{"id":361908,"date":"2026-04-30T20:09:52","date_gmt":"2026-04-30T14:39:52","guid":{"rendered":"https:\/\/forumias.com\/blog\/?p=361908"},"modified":"2026-04-30T20:09:52","modified_gmt":"2026-04-30T14:39:52","slug":"increasing-health-insurance-coverage-growing-distress","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/increasing-health-insurance-coverage-growing-distress\/","title":{"rendered":"Increasing Health Insurance Coverage, Growing Distress"},"content":{"rendered":"

UPSC Syllabus: Gs Paper 3- <\/strong>Issues relating to development and management of Social Sector\/Services relating to Education<\/p>\n

Introduction<\/strong><\/h2>\n

Health insurance coverage has expanded significantly in India, as shown by the National Sample Survey (NSS) 80th round (2025), mainly due to government-financed schemes. However, this increase has not improved healthcare access or reduced financial burden. Hospitalisation rates remain low, dependence on private healthcare has increased, and out-of-pocket expenditure has sharply risen. This reflects a clear mismatch between insurance expansion and actual healthcare outcomes, raising concerns about the effectiveness of the current insurance-led approach.<\/p>\n

Current Status of Health Insurance in India<\/strong><\/h2>\n
    \n
  1. Rapid Expansion of Coverage: <\/strong>Health insurance now covers 47.4% rural and 44.3% urban households<\/strong>, mainly due to a more than 2.5 times increase in government-financed schemes<\/strong>.<\/li>\n
  2. Government Schemes Driving Growth: <\/strong>This expansion is mainly due to Government-Financed Health Insurance (GFHI)<\/strong> schemes like Pradhan Mantri Jan Arogya Yojana and State schemes, while ESIS and CGHS have minimal contribution<\/strong>.<\/li>\n
  3. Rising Role in Household Financial Assets:<\/strong> The share of insurance and pension funds in household financial assets increased from 28.6% (2018-19) to 29.6% (2024-25)<\/strong>, showing growing financial participation.<\/li>\n
  4. Health Insurance Becoming Dominant Segment:<\/strong> Health insurance now contributes 41% of non-life premium<\/strong>, becoming the leading segment<\/strong>, surpassing motor insurance.<\/li>\n
  5. Coverage Not Translating into Utilisation: <\/strong>Despite higher coverage, hospitalisation rates remain below 2014 levels<\/strong>, with only a marginal rise in rural areas and decline in urban areas, indicating weak utilisation.<\/li>\n<\/ol>\n

    Major Concerns Related to Health Insurance in India<\/strong><\/h2>\n
      \n
    1. Shift Towards Private Healthcare: <\/strong>There is a clear shift towards private hospitals for treatment and childbirth<\/strong>, while the use of public facilities has declined, especially in urban areas. This reflects reduced reliance on public healthcare services<\/strong>.<\/li>\n
    2. Sharp Rise in Out-of-Pocket Expenditure: <\/strong>Out-of-pocket expenditure on hospitalisation has more than doubled between 2017-18 and 2025<\/strong>. This shows that financial protection from insurance remains weak.<\/li>\n
    3. Hidden Costs in Public Healthcare: <\/strong>Even in public hospitals, patients spend due to lack of medicines, diagnostic services, and high transport and other non-medical costs<\/strong>. This reduces the benefit of subsidised care.<\/li>\n
    4. High Cost Burden in Private Sector: <\/strong>Treatment in private hospitals leads to very high expenses, with costs rising by 70% in rural areas and 80% in urban areas<\/strong>, increasing financial distress.<\/li>\n
    5. Inequitable Utilisation of Insurance Schemes: <\/strong>Although schemes target the poor, better-off groups benefit more<\/strong>, and only 13% of urban beneficiaries belong to the poorest class<\/strong>.<\/li>\n
    6. Inclusion of Non-Poor Increasing Burden: <\/strong>Extending coverage to non-poor households increases utilisation but also raises fiscal burden and weakens targeting efficiency<\/strong>.<\/li>\n
    7. Rising Fiscal Pressure on States: <\/strong>States like Haryana and West Bengal spend around 15% of their health budgets on GFHI (Government-Financed Health Insurance<\/strong>), creating financial stress.<\/li>\n
    8. Delays and Dependence on Private Providers:<\/strong> Fiscal pressure leads to delays in payments to private hospitals<\/strong>, while the insurance model channels public funds towards private providers.<\/li>\n
    9. Profit-Oriented and Weakly Regulated Private Sector: <\/strong>The private sector works on profit maximisation with limited regulation<\/strong>, and patients are often charged extra despite insurance coverage.<\/li>\n
    10. Structural Imbalance in Healthcare Approach: <\/strong>The system reflects an imbalance where schemes appear \u201c<\/strong>of the rich, for profit, by the poor\u201d<\/strong>, raising concerns about fairness.<\/li>\n
    11. Neglect of Primary Healthcare System: <\/strong>Ayushman Arogya Mandir has potential for comprehensive care but remains underfunded<\/strong>, similar to the National Health Mission, showing a gap between curative insurance focus and preventive care needs<\/strong>.<\/li>\n<\/ol>\n

      Recent Policy and Regulatory Measures for Health Insurance in India<\/strong><\/h2>\n
        \n
      1. Vision of \u201c<\/strong>Insurance for All by 2047\u201d: <\/strong>The Insurance Regulatory and Development Authority of India aims to expand insurance coverage to all citizens.<\/li>\n
      2. Sabka Bima Sabki Raksha (Amendment) Act, 2025: <\/strong>The law amended key insurance Acts to expand coverage, improve protection, and strengthen the sector<\/strong>, while supporting ease of doing business.<\/li>\n
      3. Legislative Reform to Strengthen Sector: <\/strong>The Insurance Laws (Amendment) Act, 2025 increased FDI limit to 100%, simplified compliance, and aligned laws with digital data protection.<\/li>\n
      4. GST Exemption on Health Insurance: <\/strong>From September 2025, 18% GST was removed, making health insurance more affordable and encouraging wider adoption.<\/li>\n
      5. Reduced Moratorium Period: <\/strong>The moratorium period was reduced from 8 years to 5 years, limiting claim rejection after this period except in fraud cases.<\/li>\n
      6. 30-Day Free-Look Period: <\/strong>A standard 30-day period allows policyholders to review and exit policies, improving transparency and trust.<\/li>\n
      7. Guaranteed Policy Renewal: <\/strong>Insurers must renew policies and cannot deny renewal based on past claims<\/strong>, ensuring continuity of coverage.<\/li>\n
      8. Portability and Migration Benefits: <\/strong>Policyholders can switch insurers or plans while retaining waiting period credits and no-claim benefits<\/strong>, increasing flexibility.<\/li>\n
      9. No Claim Bonus (NCB): <\/strong>Policyholders are rewarded with higher coverage or lower premiums if no claim is made, promoting responsible usage.<\/li>\n
      10. Performance Monitoring of TPAs: <\/strong>Insurers monitor Third Party Administrator (TPA), and penalties based on customer feedback ensure better service delivery and accountability.<\/li>\n<\/ol>\n

        Major Health Insurance Protection Schemes<\/strong><\/h2>\n
          \n
        1. Pradhan Mantri Jan Arogya Yojana (PMJAY): <\/strong>PMJAY is the largest scheme driving coverage expansion, contributing to a more than 2.5 times increase in insurance coverage between 2017-18 and 2025<\/strong>, with 43.52 crore Ayushman cards issued<\/strong>.<\/li>\n
        2. Swasthya Saathi (West Bengal): <\/strong>This State-level scheme has supported the expansion of coverage under GFHI (Government-Financed Health Insurance)<\/strong>, especially in West Bengal.<\/li>\n
        3. Employees\u2019 <\/strong>State Insurance Scheme (ESIS): <\/strong>ESIS provides social security and healthcare to workers, but its contribution to recent coverage growth is very limited.<\/li>\n
        4. Central Government Health Scheme (CGHS): <\/strong>CGHS mainly covers government employees and has minimal role in expanding overall insurance coverage<\/strong>.<\/li>\n
        5. State Government Health Insurance Schemes: <\/strong>Schemes for State government employees are part of GFHI, but their contribution to overall expansion remains limited.<\/li>\n
        6. Ayushman Arogya Mandir (AAM): <\/strong>AAM focuses on comprehensive primary healthcare, including non-communicable diseases<\/strong>, but remains severely underfunded<\/strong>.<\/li>\n<\/ol>\n

          Conclusion<\/strong><\/h2>\n

          The expansion of health insurance has not translated into better care or financial protection. Rising out-of-pocket costs, growing dependence on private providers, and unequal access show deep structural problems. Public funds are increasingly supporting private profit, while primary care remains neglected. There is a need to rethink the insurance-led model and prioritise strengthening public healthcare to ensure universal, equitable, and affordable access for all sections.<\/p>\n

          Question for practice:<\/strong><\/p>\n

          Discuss how the increase in health insurance coverage in India has failed to improve healthcare access and financial protection, as reflected in recent data.<\/p>\n

          Source<\/strong>: The Hindu<\/a> and PIB<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

          UPSC Syllabus: Gs Paper 3- Issues relating to development and management of Social Sector\/Services relating to Education Introduction Health insurance coverage has expanded significantly in India, as shown by the National Sample Survey (NSS) 80th round (2025), mainly due to government-financed schemes. However, this increase has not improved healthcare access or reduced financial burden. Hospitalisation… Continue reading Increasing Health Insurance Coverage, Growing Distress<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230],"tags":[216,242,10498],"class_list":["post-361908","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","tag-gs-paper-3","tag-science-and-technology","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/361908","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=361908"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/361908\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=361908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=361908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=361908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}