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 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.
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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.
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.