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Ayushman Bharat – Policy Analysis

Ever since the Bharatiya Janata Party (BJP) came to power in 2014, India has been flooded with various new policies one after the other. Beginning from the Jan Dhan Yojana, to other schemes like Make in India, Swachchh Bharat Mission and Digital India Mission, these policies have led to rapid growth and development. One such policy centered towards healthcare in India is Ayushman Bharat Yojana which is India’s largest Health Insurance Scheme.

Ayushman Bharat Yojana or Pradhan Mantri Jan Arogya Yojana (PM-JAY) is a centrally sponsored scheme having a central sector component under Ayushman Bharat Mission anchored in the Ministry of Health and Family Welfare (MoHFW). Launched on 23rd September 2018, it is an umbrella of two major health initiatives, namely Health and Wellness Centres (HWC) and National Health Protection Scheme (NHPS). It is targeted at poor and deprived rural families and occupational category of urban workers’ families. The families identified by the government on deprivation and occupational criteria using the SECC database (rural & urban) are entitled under the scheme. September 23 is celebrated as ‘Ayushman Bharat Diwas’ to generate awareness about the scheme.

Major Elements

National Health Protection Scheme (NHPS) is the world’s largest health insurance/assurance scheme fully financed by the government which provides a cover of Rs.5 Lakhs per family per year, for secondary and tertiary care hospitalization across public and private empaneled hospitals in India. More than 10.74 crore poor and vulnerable families are eligible for the benefit that provides cashless access to health care services for the beneficiary.

Health Wellness Centres (HWC) involves creation of 150000 HWCs by transforming existing sub centres and primary health centres. These centres would ensure universal access to an expanded range of Comprehensive Primary Health Care (CPHC) services for non-communicable diseases and maternal and child health services, bringing healthcare closer to homes of people.

Benefits Covered

The Ministry of Health and Family Welfare (MoHFW) has incorporated a list of 1354 packages in the Ayushman Bharat scheme. Knee replacements, stinting, coronary bypass is provided at 15-20% lower rates than the Central Government Health Scheme. The enrolment process is automatic without filling any forms. Families irrespective of their size are covered. The network of hospitals are large and eligible persons can simply walk into a hospital with their Aadhaar card and get treated.

Cover under the scheme is superior to regular mediclaim insurance and the sum assured is more than what many of them have. Cover includes pre-existing diseases, mental health conditions, food and internal congenital diseases and many more. The benefit includes both pre and post hospitalization charges. Each hospital covered under the scheme will have an Ayushman Mitra to assist patients and coordinate with them. They will run a help desk and carry out document verification and enrolment to the scheme. The benefits under the scheme are portable across the country.

Trust and Insurance Model

The scheme has three models i.e. Trust model, Insurance model and Hybrid model.

Under Trust Model, premiums are not be paid to insurance companies and rather is collected by a trust from the state and pooled together. The trust is therefore responsible for paying off claims and administering and managing the scheme.

Under Insurance Model, premiums are paid directly to the insurance companies by states. Therefore, the insurer is responsible for the payment of the claims.

Under Hybrid Model¸ a part of claim comes under the insurance model while the balance gets processed under the trust.

There are no major changes under the models however competition among the insurance companies will intensify. It is believed to bring about a structural change in the health insurance market in India.

Reasons for Launch

Ayushman Bharat is likely to offer significant benefits to the health insurance sector and expand the market over a period of time. The policy was launched due to challenges faced by poor of the country. Data showed that around 63% of the people were not covered under any health protection scheme and they have to cover all their healthcare and hospitalization cost on their own. In-patient hospitalization expenditure in India increased nearly 300% during the last ten years (National Sample Survey Office 2015). Problems like financing the entire process of treatment and lack of quality healthcare service in public healthcare centres is a concern even now. The scheme is thus, expected to reduce expenditure on healthcare which pushes 6 crore people into poverty every year. The scheme also ensures equity of access to services for all.

Challenges Encountered

It has been a year since the policy was launched and it has faced a lot of challenges overtime.

  • Fraud by Beneficiaries

One such challenge is to strengthen its fraud control mechanism caused due to higher cover per family. The amount of cover per family i.e. Five Lakh rupees is way higher than the average cost per patient. According to a recent data, patient’s availed free treatment of nearly Rs.7500 crore. Therefore, the average cost of treatment per patient in the scheme comes up to Rs.16000. Many ineligible beneficiaries having good relationship with the head of beneficiary family perpetrated by forging marriage certificates or adoption papers by local entrepreneurs at common service centres (CSCs). Further surgeries are claimed to be performed on a discharged person and dialysis has been shown to be performed at hospitals which lack kidney transplant facility.

  • Lack of Participation

PM-JAY rates remained a mere guideline for big hospitals. Big corporate hospitals have chosen to stay away considering the scheme non-viable. They argued that if they provided treatment at the prices of the scheme, then they will never be able to cover their costs. Even after the rates being revised, the major part of private sector chose to stay away from the scheme.

  • Opposition from States

Multiple States have refused to implement the policy and withdrawn after a few months. Except from some central institutions like AIIMS, majority of hospitals and medical centres are state operated and owned. Therefore, a nationwide scheme of healthcare facilities and health insurance at the state level leads to reduction in the responsibility of the states in carrying out the same. Tamilnadu and Maharashtra, who are already running insurance programs at state level argued that PM-JAY rates were not viable as a result of which the centre gave them levy to stick to their old rates. Further, the participation in the scheme requires the states to contribute funds for insurance, which diverts funds allocated for building healthcare infrastructure.

  • Abrogation of Article 370

The abrogation of Article 370 and sudden internet shutdown has impacted the performance of the scheme in the past few months. Information Technology is the backbone of PM-JAY. With internet shutdown, private hospitals who earlier treated on the treat first pay later offline mode, have incurred pending payments of lakhs of rupees. Hospital admission rate which was at a rise before August, saw a sharp decline as hospitals discontinued treatment under the scheme citing non-affordability as a reason.


Although BJP (the national ruling party), is the ruling party in a lot of states, there is requirement of consensus from the entire country to ensure that the scheme stays viable and there is coverage across states. Ayushman Bharat has covered 46 lakhs people in the past year but it has to overcome its challenges to run for long term. This will definitely create 11 lakhs job opportunities in the coming 5-7 years and make healthcare the second biggest source of job after railways.

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1 Comment

  1. Mallika Sarda

    Very well written Ayush!!

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