On 21 May 2020, Prime Minister Narendra Modi celebrated the ten millionth beneficiary of Ayushman Bharat. By early June, the Director-General of the World Health Organisation, Tedros Ghebreyesus, called the COVID-19 pandemic an “opportunity” to speed up the scheme’s implementation. But can the world’s largest health insurance scheme live up to its promise of health protection for the poor? An analysis of recent changes juxtaposed with existing concerns reveals some factors that may thwart the scheme from achieving its objectives. 

Launched with much fanfare in 2018, Ayushman Bharat comprises two schemes. First, PMJAY is a health insurance scheme aimed at providing access to quality inpatient secondary and tertiary care to poor and vulnerable families, and reducing out-of-pocket expenditures (OOPE) arising out of catastrophic health episodes. Second, the transformation of 1.5 lakh Sub Health Centres (SHCs) and Primary Health Centres (PHCs) – the first point of contact in primary healthcare – to Health and Wellness Centres (HWCs) by 2022. 

A few important modifications have been made recently. For one, PMJAY now has a package for testing and treating beneficiaries for COVID-19. While this change has been made when faced with a global emergency, other changes which were already in the works are also being implemented. One such is the rationalisation of Health Benefit Packages (HBP) to create the new HBP 2.0, as dubbed by the National Health Authority, which is in-charge of the implementation of PMJAY. To begin with, the NHA documented feedback it received on HBP 1.0. This included inadequate package rates, duplication of packages within and across specialties, procedures overlapping with ongoing national health programmes, and the absence of some high-end procedures/ investigations/drugs. 

To rectify these issues and rationalise HBP 1.0, the NHA collected cost data on packages, constituted specialist committees, consulted experts and members of State Health Authorities (SHAs), and conducted multiple reviews. This led to packages being rationalised, and an increase in prices of 270 packages, as requested by healthcare providers. As many as 237 new packages were introduced, and 554 packages were discontinued. While the impact of these changes will only be observed in time, they reflect something that isn’t always visible with government schemes: reflexivity. The effort that has gone into HBP 2.0 should be acknowledged, yet some vital concerns remain. 

Are there exclusion errors in PMJAY? 

PMJAY aims to reach the poorest of the poor. To do this, at least 16 states and Union Territories (UTs) prepare the family list of beneficiaries based on Socio-Economic Caste Census (SECC) 2011 data, whereas 4 states and UTs use data from Census 2011. Various issues with SECC data have been pointed out by experts: such as a non-transparent method of data collection, and several contradictions in the data. An example of this is the number of the poorest of the poor which,  according to SECC 2011, stood at 16.50 lakh compared to the Ministry of Rural Development’s target in 2015 to provide Indira Awas Yojna (IAY) housing for all rural homeless to 2 crore families. Similarly, Census data are outdated, and population numbers have changed over time. Hence, more reliable estimates should be used.

Adding new beneficiaries who may have been excluded from earlier lists is also a must. Several states have increased the coverage of the scheme via state schemes. This entails increased expenditure by states which choose to expand coverage, such as Kerala. However, this may be particularly hard for cash-strapped states like Bihar who depend on Union government funding more than their own resources (as was shown by a report of state finances by the Accountability Initiative). 

Empanelment needs to pick pace

Hospitals have to apply online to be empaneled, and these applications are verified by State Empanelment committees based on set criteria. While the number of empanelled hospitals has been increasing, some states and districts lag behind. For example, Arunachal Pradesh has more than 12 times the number of beneficiaries as the Andaman and Nicobar Islands, but has the same number of empanelled hospitals – 3. While Madhya Pradesh, Maharashtra, and Bihar have more than 10,000 families per empanelled hospital, others such as Goa and Gujarat have less than 2,000. While the portability feature of the scheme is useful for those who live away from home but close to an empanelled hospital, it is hard to imagine sick people being able to travel to other states for treatment if no empanelled hospital is available nearby. 

The Union Budget speech in February mentioned setting up hospitals in aspirational districts which did not have PMJAY empanelled hospitals. This was to be done in Public-Private Partnership (PPP) via viability gap funding. While proceeds from taxes on medical devices would have been used to support this vital health infrastructure, taxes on essential devices for COVID-19 treatment have now been removed which may affect funds available so it is unclear how these facilities will be funded, and how quickly they can be built. Simultaneously, it remains to be seen if recent changes to prices and packages will incentivise more hospitals to apply for empanelment under PMJAY. 

Who pays for healthcare? 

In India, the majority of total health expenditure is borne by patients themselves. In FY 2020-21 Budget Estimates, allocations stood at ₹6,400 crore for PMJAY and ₹1,600 crore for HWCs. However, this pales in comparison to the ₹3,40,916 crore out-of-pocket expenditure on health by households in 2016-17, according to the National Health Accounts. Of course, while recognising that health is a state subject, one must note that Ayushman Bharat may not be sufficient to cover OOPE. 

Now, consider this. By design, PMJAY excludes conditions that require only outpatient care. For cases which require hospitalisation, outpatient care is only available for 15 days after discharge. According to the National Sample Survey (NSS) 75th round (2017-18) on health, the number of hospitalisation cases is far lower than total ailments. This means that those requiring only outpatient care far outnumber those requiring hospitalisation. 

While the impact of these changes will only be observed in time, they reflect something that isn’t always visible with government schemes: reflexivity.

Follow-up packages have been announced in HBP 2.0, which acknowledges that some procedures require prolonged or multiple follow ups beyond 15 days. However, this still doesn’t account for outpatient care needs. 

Outpatient care has been left to the other arm of Ayushman Bharat – HWCs. While targets in some states have been met, there are substantial gaps and most non-upgraded facilities still function below Indian Public Health Standard norms. Consequently,  the majority of people (66 per cent according to the NSS) rely on private facilities. The cost of outpatient care in government facilities is half that in private clinics, and one-third of costs in private hospitals. Therefore, while progress on the creation of HWCs must be acknowledged, it is evident that the decline in OOPE might not be as widespread or as sharp as desired by the government. 

Informational asymmetry will always be a challenge

Information asymmetry can be defined as a situation wherein one party in a transaction possesses more information and knowledge than the other party. One of the fundamental problems in healthcare systems across the world is the vast information asymmetry that exists between doctors and patients. This information imbalance leads to a power imbalance wherein patients may not be able to question medical experts and may be overcharged by the latter. 

This is not to say that the NHA or other state authorities are inept. Rather, this issue is not unique to a health insurance scheme like PMJAY, and no matter how excellent state capacity may be, information asymmetry will remain a thorny problem to deal with. PMJAY has some systems to deal with the problem. These include setting up of a  grievance redressal mechanism, reserving certain packages for government hospitals, and taking action de-empanelling hospitals if complaints are received. While such reflexivity and acknowledgement of a major challenge is encouraging, not much is known about the actual implementation and impact of these processes and further research is required to identify gaps. 

There are thus  substantial implementation challenges that PMJAY still faces. It is important to recognise that insurance systems take time to be effective. Feedback loops must be maintained among various stakeholders and the NHA, and there is some evidence of transparency and acknowledgement of issues at the policy level. While recent changes to PMJAY are welcome, other concerns such as exclusion, low empanelment, high outpatient care costs, and informational challenges remain. Addressing these, therefore, is the only route that can put India on track to achieving the near mythical goal of universal healthcare.

Ritwik is a Research Associate at Accountability Initiative. 

To cite this blog, we suggest the following: Shukla, R. (2020) As the Pradhan Mantri Jan Arogya Yojana Evolves, Some Challenges Remain Rooted. Accountability Initiative, Centre for Policy Research. Available at: http://accountabilityindia.in/blog/as-the-pradhan-mantri-jan-arogya-yojana-evolves-some-challenges-remain-rooted/.