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1) Insurance-based schemes like Ayushman Bharat are no substitute for public provisioning of health. Analyze. (250 words)

Topic–  Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

1) Insurance-based schemes like Ayushman Bharat are no substitute for public provisioning of health. Analyze. (250 words)

The hindu

Why this question

Health is an important indicator and determinant of development of a country. Ayushman Bharat Scheme has been recently launched by the govt of Indian with an objective of health for all. In this context it is important to analyze the efficacy of insurance based schemes in improving healthcare in the country.

Directive word

Analyze-here we  have to examine methodically the structure or nature of the topic by separating it into component parts, and present them as a whole in a summary.

Key demand of the question.

The question wants us to dig deep into the insurance based healthcare schemes like the Ayushman Bharat scheme and bring out the deficiencies and inefficiencies in those schemes.

Structure of the answer

Introduction– write a few introductory lines about the  Ayushman Bharat scheme and how its aims to provide health for all the Indians.


Discuss why such schemes based on insurance are not well placed for India. E.g large amount of financial resources will be needed for the scheme which will need higher budgetary allocation ( to the tune of around 12000 crore as against the present 1000 crore outlay)  and higher premium rates; out-of-pocket medical expenditure rises with a fall in expenditure on public provisioning. In India, where just 1% of GDP is allocated for public health, 65% of the health expenditure is out-of-pocket; It will lead to increase in hospitalisation in private hospitals and, as a result, the expenditure not covered under the scheme will rise. Moreover, most insurance schemes do not cover outpatient visit costs, which are significantly higher for chronic illnesses. If there is public provisioning of such services, the burden of spending would not have fallen on the patient; insurance-based government schemes have an inbuilt inflationary bias. For one, they induce more hospitalisation, which, without a commensurate increase in supply, increases the price of health care, which further increases the insurance premium, and, hence the burden on the government; insurance companies can cross-finance the losses arising out of private coverage through these guaranteed lump-sum premium commitments from the government, leading to an increased pressure on the exchequer etc.

Conclusion– based on your discussion, form a fair and a balanced conclusion on the given issue.