Rise and Risks of Health Insurance in India

Syllabus: GS2/Issue Related To Health

Context

• Over the past decade, India’s health insurance coverage has surged, largely due to government schemes seen as progress toward Universal Health Coverage (UHC). However, critics argue that insurance alone cannot replace strong public health infrastructure.

UHC in India & Expansion of Health Insurance

• Universal Health Care (UHC), as defined by the Bhore Committee in 1946, calls for quality health care for all, irrespective of ability to pay.
  • However, India remains far from this vision after nearly eight decades.
• Instead, an illusion has been created that expanding health insurance schemes such as Pradhan Mantri Jan Arogya Yojana (PM-JAY) and State Health Insurance Programmes (SHIPs) will deliver Universal Health Coverage (UHC).

Expansion of Health Insurance

• Over the past decade, India has witnessed rapid growth in State-sponsored health insurance:
  • PMJAY: Covers 58.8 crore individuals, with an annual budget of ₹12,000 crore.
  • SHIPs: Cover a similar number, costing around ₹16,000 crore.
  • Combined Spending: About ₹28,000 crore in 2023–24, still a small share of overall health expenditure but rising steadily.
• They fall short of establishing a sustainable UHC framework, while these schemes provide short-term relief to patients.

Major Fault Lines in Health Insurance

• Underinvestment in Public Health: India’s reliance on insurance reflects decades of neglect of public health infrastructure.
  • In 2022, public expenditure on health was just 1.3% of GDP, far below the world average of 6.1%.
• Promotion of For-Profit Medicine: Two-thirds of PMJAY’s funds flow to private hospitals, reinforcing profit-driven care.
  • Poor regulation of private providers exacerbates this imbalance, with little impact on hospitalisation rates but higher reliance on private hospitals.
• Bias Towards Hospitalisation: Insurance schemes cover only in-patient care, neglecting primary and outpatient services, which are crucial for preventive and accessible health care.
  • With an ageing population, costly tertiary care risks consuming most of the health budget while primary needs remain unmet.
• Low Utilisation Despite High Coverage: Although official figures suggest 80% population coverage, utilisation is weak.
  • Only about 35% of insured hospital patients were able to use insurance in 2022–23.
  • Lack of awareness, procedural hurdles, and resistance from private hospitals contribute to this gap.
• Discrimination in Treatment: Private hospitals often prefer uninsured patients, who pay higher rates, while public hospitals may prioritise insured patients for revenue.
  • It fosters discriminatory treatment and pressure to enrol patients on the spot.
• Provider Dissatisfaction and Delays: Hospitals face low reimbursements and delayed payments.
  • Pending dues under PMJAY alone exceeded ₹12,000 crore in 2023, leading to hospital withdrawals and service suspensions.
• Corruption and Fraud: Fraudulent practices are rampant, including denial of care, inflated billing, and unnecessary procedures.
  • Thousands of hospitals have faced action under PMJAY, but transparency remains weak, with little evidence of effective audits.

Learning from Global Experiences

• Countries like Canada and Thailand use social health insurance within a robust public health system. Key differences include:
  • Universal coverage;
  • Focus on non-profit providers;
  • Strong regulation and accountability
• India’s insurance schemes lack these safeguards, making them ill-suited to deliver true UHC.
  • Earlier, IRDAI has announced a goal to make health insurance universal by 2047, aligning with India’s centennial independence milestone.

Conclusion

• India’s path to Universal Health Care (UHC) cannot rest on insurance schemes alone, as they promote profit-driven hospitalisation, suffer from low utilisation, and remain vulnerable to corruption.
  • It needs to be grounded in accessible, quality care for all.
• There is a need to:
  • Increased public investment in health (above the current 1.3% of GDP).
  • Strengthening of primary and public health facilities.
  • Effective regulation of private providers.

Source: TH