Ayushman Bharat

The Pradhan Mantri Jan Arogya Yojana is an ambitious health insurance scheme that has been touted as an important tool to achieve universal health coverage. However, there is still no clarity regarding the financial implications of this scheme. Based on National Sample Survey data of 2004 and 2014 on hospitalisation rates and average medical expenditures, three alternate scenarios have been analysed based on different assumptions about these two parameters, to estimate the total costs of the programme. The results indicate a potentially high burden of the programme on the state and union government finances, especially if it is successful in covering all the intended beneficiaries.

This paper is based on research made possible by a grant from the Fifteenth Finance Commission to the Institute of Economic Growth. The research was undertaken by the Health Policy Research Unit of the Institute of Economic Growth, between September 2018 and January 2019. The team is grateful to the Finance Commission for funding support, and they would also like to acknowledge the support given by Avantika Ranjan and Diwas Singh Saun in preparing and finalising the original report submitted to the commission.

Ayushman Bharat of the Government of India comprises the health and wellness centres and the National Health Protection Scheme, renamed Pradhan Mantri Jan Arogya Yojana (PM–JAY) (MoFHW 2018a). The PM–JAY is designed to cover 10 crore poor and vulnerable families (approximately 50 crore individual beneficiaries), with the aim of providing medical coverage of up to ₹ 5 lakh per family per year, for secondary and tertiary care hospitalisation. With a design similar to other major hospitalisation scheme—Rashtriya Swasthya Bima Yojana (RSBY)—the PM–JAY is to subsume the ongoing centrally-sponsored schemes: RSBY and the Senior Citizen Health Insurance Scheme. Unlike previous schemes, however, the PM–JAY has no cap on family size and age. States running similar schemes were given an option to merge with PM–JAY or run it in a parallel manner. The states have been required to set up state health agencies but were free to decide whether they wanted to run PM–JAY as an insurance, trust or mixed model—the latter by setting up a new trust/society/not for profit/state nodal agency for the scheme’s implementation for those states that did not have a trust model for their earlier schemes.

The identification of the beneficiaries is being done on the basis of the Socio Economic and Caste Census (SECC), 2011 (MoRD 2011). The centre–state financing mode is as in the National Health Mission. For eight states of the North East and the Himalayan states, the sharing is 90:10. For other states, it is 60:40. For union territories with a legislature and for those without a legislature, the sharing patterns are 60:40 and 100:0, respectively. Transfers to state governments will be made using an escrow account. The intended impact is an extensive coverage of hospital-based tertiary care needs of the poor and vulnerable sections of the society, and a reduction in their out-of-pocket expenditure. Thus, the PM–JAY is seen as a step to accelerate India’s progress towards universal health coverage (UHC).