Balancing India’s Insurance and Primary Health Care

Context

Strengthening primary health care (PHC) ensures to reduce out-of-pocket expenditure (OOPE) to make healthcare affordable and accessible. While the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) has improved financial protection by covering hospitalisation and surgeries, it has inadvertently shifted focus away from primary healthcare, weakening the public health infrastructure and increasing reliance on private healthcare.

Relevance:
GS-02 (Health)

Dimensions of the article:

History of Healthcare system in India
Challenges in India’s Healthcare System
Lessons from Global Healthcare Models

History of Healthcare system in India:

Bhore Committee Report which was released in 1946 appealed for the establishment of Primary Health Centres in rural areas.
Later, the Economic Liberalization in 1991 paved way for the growth of private healthcare centres.
With a vision to achieve universal health coverage, the National Health Policy was proposed in 2017.
Major policies:
- Consumer Protection Act, 1986: Although healthcare wasn’t mentioned in the act, the Supreme Court in Indian Medical Association vs. V.P. Santha & Ors 1996 case, held that the language used in the Act was wide enough to cover the services rendered by the doctors as well.
- Pre-Conception and Pre-Natal Diagnostic Techniques Act, 1994: To prevent female foeticide.
- Clinical Establishments (Registration and Regulation) Act, 2010: It outlines clear registration processes and standard treatment guidelines.
- Drugs and Cosmetics Act, 1940: Aims to regulate pharmaceuticals.

Challenges in India’s Healthcare System

Neglect of Primary Healthcare (PHC): A strong PHC system reduces pressure on secondary and tertiary healthcare, ensuring cost-effective service delivery.
- AB-PMJAY’s hospitalisation-based model diverts focus from preventive and community-based care, increasing long-term costs and dependency on private hospitals that contradicts the Bhore Committee’s recommendation for a pyramid-shaped healthcare system, where primary care forms the foundation.
Financial Allocation and Privatisation Trends: The recent 2025 Budget has allocated ₹9,406 crore to AB-PMJAY, ₹2,000 crore higher than the previous year, reinforcing insurance-based healthcare financing.
- The health budget stands at ₹95,957.87 crore for the Department of Health and Family Welfare and ₹3,900.69 crore for the Department of Health Research.
- Funding for the National Health Mission (NHM), crucial for grass-root health services, is declining, reflecting the state’s gradual withdrawal from direct healthcare responsibility.
- Increased reliance on private healthcare risks driving up costs and widening inequalities in access.
Insurance Sector Reforms and Risks: The FDI cap in the insurance sector has been increased from 74% to 100%, aiming to expand coverage, especially in rural areas, and improve insurance penetration.
- However, without strict regulation, private insurers may inflate medical costs and limit coverage, increasing out-of-pocket expenditure (OOPE) for patients.
Gaps in Data and Policy Implementation: Outdated data from the 2011 Census and the 2020-21 Periodic Labour Force Survey hinder effective allocation of healthcare resources.

Lessons from Global Healthcare Models

United States: Over-reliance on private insurance has led to soaring healthcare costs, unequal access, and denial of claims, highlighting the risks of market-driven healthcare.
Thailand: A tax-funded universal coverage scheme ensures strong public health infrastructure and affordable healthcare.
Costa Rica: A mandatory insurance scheme supported by general tax revenue provides comprehensive health coverage while regulating private healthcare costs.
India can adapt these models by integrating primary care with insurance-based systems to ensure balanced healthcare delivery.

Way Forward

Improve PHCs: Increase funding for PHC to reduce dependence on secondary and tertiary care.
Balanced Public-Private Partnership: Regulate private health providers to prevent overcharging and ensure fair pricing.
Comprehensive Health Benefit Packages: Develop all-inclusive health benefit packages covering primary, secondary, and tertiary care.
Promote Insurance Literacy: Launch awareness campaigns to improve understanding of insurance benefits and procedures.

Conclusion

Having to depend more on private insurance could possibly risk India’s marginalised groups. Therefore, India must find a balance between insurance-based financial protection and strong primary healthcare infrastructure.

Mains Question

Critically analyse India’s healthcare financing model under Ayushman Bharat PM-JAY. (150 words)