As the world’s largest democracy, India has long been committed to ‘Health for All’ under the World Health Organization’s Universal Health Coverage (UHC) framework, which prioritises primary health care (PHC) and to reduce out-of-pocket expenditure (OOPE). India’s evolving health policies have shaped Budget allocations and influenced health-care service and delivery. With the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) addressing OOPE, there is now greater scope to strengthen public health systems, especially primary health care. This insurance-based programme reduces OOPE by covering hospitalisation, surgeries, and procedures at the tertiary level, but sidelines the UHC principle of primary health care. Despite improving financial protection, it discourages primary health-care use, weakens public health infrastructure, and strengthens market-driven private health care.
Neglect of primary health-care systems
A robust PHC system reduces the burden on secondary and tertiary care, and ensures cost-effective health care. When health is recognised as a citizen’s right, the state must ensure accessible and affordable PHC, whether publicly provided or well-supported. However, AB-PMJAY’s hospitalisation-based reimbursement shifts the focus away from preventive and community-based health care, increases long-term costs and reliance on private hospitals, and fails to reduce OOPE. This contradicts the Bhore Committee’s vision of strong primary health care, with a pyramid-shaped health system tapering to secondary and tertiary care.
Since its launch in 2018, the Ayushman Bharat Digital Mission dashboard reports the issuance of over 36 crore Ayushman cards and the empanelment of more than 31,000 hospitals. Although health is a state subject, PM-JAY reroutes funds to private insurance players, limiting state control. The 2025 Budget allocates ₹9,406 crore to AB-PMJAY, which is ₹2,000 crore more than the previous year, boosting privatisation and insurance-based financing. It remains unclear how much it will help reduce health expenditures for marginalised groups or support primary health care to lower out-of-pocket expenses for Below Poverty Line cardholders.
Budget, privatisation, insurance overhaul
The health budget allocates ₹95,957.87 crore to the Department of Health and Family Welfare and ₹3,900.69 crore to the Department of Health Research. The Budget prioritises medical digital infrastructure and medical education expansion over PHC. The National Health Mission, vital for grass-root health care, receives a declining share, signalling the state’s gradual retreat from its universal health-care responsibility and shifting the burden onto private players. This affects citizens, as insurance schemes merely consolidate capital at the public’s expense.
Additionally, significant changes in the insurance sector include raising the foreign direct investment (FDI) cap in the insurance sector from 74% to 100%, following a previous increase from 49% to 74% in 2021. This aims to improve India’s low insurance penetration, especially in rural areas, attract more players into the insurance market, and achieve “Insurance for All” by 2047. The Insurance Regulatory and Development Authority of India (IRDAI) expects this to bring capital and expand coverage.
Policy changes raise concerns for India’s informal workforce and marginalised urban populations. With the informal sector comprising a significant portion of the workforce, the lack of universal health coverage leaves millions without health security. The government has yet to outline how it will protect these vulnerable populations. Insurance illiteracy further complicates access, forcing many migrant and non-literate working classes to rely on middlemen. Without strict private sector regulation, OOPE is likely to increase due to inflated medical costs and uncovered consumables. Coverage for Accredited Social Health Activist (ASHA) workers and grass-root health-care providers remains uncertain. Compounding these issues is outdated data —the last Census was in 2011, and the Periodic Labour Force Survey was in 2020-21 — hindering efficient allocation and utilisation of social protection schemes.
Lessons from global models
Global experiences warn against an over-reliance on private insurance. In the U.S., insurance-driven pricing has led to skyrocketing health-care costs, widening inequalities, and limiting access for uninsured individuals. Public outcry over claim denials highlights the risks of corporate control over health care.
India can learn from countries such as Thailand (tax funded universal coverage scheme) and Costa Rica’s Mandatory insurance scheme (Caja Costarricense de Seguro Social). Both rely on general tax revenue, strong public health investments, and regulated private insurance, prioritising primary care and community-based services.
As India navigates urban and health-care transitions shaped by the Budget and policy, it must reassess priorities. Instead of disproportionately favouring tertiary private health care through insurance models, the government must invest in preventive, community-based care that is accessible to all. Policies must address the health-care needs of informal workers, the unemployed, migrants, and vulnerable populations, especially with rising climate-related health risks.
Comprehensive public health benefit packages, cost-control mechanisms, and programmes to reduce OOPE are essential for achieving UHC. Safeguards must be in place to prevent private insurance from driving up health-care costs, ensuring India’s commitment to ‘Health for All’ remains more than just a slogan.
Pooja Sagar is a researcher in the history of medicine and the oral histories of health and medical practices. Aruna Bhattacharya leads urban health academics, research and practice at the IIHS School of Human Development. She is a current fellow of the WomenLift Health India cohort
Published - March 17, 2025 12:08 am IST
