India’s journey towards Universal Health Care (UHC), envisioned by the Bhore Committee (1946), remains incomplete. Despite expanding health insurance schemes, low public health expenditure and reliance on profit-driven private providers hinder equitable, affordable, and accessible healthcare for all.
- The Bhore Committee Report (1946) defined Universal Health Care (UHC) as a system where quality healthcare should be guaranteed to all members of the community irrespective of their ability to pay.
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About Health Insurance in India
- Definition: Health Insurance is a mechanism that provides financial risk protection against medical expenses, ensuring individuals do not fall into poverty due to health shocks.
- About Health Insurance: Health Insurance pools resources through premiums or state funding to cover medical costs.
- Delivery Models: It can be implemented through government-financed schemes, employer-based group insurance, or private policies.
- Coverage: Health Insurance typically protects against in-patient hospitalisation expenses, with limited extensions to outpatient and preventive services.
| Type of Services |
Meaning |
Examples |
Insurance Coverage in India |
| In-Patient (IPD) |
Treatment requiring hospital admission (≥24 hrs) |
Surgery, ICU care, delivery |
Widely covered (e.g., Pradhan Mantri Jan Arogya Yojana (PMJAY), private insurance) |
| Outpatient (OPD) |
Consultation/treatment without admission |
Doctor visits, diagnostics, medicines |
Limited/rarely covered |
| Preventive |
Measures to prevent or detect disease early |
Vaccines, screenings, health check-ups |
Very limited, often excluded |
Need for Health Insurance in India
- High Out-of-Pocket (OOP) Expenditure: Nearly 47% of total health spending in India comes directly from households, making healthcare unaffordable and pushing families into debt or poverty.
- Out-of-Pocket (OOP) expenditure refers to the direct payments made by households for healthcare services at the time of use, without any reimbursement from insurance or government schemes.
- It includes spending on consultation fees, medicines, diagnostic tests, hospitalization, and other medical costs borne directly by patients.
- Low Public Health Spending: India spends just 1.3% of GDP on public health, far below the global average of 6.1%, creating a vacuum that insurance schemes attempt to fill.
- Healthcare Inequalities: Rural populations, informal sector workers, and disadvantaged communities face limited access to quality healthcare, highlighting the urgency for financial risk protection.
- Poverty Reinforcement through Medical Costs: Around 6 crore Indians are pushed below the poverty line every year due to healthcare expenses (NITI Aayog estimates), worsening poverty cycles.
Importance of Health Insurance in India
- Financial Protection: Health insurance shields families from catastrophic health expenditure, preventing distress borrowing or forced asset sales during medical emergencies.
- Improved Accessibility: It enhances access to public and private hospitals through empanelled networks, widening treatment choices for patients.
- Equity and Social Justice: By reducing financial barriers, insurance ensures the poor and marginalised can access quality healthcare, promoting social justice.
- Economic Productivity: A healthier workforce leads to reduced wage loss from illness. Insurance coverage supports economic efficiency and productivity gains.
Challenges and Critiques of Insurance-Led UHC
- Profit-Driven Healthcare: About two-thirds of Pradhan Mantri Jan Arogya Yojana (PMJAY) spending goes to private hospitals, reinforcing for-profit medicine instead of strengthening public facilities.
- Hospitalisation Bias: Health insurance focuses on hospitalisation, neglecting primary and outpatient care. This over-burdens tertiary care and diverts funds from preventive services.
- Elderly Burden: Rising elderly enrolment (70+ years) risks unsustainable financial pressures. Resources shift to expensive tertiary care, reducing focus on basic services.
- Low Utilisation: Despite 80% coverage claims, only 35% of insured patients (2022–23) used their insurance due to awareness gaps and hospital discouragement.
- Discrimination in Access: Private hospitals often prefer uninsured patients for higher charges, while public hospitals prefer insured patients for reimbursements — creating inequities.
- Delayed Reimbursements: Over ₹12,161 crore in pending dues under PMJAY has forced 609 hospitals to withdraw, threatening scheme sustainability.
- Corruption and Fraud: More than 3,200 hospitals flagged for fraud; lack of transparent audits undermines credibility of insurance schemes.
- Systemic Weakness: Insurance cannot substitute public health investment. Without stronger primary healthcare and public hospitals, insurance remains temporary relief, not a structural solution.
Global Initiatives and Best Practices
- United Kingdom (NHS): Provides universal, tax-funded healthcare under the National Health Service (NHS). Ensures free-at-point-of-care treatment for all citizens.
- Thailand (Universal Coverage Scheme, 2002): Demonstrates the inclusion of outpatient and preventive services. This model has significantly reduced health inequities.
- Germany (Social Health Insurance – SHI): Balances employer and employee contributions. Strong regulation of private providers ensures standardised costs and universal access.
- Japan (Compulsory Health Insurance): Ensures comprehensive coverage with cost-sharing caps. Digital monitoring prevents fraud and ensures timely reimbursements.
- Canada (Publicly Funded Model): Adopts a publicly funded, non-profit delivery model. Emphasises equity and prevention rather than profit incentives.
- Lessons for India: Needs strong regulation, expanded outpatient care, transparency, and higher public spending. Over-reliance on private hospitals without oversight will not deliver Universal Health Care (UHC).
Government Health Insurance Schemes and Actions Taken
- Ayushman Bharat–PMJAY: Launched in 2018, it is the world’s largest government-funded insurance programme, offering ₹5 lakh per household annually for secondary and tertiary care. In 2023–24, it covered 58.8 crore individuals with a ₹12,000 crore budget.
- State Health Insurance Programmes (SHIPs): States like Tamil Nadu (CMCHIS), Andhra Pradesh (Arogyasri), and Kerala (Karunya) complement PMJAY. Their combined budgets are around ₹16,000 crore, growing 8–25% annually.
- Legacy Schemes: The Employees’ State Insurance Scheme (ESIS, 1952) and Central Government Health Scheme (CGHS, 1954) continue to provide comprehensive services for industrial workers and government employees.
- Digital Integration: The Ayushman Bharat Digital Mission (ABDM) links insurance with Digital Health IDs, enabling portability of health records and streamlined insurance claims for better transparency and efficiency.
PWOnlyIAS Extra Edge:
Health in Indian Constitution (Seventh Schedule)
- Health is primarily a State subject under the 7th Schedule, but with significant responsibilities in the Union and Concurrent lists, making it a shared responsibility between Centre and States.
- State List: Public health and sanitation, hospitals and dispensaries, burial and cremation grounds, and regulation of the medical profession fall under the State List, making states primarily responsible for PHCs, hospitals, sanitation, and medical workforce regulation.
- Union List: Matters such as port quarantine, inter-state quarantine and migration, coordination of medical and higher education standards, and national institutions & research are in the Union List, giving the Centre responsibility for policy, standard-setting, funding, and national programmes like AIIMS, ICMR, NHM, and PMJAY.
- Concurrent List: Education (including medical), legal and medical professions, and prevention of infectious diseases across states fall under the Concurrent List, allowing both the Centre and States to legislate. Key examples include the Epidemic Diseases Act, Food Safety and Standards Authority of India (FSSAI), and Environment Acts.
Constitutional Provisions on Health in India
- Directive Principles of State Policy (DPSP):
- Article 38: State to secure a social order for welfare of the people.
- Article 39(e): Protection of workers’ health.
- Article 41: Right to public assistance in case of sickness and disability.
- Article 42: Provision for just and humane conditions of work and maternity relief.
- Article 47: Duty of the State to raise the level of nutrition, improve public health, and prohibit intoxicating drinks & drugs.
- Fundamental Rights (Indirectly Linked):
- Article 21 (Right to Life): Interpreted by SC to include Right to Health (e.g., Paschim Banga Khet Mazdoor Samity v. State of West Bengal, 1996).
- Article 23 & 24: Protection from trafficking, forced labour, and hazardous child labour (health dimension).
- Fundamental Duties:
- Article 51A(g): Duty to protect and improve the natural environment, directly linked to public health.
SDGs impacting Health
- SDG 1 (No Poverty): Reduces health-driven impoverishment.
- SDG 2 (Zero Hunger): Nutrition-health linkage.
- SDG 6 (Clean Water & Sanitation): Crucial for disease prevention.
- SDG 13 (Climate Action): Climate-related health impacts.
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Way Forward
- Rebalancing Healthcare: India must rebalance its healthcare system by investing in primary and preventive care. This will reduce unnecessary hospitalisation and improve affordable access.
- Expanding Coverage: Coverage should be expanded to include outpatient services, diagnostics, and mental healthcare. This aligns with global best practices.
- Private Sector Regulation: The private healthcare sector must be strictly regulated to prevent profiteering and exploitation. Price caps, treatment protocols, and strict audits are essential.
- Public Health Expenditure: Public health expenditure must rise to at least 2.5% of GDP by 2025. This will strengthen public hospitals and reduce dependency on insurance schemes.
- Awareness Campaigns: Awareness campaigns are essential to improve utilisation among vulnerable populations. Beneficiaries must know their rights and entitlements.
- Digital Innovations: Transparency and accountability must be enhanced through digital innovations. Artificial Intelligence (AI), Big Data, and Blockchain can detect fraud and ensure timely payments.
- Universal Health Coverage: India must adopt a universal approach rather than fragmented, targeted schemes. A tax-funded, equitable system with strong public health infrastructure is the sustainable path to UHC.
Conclusion
- Realising Universal Health Care (UHC) is essential to uphold Right to Life under Article 21, ensure equality under Article 14, and fulfil Directive Principles of State Policy, especially Article 47, making healthcare equitable, affordable, and just.
Read More About: Ayushman Bharat Health Insurance Scheme
2 Sep 2025
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