India’s journey towards Universal Health Care (UHC) remains fraught with challenges in 2025. Despite ambitious health insurance schemes like the Pradhan Mantri Jan Arogya Yojana (PMJAY) and various State Health Insurance Programmes (SHIPs), the country struggles to ensure quality health care for all. These schemes have expanded coverage but fall short of delivering comprehensive care or reducing out-of-pocket expenses . The reality exposes systemic issues in funding, service delivery, and regulation that hinder India’s progress towards true UHC.
Recent Expansion of Health Insurance Schemes
Since 2018, PMJAY has covered nearly 59 crore individuals with an annual budget around ₹12,000 crore. Alongside, SHIPs in major States cover similar numbers with a combined budget of ₹16,000 crore. These schemes primarily cover inpatient care in a mix of public and private hospitals. Budgets for SHIPs in States like Gujarat, Kerala, and Maharashtra have grown 8% to 25% annually in real terms. However, this growth focuses on insurance coverage rather than strengthening public health infrastructure.
Limitations of Insurance-Based Health Care
Health insurance in India promotes a profit-driven model. About two-thirds of PMJAY funds go to private hospitals, which often prioritise profit over patient care. Hospitalisation is emphasised while primary and outpatient care remain underfunded. This imbalance risks escalating costs, especially as the elderly population grows and demands expensive tertiary care. Insurance schemes do not address preventive care or early treatment, which are critical for UHC.
Utilisation and Awareness Gaps
Despite high nominal coverage, utilisation of insurance remains low. Studies show only about 35% of insured hospital patients use their insurance effectively. Many beneficiaries lack awareness or face barriers in accessing benefits. Disadvantaged groups are particularly affected. This gap limits the schemes’ impact on reducing financial burdens from health care.
Discrimination and Provider Challenges
Insurance creates disparities between insured and uninsured patients. Private hospitals often prefer uninsured patients due to higher charges. Public hospitals favour insured patients as they receive payments for treatment. This dynamic can lead to discriminatory practices and pressure on patients to enrol in insurance on the spot. Health providers also complain about low reimbursement rates and delayed payments, with pending dues under PMJAY exceeding ₹12,000 crore, causing some hospitals to withdraw from the scheme.
Corruption and Transparency Issues
Fraud and abuse plague health insurance schemes. Thousands of hospitals have been flagged for irregularities like denying eligible patients, overcharging, and unnecessary procedures. Despite audits and monitoring, transparency remains weak. Audit reports are rarely available publicly, undermining trust and accountability in the system.
Systemic Underinvestment in Public Health
India’s public health expenditure remains low at about 1.3% of GDP, far below the global average of 6.1%. This chronic underfunding has led to weak public health infrastructure and reliance on private, profit-driven providers. True UHC requires investment in public facilities and a shift towards non-profit care models. Some States have made progress, but nationwide gaps persist.
Need for Comprehensive Health Care Reform
Health insurance schemes like PMJAY and SHIPs offer partial relief but cannot replace a robust UHC framework. The focus must shift to strengthening primary care, expanding public health services, and regulating private providers strictly. Only then can India hope to achieve equitable and affordable health care for all its citizens.
Questions for UPSC:
- Point out the challenges India faces in achieving Universal Health Care despite the expansion of health insurance schemes like PMJAY.
- Critically analyse the impact of profit-driven private health care on the accessibility and quality of health services in India with suitable examples.
- Underline the role of public health expenditure in strengthening health systems and estimate its significance in achieving Universal Health Care.
- What are the causes and consequences of corruption in health insurance schemes? How can transparency and accountability be improved in India’s health sector?
