Insurance cannot deliver universal health care (UHC) alone

Source: The post Insurance cannot deliver universal health care (UHC) alone has been created, based on the article “The rise and risks of health insurance in India” published in “The Hindu ” on 2 September 2025. Insurance cannot deliver universal health care (UHC) alone.

UPSC Syllabus Topic: GS Paper 2- Issues Related to Health

Context: India defined universal health care (UHC) in 1946 as quality care for all, regardless of ability to pay. Despite rapid insurance expansion, India remains far from this goal. The rise of PMJAY and State Health Insurance Programme (SHIP) models has triggered concerns about distortions, low use, and neglect of public health services.

For detailed information on Universal Health Coverage (UHC) in India read this article here

What is UHC and where is India?

1. Minimal guarantee: Universal health care (UHC) means guaranteed quality care to all, irrespective of ability to pay, as the Bhore Committee stated. Nearly eight decades later, India is still far from this goal, even as many other countries progressed.
2. Insurance surge: In the last decade, State-sponsored health insurance grew rapidly. PMJAY began in 2018 under Ayushman Bharat. Most State schemes mirror PMJAY, typically offering ₹5 lakh per household a year.
3. Scheme scale and design: In 2023–24, PMJAY covered 58.8 crore people with about ₹12,000 crore. SHIPs covered a similar number with at least ₹16,000 crore. Together, ~₹28,000 crore. Coverage is inpatient-only through empanelled public and private hospitals.
4. Fast-rising State spending: SHIP budgets in Gujarat, Kerala, and Maharashtra grew 8% to 25% per year in real terms between 2018–19 and 2023–24.

For detailed information on Government initiative to improve PMJAY read this article here

What are the issues with insurance-led UHC?

1. Profit bias toward private providers: About two-thirds of PMJAY spending goes to private, mainly profit-oriented hospitals. Study in 6 major states found little change in hospitalisation rates but higher use of private hospitals. Weak regulation makes profit seeking especially problematic.
2. Hospital-centric tilt and weak primary care: PMJAY and State Health Insurance Programmes (SHIPs) cover in-patient care only. This pulls attention and funds away from primary and outpatient services that prevent illness and reduce costs. Inducting all citizens aged 70 and above risks expensive tertiary care absorbing a growing share of spending while basics lag.
3. Low effective utilisation: Combined coverage may reach about 80% of the population. Yet only 35% of insured inpatients in 2022–23 could use their cover. Many lack information or face hurdles. There is no strong evidence of large reductions in out-of-pocket spending.
4. Discrimination between insured and uninsured: Private hospitals prefer uninsured patients because commercial charges exceed reimbursements and may discourage insured use. Public hospitals prefer insured patients for reimbursements. This creates discriminatory treatment and pressure to enrol on the spot.
5. Payment delays and provider exits: Providers complain of low rates and long delays. Pending PMJAY dues reached ₹12,161 crore, exceeding the annual budget. Services were suspended in places and some hospitals withdrew. Since inception, 609 hospitals have opted out.
6. Fraud, abuse, and opacity: The NHA recommended action against 3,200 hospitals for fraudulent activities. Irregularities include denial of care, extra charges, and unnecessary procedures. Safeguards exist, but audit reports are not traceable. Transparency is weak.

What is required for Universal Health Care?

1. Insurance is not UHC: Insurance offers some relief when public facilities are overcrowded or substandard. Yet it is a very poor way to arrange care and cannot substitute for expanding and improving public provision. No country has achieved UHC on this foundation.
2. Social insurance, properly defined: Some countries use social health insurance. PMJAY and SHIPs lack key features: universal coverage and a strong focus on non-profit providers.
3. Invest in public health: India’s profit-driven system reflects decades of under-investment. Public health spending was 1.3% of GDP in 2022 versus a world average of 6.1%. UHC needs serious investment and public-sector transformation.
4. Uneven progress: Some States show encouraging results. Immense gaps persist. Health insurance remains a pain killer for a system that needs real healing.

Question for practice:

Examine whether insurance-led schemes like PMJAY and State Health Insurance Programmes (SHIPs) can achieve Universal Health Care in India.