Does the Pradhan Mantri Jan Arogya Yojana need a design change?

Ayushman Bharat, the government’s flagship programme to achieve universal health coverage (UHC), was launched in 2018. The scheme has two inter-related components: health and wellness centres and the Pradhan Mantri Jan Arogya Yojana (PMJAY) that aims to provide a health cover of ₹5 lakh per family per year for secondary and tertiary care hospitalisation to over 12 crore families that form the bottom 40% of the population. PM-JAY has issued 34.27 crore cards. About 6.5 crore have received treatment and there are over 30,000 empanelled hospitals. However, over the past year, hospitals in some States have reported they are owed hundreds of crores in dues, and some are reportedly turning away or taking in fewer PMJAY patients. Does PMJAY need a design change? Avani Kapur and Nachiket Mor discuss the question in a conversation moderated by Zubeda Hamid. Edited excerpts:

Does PMJAY’s design need to be changed to make the scheme more sustainable?

Nachiket Mor: PMJAY was required as there was a belief that while the public sector exists and is supposed to offer universal healthcare for free, there were deficiencies in what it could do. Therefore, there was a need to allow patients to access the private sector. I don’t think this scheme was ever designed to deal with comprehensive universal health coverage or comprehensive healthcare costs — it is currently at under 2.5% of total health expenditure. Our research suggests that if you pool government departmental expenditure with PM-JAY expenditure in many States, government health expenditure may be enough to offer universal health coverage, including drugs and diagnostics. The reason we see high out-of-pocket expenditure in Kerala, for example, is that the public sector, despite being well funded, is unable to deliver universal healthcare. Its primary care is underutilised and there is enormous waste and inefficiency. I worry that if schemes are layered on top of a hospital-centric design, it exacerbates misallocation of government resources. In fact, there are distortions now: even a government hospital that is supposed to give you free care is now checking whether you’re authorised to receive PMJAY. Why? Have we created a barrier now? Because, while a high-income family can handle a claim rejection or delay, a low-income family cannot. How can you deliver better healthcare to people to eliminate out-of-pocket expenditure? Where can the National Health Authority (NHA) and the State Health Authority (SHA), with their ability to purchase care in an organised, high quality manner, help you? I think that’s the question we should pursue.

Also read | Women account for approximately 49% of the total Ayushman cards created, says Health Ministry data 

Avani Kapur: Nachiket spoke about the supply side, and I wanted to bring in the demand side. It’s interesting that of empanelled hospitals, while 43% are private, the rest are government. There is a belief that a private hospital delivers better services and so people choose to go to a private hospital even when they have a public hospital close to them. It’s possible that this is not just an assumption: in most places, the chances of getting better quality care in a private hospital could be higher than in a public hospital. We have not done enough to increase belief in the public health system.

Why would the private sector turn away patients? One, capacity. In many States, the number of people per empanelled healthcare provider (EHCP) is really high. In Bihar, it was over 10,000 families per EHCP. So, you don’t necessarily have an adequate number of beds and facilities to be able to cater to that demand. Two, the delays in claim payments despite the guidelines being clear about turnaround time. Three, there are claim rejections too, which means a hospital takes in a patient, does the surgery, and then the insurance company rejects that claim because of documentation errors or a technicality. Four, the Union government has put a cap on the amount you can charge for different treatments. That doesn’t always work well for private providers.

To deliver PMJAY will be difficult until the public sector is strengthened. This is because patients will choose to go to an already overburdened private player. Of course, private hospitals charge more and may do unnecessary procedures, but what is often not spoken about enough is that there is a burden on them because the public sector either isn’t performing or people don’t trust the sector to perform.

How wide is the performance disparity among States under PMJAY?

Avani Kapur: Not only do hospitals not exist [in many parts], but even empanelled hospitals haven’t been active. In Uttar Pradesh, for instance, 39% have been inactive since empanellment, and only 50% have been active in the last six months. The States’ [performances] vary. In coverage, some have been quite low compared to others, and even within States, the dispersion of hospitals is skewed. Governance processes make a big difference. In terms of claim payments, some States saw a delay of more than 45 days, while others paid the claims faster. What is also interesting is that there is a concentration of claims in Andhra Pradesh, Arunachal Pradesh, Rajasthan, Karnataka, Maharashtra, and Tamil Nadu. More research is needed to understand why this is the case.

Nachiket Mor: The issue of delays [in payments] should not have anything to do with poor or rich States; these are technology-enabled platforms. The fact is, in Shravasti district in U.P., for example, there isn’t enough hospital capacity. This is the driver of these differences. In most jurisdictions around the world, there is an obligation for the insurer to have network adequacy. This means you can’t offer an insurance scheme unless you have hospitals nearby. That restriction is not there in India, so you can offer a card to somebody even though there is no way for him to go and claim it. And that is a key deficiency in much of the northern and north-eastern States. And that’s where we need to pay attention. The private sector is unlikely to go to Bastar and build a hospital. It would have to be led by the public sector for the foreseeable future.

India’s out-of-pocket expenditure for health has decreased, but it still hovers around the 47-50% mark, which is much higher than global average. Do we need to look at a system where outpatient care, diagnostics and drugs can also be covered?

Nachiket Mor:We are making an error in equating PMJAY and health and wellness centres with government efforts on the healthcare side. The largest component of healthcare expenditures are government expenditures through the State and Centre and they are multiples higher than what these two schemes are doing. These are supposed to include outpatient (OP) care: in fact, the bulk of the expenditure is on drugs and OP care. Are there governments (in the world) that have a separate government-financed public sector and then added an insurance layer on top of it? I have not seen [this] because it adds to the fragmentation of the overall health landscape. And that is something we need to address to solve the problem of out-of-pocket expenditure.

Avani Kapur: In the current design and given the fiscal cost, it may be too much to expect the current model of PMJAY to cover everything. But there are lots of interesting State schemes that are taking care of providing free medicines: Tamil Nadu and Rajasthan are doing great work in trying to provide some form of universal healthcare. India is ranked 67th out of 189 countries in terms of out-of-pocket expenditure. Also, the Union government is meant to allocate 60% of PMJAY funds, but the amount [it is] actually spending is less than this. In some ways, PMJAY was designed to take care of [healthcare cost] shocks, as inpatient treatments can cost a lot relative to outpatient treatments. But we need to think about it in its entirety rather than looking at it as bits and pieces.

The government said this was a step towards providing UHC. Would you argue that the insurance model is not correct for India’s path towards achieving UHC? Has any other country been able to achieve it through an insurance model?

Nachiket Mor: The insurance model, if defined narrowly as separating the money from the provider, and not giving budget-based allocations but saying to the provider that if you perform, then you get paid — in India, my own belief is that the insurance model, if restricted exclusively to the public sector, could have a big impact on its performance, particularly in the poorer States. It’s almost become the only way many countries have delivered UHC, such as Thailand, Turkey, Vietnam, and Uruguay. India’s current model is no longer the dominant model. That is what is exciting to me about the NHA/SHA — we have the capacity to implement something like this. But it wouldn’t be in the way you’re thinking about insurance perhaps, which is indemnity: I file a claim, I get refunded. Those approaches are a pathway to bad outcomes. This is the error Medicare/Medicaid made in the U.S. in 1965 – it led to massive inflation in healthcare prices. But with the purchaser-provider split, I would say it is the only idea that can take us forward, but if we restrict it only to the public sector and bring all the multiple pools of money together.

Avani Kapur: I agree. I don’t think in its current design, insurance is going to yield what we want it to yield, which is not just reducing out-of-pocket expenditure, but also ensuring quality care. A recent paper on low- and middle-income countries and health insurance said the issue is not just whether government subsidy should be channelled through health insurance or direct subsidies to public facilities, but how do you reach a system where you have specific payment structures and non price mechanisms that can actually change both provider behaviour and also patient choice? In its current form, I don’t think PMJAY is going to get us there unless we focus a lot more on the public health system.

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Nachiket Mor is Visiting Scientist, Banyan Academy of Leadership in Mental Health; Avani Kapur is Senior Visiting Fellow, Centre for Policy Research and Founder-Director, Foundation for Responsive Governance