NITI AAYOG REPORT ON AYUSHMAN BHARAT: CHALLENGES AND WAY FORWARD

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Why In News?

A NITI Aayog study highlighted that the high Out-of-Pocket Expenditure (OOPE) in private hospitals undermines Pradhan Mantri Jan Arogya Yojana (PMJAY) goal of providing financial security to vulnerable families.

What are the Key Findings of the NITI Aayog Study?

Cost Disparities in Healthcare

Key Insights from the Study

• Marginal Savings: On average, PMJAY provided a saving of only Rs 3,294 per hospitalisation compared to what uninsured patients paid.
• Widespread Burden: While 35% of beneficiaries had zero OOPE, a majority (65%) were forced to pay out-of-pocket for expenses like medicines, diagnostics, and transport.
• Primary Drivers of OOPE: The main costs incurred by patients were for medicines and diagnostics, which were often unavailable in empanelled hospitals.

Why is Out-of-Pocket Expenditure Still High?

Exclusion of Indirect Costs

The scheme does not cover costs like patient transport to and from hospitals, which places a heavy burden on rural families travelling to urban centres for tertiary care.

Gaps in Public Infrastructure: Public hospitals often face stock-outs of essential medicines and lack advanced diagnostic equipment. 

• This forces patients to buy drugs and get tests done from private, out-of-network providers at their own expense. 
• India's overall OOPE on health remains high at 39.4% of Total Health Expenditure. (Source: National Health Accounts Estimates 2021-22)

Private Sector Practices: Private hospitals often engage in practices like upselling non-covered services or unbundling packages to charge patients extra. 

• This was also flagged in a CAG Performance Audit Report on PMJAY.

Chronic Underfunding of Health: Indian government health expenditure is just 1.9% of GDP. (Source: Budget 2025-26).

• This chronic underfunding weakens public healthcare and increases dependency on the more expensive private sector.

Socio-Economic Impact of High OOPE

Catastrophic Health Expenditure (CHE)

High OOPE pushes households into poverty. The World Bank estimates that such expenses push nearly 100 million people into extreme poverty globally each year. 

Debt Cycles

Families often resort to distress borrowing or selling productive assets (like land or livestock) to fund surgeries or chronic care, leading to long-term intergenerational debt.

Undermining Universal Health Coverage (UHC)

A key goal of UHC is to reduce financial hardship. India remains far from the expert-recommended target of reducing OOPE to below 20% of total health spending.

Delayed Care-Seeking

High costs force individuals to delay seeking treatment for early symptoms, leading to complications and higher mortality rates.

Gender Disparity

Studies indicate that households are less likely to incur high OOPE for female members compared to males, exacerbating gender-based health inequities.  

The "Missing Middle"

While the poorest 40% are covered by Ayushman Bharat and the top 10% have private insurance, nearly 40 crore people in the "middle" remain uninsured and highly vulnerable to OOPE shocks. (Source: NITI Aayog)

Way Forward

Expand the Benefit Package

Integrate essential non-medical costs like transport allowances into the PMJAY package, similar to the model used in the Janani Suraksha Yojana (JSY).

Adopt Centralized Procurement

States must replicate the successful Tamil Nadu model to ensure an uninterrupted supply of free generic medicines and diagnostics in all public hospitals.

Regulate Private Providers

Enforce the Clinical Establishments Act, 2010 strictly to standardize costs and prevent unethical practices like upselling and overcharging by private hospitals.

Increase Public Health Spending

The government must meet its commitment to increase public health expenditure to 2.5% of GDP by 2025 as stated in the National Health Policy 2017.

Learning From Best Practices

Domestic Model: Tamil Nadu Medical Services Corporation (TNMSC)

• Tamil Nadu tackled high medicine costs by creating the TNMSC. 
• This agency uses a centralized model for bulk procurement of generic drugs and an IT-backed supply chain to ensure public hospitals are always stocked. 
• This provides medicines completely free to patients, cutting their OOPE.

Global Model: Thailand’s Universal Coverage Scheme (UCS)

• Thailand achieved Universal Health Coverage by strengthening its primary healthcare system and implementing strict price controls on the private sector. 
• This strategy helped reduce its OOPE to less than 12% of total health expenditure, serving as a global benchmark. (Source: WHO)

Conclusion

To ensure PMJAY fulfills the constitutional mandate of the Right to Health under Article 21, the government must transition from a limited insurance model to a comprehensive 'health assurance' framework that eliminates high out-of-pocket expenditure (OOPE) by expanding benefit packages, regulating private sector costs, and strengthening public primary healthcare.

Source: INDIANEXPRESS