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Could Ayushman Bharat Salvage the Healthcare Industry in India?

Product Manager with 6+ years of experience in building consumer facing technology products.
Sep 25, 2018 11:17 AM 5 min read

On Sep 23 2018, India awoke to another milestone in social welfare - the Ayushman Bharat Scheme cited by the government as a universal health coverage scheme. The scheme has two components - an infrastructure focused one which aims to build ‘Health and Wellness Centers’ and an insurance component which plans to provide insurance up to INR5 lakh to 10 crore households or 50 crore individuals.


By all accounts this is a long overdue step, and it is useful to get into details of why this kind of scheme is important and what exactly it entails. Let’s start off with macro statistics on healthcare in India.


What Is The Status Of Healthcare In India Today?


The government spends around 1.3% of its GDP on healthcare. Sweden spends 9.9%, Singapore spends 2.2%. According to a report by the World Health Organisation (WHO), India is far below. 


Around 70% of the total health expenditure in India is out-of-pocket i.e. consumers spend it from their earnings at point of services without coverage from financial protection schemes. In 2015, an estimated 8% of the Indian population had been pushed below the poverty line by high out-of-pocket payments for health care, according to WHO.


India has only 0.5 hospital beds per 1000 of population, reveals a World Bank Dataset. The World Health Organization recommendation is 5 beds per 1000 of population. India has 1 million doctors of modern medicine (allopathic) to treat its 1.3 billion population. Of them, reportedly only 0.1 million work in the public health sector, to which India’s 900 million rural population turns for treatment.

 Ayushmaan Bharat


Things are pretty bad if you’re poor and get sick. For most, it is a descent into a vicious circle - they can’t work because they are sick and whatever earnings have been saved up, are spent on healthcare.


Universal Health Coverage is thus an urgent necessity, and something, which has been pushed for repeatedly. So when it was finally announced in the budget this year, it created quite a flutter. The British medical journal, Lancet, also praised the government’s courage to go ahead with such an ambitious scheme.


What Is The Ayushman Bharat/National Health Protection Scheme?


The scheme offers medical insurance of up to INR5 lakh per household to 10 crore households (~50 crore individuals). 


Who Are The Beneficiaries?


The beneficiaries are selected on the basis of the Socio-Economic Caste Census, and the primary criterion is economic deprivation - which is defined differently for rural and urban areas. Most people in the unorganized sector are expected as beneficiaries (e.g.: people with kuccha houses in rural areas, domestic workers and rag pickers in urban areas).


Can They Go To Any Hospital?


The government has rolled out tenders to empanelled hospitals and around 10,000 hospitals are onboard as of now, both public and private.


What Procedures Are Covered?


This is a sticking point for anyone who has ever tried to claim from a private medical insurance scheme only to discover that the procedure is not covered at the last moment. Theoretically, there is a large list of allowed procedures in the Ayushman Bharat Scheme but I haven’t been able to find a solid list anywhere. The website says ‘All pre existing diseases’ are covered from Day 1, which is a big difference from private health insurance providers and also extremely relevant for the audience of this scheme. 1,350 medical packages covering surgery, medical and day care treatments, cost of medicines and diagnostics.  


Is The Treatment Cashless?


Yes, in theory, beneficiaries need to get to an empanelled hospital, show an ID, at which point membership in the scheme will be confirmed via online authentication with the Socio Economic Caste Census database and treatment can begin.


Where Will The Money Come From?


The program is modeled as a Centrally Sponsored Scheme where 60% of the cost is borne by the Center and 40% by the states (the split is 90-10 for North Eastern states). This is cited to be the largest universal health coverage plan anywhere in the world, and the associated costs are also going to be huge. Budget 2018-19 however did not provide any concrete details about how/where/when the money will be made available. Estimates range from INR10,000 crore to INR30,000 crore (yearly) with more being committed under the PM’s authority. Part of this will be funded by the increased 4% health and education cess announced under the current budget - so via taxpayers.  


Is That Enough?


This is a very important question, which doesn’t seem to have any clear answers at this point. It’s important because without adequate funds, a program at this scale runs the risk of receding into oblivion. Concerns have been raised in Lancet about the government set rates for procedures being far below what is viable for hospitals, forcing them to withdraw from the scheme. Further questions remain on the premium - will private providers handle the insurance? Or will the government run it on its own? What safeguards will be provided to ensure private providers will do what is best for beneficiaries?


What About Infrastructure?


This is another key point. With the increased demand for healthcare spurred by the insurance scheme, are there enough hospitals, doctors, nurses, and other tertiary healthcare professionals to match it? Anecdotally, the answer seems to be no. Building healthcare infrastructure in the public sector is a long process, and then ensuring quality care is another bottleneck. Today 70% of healthcare services are provided by the private sector in India, so getting private hospitals onboard is crucial for the success of this scheme. The hospitals then need to be verified, accredited for quality care, and audited to ensure that corruption in the form of ghost beneficiaries, unnecessary procedures, charging of cash upfront etc. does not derail the scheme.

Ayushmaan Bharat 



There are no two ways about it - the Ayushman Bharat Scheme is a much-needed step forward. Universal healthcare is now closer to being recognized as a right, enabling people to fulfill their full potential, and something that the state should actively encourage. This is going to be the largest coverage program in the world, and the onus is on the state to make sure it delivers all that it has promised.


The onus is on us, in the meanwhile, to keep asking questions, and making sure loud proclamations do not override actual implementation.


Also, if you have domestic help, or are in contact with unorganized labor, wherever you are, do make sure to tell them about the scheme. There is an online OTP process for people to check if their name is on the beneficiary list.


Until next time!


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