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AB-PMJAY is more of a private sector primer


The central government’s flagship health insurance scheme, the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), aims to extend hospitalisation cover of up to ₹5 lakh per family per annum to a poor and vulnerable population of nearly 50 crore people.


GS-II: Social Justice and Governance (Issues related to Health, Welfare Schemes, Government Policies and Initiatives)

Dimensions of the Article:

  1. About Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
  2. National Health Protection Mission (AB-PMJAY)
  3. Highlights of the Health Insurance for India’s Missing Middle report
  4. Why is health insurance important in India?
  5. A look at numbers
  6. Recommendation by Niti Aayog
  7. Concerns

About Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)

  • Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) is a Centrally Sponsored Scheme having central sector component under Ayushman Bharat Mission anchored in the Ministry of Health and Family Welfare (MoHFW).
  • It is an umbrella of two major health initiatives, namely Health and wellness Centres and National  Health Protection Scheme.
  • The PM Jan Arogya Yojana beneficiaries get an e-card that can be used to avail services at an empanelled hospital, public or private, anywhere in the country, with which they can walk into a hospital and obtain cashless treatment.
  • The scheme has certain pre-conditions by which it picks who can avail of the health cover benefit. While in the rural areas the list is mostly categorized on lack of housing, meagre income and other deprivations, the urban list of PMJAY beneficiaries is drawn up on the basis of occupation.
  • AB PM-JAY is the flagship scheme of the Union government as a part of the Indian government’s National Health Policy.

National Health Protection Mission (AB-PMJAY)

  • AB-PMJAY provides a defined insurance benefit cover of Rs. 5 lakh per family per year. This cover will take care of almost all secondary care and most of tertiary care procedures.
  • To ensure that nobody is left out (especially women, children and elderly) there will be no cap on family size and age in the scheme.
  • The beneficiaries can avail benefits in both public and empanelled private facilities. All public hospitals in the States implementing AB-PMJAY, will be deemed empanelled for the Scheme.
  • Benefits of the scheme are portable across the country and a beneficiary covered under the scheme will be allowed to take cashless benefits from any public/private empanelled hospitals across the country.
  • To control costs, the payments for treatment will be done on package rate (to be defined by the Government in advance) basis.

Health and Wellness Centres (AB-PMJAY)

  • Under this 1.5 lakh existing sub centres will bring health care system closer to the homes of people in the form of Health and wellness centres.
  • These centres will provide comprehensive health care, including for non-communicable diseases and maternal and child health services.

Highlights of the Health Insurance for India’s Missing Middle report

  • According to the report, at least 30% of the population, or 40 crore individuals (referred as the missing middle in this report) are devoid of any financial protection for health.
  • Around the top 20% of the population – 25 crore individuals – are covered through social health insurance, and private voluntary health insurance.
  • In the absence of a low-cost health insurance product, the missing middle remains uncovered despite the ability to pay nominal premiums.
  • Affordable contributory products such as Employees’ State Insurance Corporation (ESIC), and Government subsidized insurance including AB-PMJAY are closed products. They are not available to the general population due to the risk of adverse selection.
  • The Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) and various State Government extension schemes, provide comprehensive hospitalization cover to the bottom 50% of the population.

Why is health insurance important in India?

  • Health insurance is a mechanism of pooling the high level of Out of Pocket expenditure (OOPE) in India to provide greater financial protection against health shocks.
  • Pre-payment through health insurance emerges as an important tool for risk-pooling and safeguarding against catastrophic (and often impoverishing) expenditure from health shocks. Moreover, pre-paid pooled funds can also improve the efficiency of healthcare provision.
  • Expansion of health insurance coverage is a vital step, and a pathway in India’s effort to achieve Universal Health Coverage (UHC).
  • India’s health sector is characterized by low Government expenditure on health, high out-of-pocket expenditure (OOPE), and low financial protection for adverse health events. The private sector is characterized by high OOPE, leading to low financial protection.

A look at numbers

  • The report pointed out that Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) launched in 2018, and state government extension schemes, provide comprehensive hospitalisation cover to the bottom 50 per cent of the population – around 70 crore individuals.
  • Around 20 per cent of the population – 25 crore individuals – are covered through social health insurance, and private voluntary health insurance.
  • The remaining 30 per cent of the population is devoid of health insurance.

Recommendation by Niti Aayog

The report has recommended three models for increasing the health insurance coverage in the country.

  • The first model focuses on increasing consumer awareness of health insurance.
  • The second model is about “developing a modified, standardized health insurance product” like ‘Arogya Sanjeevani’, a standardised health insurance product launched by the Insurance Regulatory Development Authority of India (IRDAI) in 2020.
  • The third model is a “slightly modified version” of the standardised Aarogya Sanjeevani insurance product.
    • The modified product should have lower waiting periods.
    • The model should expand government-subsidized health insurance through the PMJAY scheme to a wider set of beneficiaries.

A combination of the three models, phased in at different times, can ensure coverage for the missing middle population.

  • In the short term, the focus should be on expanding private voluntary insurance through commercial insurers.
  • In the medium-term, once the supply-side and utilization of PMJAY and Employees’ State Insurance Corporation (ESIC) is strengthened, their infrastructure can be leveraged to allow voluntary contributions to a PMJAY plus product, or to ESIC’s existing medical benefits.
  • In the long-term, once the low-cost voluntary contributory health insurance market is developed, the expansion of PMJAY to the uncovered poorer segments of the missing middle should be considered.


  • Government subsidies, if any at all, will be reserved for the very poor within the ‘missing middle’ and only at a later stage of the development of voluntary contributory insurance.
  • UHC cannot be achieved by relying predominantly on private sources of financing health care.
    • Evidence also shows that in countries such as India, with a large informal sector, contributory health insurance is not the best way forward and can be beset with complications.
  • Even if there are examples where contributory social health insurance has been successful there are significant contributions made by the Govt, with participation from the NGOs and some important guarantees for health.
  • The free-of-cost government health insurance for the poor has little penetration in the country despite being implemented for nearly two decades.
    • Therefore, in all likelihood, the contributory private health insurance with modestly lower premiums, for a target group may not be successful.

-Source: The Hindu

July 2024