chosen the trust model. The states that have opted for pure insurance model or mixed model, many of them are being served by the public insurance companies also," said Indu Bhushan, chief executive officer (CEO), AB-PMJAY.
According to the latest update with the National Health Authority (NHA), Andhra Pradesh, Tripura, Arunachal Pradesh, Uttar Pradesh, Assam, Uttarakhand, Bihar, Lakshadweep, Goa, Andaman and Nicobar, Madhya Pradesh, Chandigarh, Manipur, Karnataka, Sikkim, Haryana and Himachal Pradesh have chosen the trust model.
Meghalaya (Reliance General Insurance), Mizoram (Bajaj Alliance), Nagaland (Apollo Munich), Dadra and Nagar Haveli (Oriental Health), Daman and Diu (Oriental Health), Jammu and Kashmir (Bajaj Alliance), Puducherry (Star Health), Kerala (Reliance General Insurance), Punjab (IFFCO Tokio), are running the scheme on insurance mode. In contrast, Chattisgarh, Gujarat, West Bengal, Rajasthan, Jharkhand, Maharashtra and Tamil Nadu have chosen the mixed model.
While launching the scheme, the centre had provided the states with flexibility to choose the mode of implementation.
“Most states normally start with insurance, move to mixed model and then to trust, as they gain experience and capacity. For example, Arogyasri in Talengana started with insurance in 2007 and then moved to trust in 2012. And, Karnataka and Andhra Pradesh from Rashtriya Swasthya Bima Yojana (RSBY) to trust mode," said Dinesh Arora, deputy CEO, NHA.
“Ayushman Bharat is different from other schemes. We learn and improvise as we evolve. Federal structure is an advantage here. And then we discover which model works best," Arora said.
The government has said that the states are experimenting in AB-PMJAY and trying to find out which model suits them the best. Some have moved from insurance to trust or hybrid, while some are running with their own schemes.
The government has said that the states are experimenting in AB-PMJAY and trying to find out that which model suits them the best. When trust models remains the first choice, for majority of states, some states have moved from insurance to trust or hybrid while some are running with their own schemes.
However, health insurance experts claim that there are downsides of the trust model.
“Unsurprisingly, utilization was very low. Insurance companies did not always share claims data. So the government could not determine whether claim denials were legitimate or what care people wanted. Using a trust model avoids both these issues. So it is not surprising that most states have chosen this. The trust model also has some downsides. For example the government has little experience running an insurance program," said Malani.
“The government is subject to political pressure not to deny even fraudulent claims. The government should not bear the risk of high health costs in case of natural disasters. This would jeopardize funding for other necessary government programs like education," he said.