Finance Minister Nirmala Sitharaman’s Budget 2024 adopted a seriously low-touch approach to healthcare, which was unexpected but not unprecedented.
Given that the budget came less than a month before Prime Minister Narendra Modi’s Independence Day address, which has emerged as a far more significant policy statement, it is not surprising that Sitharaman did not announce the expansion of Pradhan Mantri Jan Arogya Yojana (PMJAY) to include Indians over 70 years old.
What the Union Budget could have done better was introduce innovative tax-based incentives to enhance private sector participation in PMJAY ahead of the promised expansion.
The lack of sufficient empanelled healthcare providers under the scheme has been flagged in numerous reports, including one by the Comptroller and Auditor General (CAG). The CAG report on the performance audit of PMJAY noted: “The availability of Empanelled Health Care Providers (EHCPs) per lakh beneficiaries is very low in the States/UTs, Assam (3.4), Dadra Nagar Haveli-Daman Diu (3.6), Maharashtra (3), Rajasthan (3.8) and Uttar Pradesh (5), etc. Further, availability of EHCPs per one lakh beneficiaries ranged from 1.8 EHCPs in Bihar to 26.6 EHCPs in Goa.”
Of the more than 43,000 private hospitals in India, just over 30 per cent—13,261—are empanelled under PMJAY.
The BJP’s 2024 election manifesto promised to include citizens over 70 years in PMJAY, a promise reiterated by President Droupadi Murmu in her address to the joint session of Parliament. Both PMJAY and its non-starter predecessor, the National Health Protection Scheme (NPHS), have featured in Modi’s Independence Day addresses in the past. In fact, the PMJAY launch happened just over a month after Modi mentioned it in his 2018 address.
So, for the expansion of the scheme to feature in this year’s address from the Red Fort would be a fitting continuation of the trend, especially with crucial state elections coming up in Maharashtra, Jharkhand, Haryana, and Delhi.
PMJAY without private sector?
Regardless of the definitive rollout announcement, there is widespread curiosity about how the government pulls off the formidable task of providing health insurance to a group most prone to illness or pre-existing conditions that lead to serious illnesses.
It remains to be seen whether the current annual premium amount for families (with an annual health cover of Rs 5 lakh) will be a benchmark for setting the premium for the elderly population (largely individuals rather than families).
But PMJAY will never realise its full potential without better private sector participation.
Eligibility based on age will even out the distribution of PMJAY beneficiaries across urban, rural, and semi-rural India. However, its implementation will be hamstrung if prominent hospital chains continue to stay out of its purview. This problem has persisted with the Central Government Health Scheme (CGHS), but PMJAY aims to cover a much wider beneficiary base.
On a related note, the exodus of private hospitals from CGHS was triggered by pending dues, and the latest data from the National Health Authority (NHA) show that not much has changed in this regard. Hospital dues of over Rs 663 crore are pending with CGHS—these are claims that have been vetted and cleared by the NHA.
This backlog is a disincentive for private enrolment in any government scheme, not just CGHS.
Empanelment in government schemes has a longer-term ripple effect of lowering hospital rates, which is a significant collateral benefit. Notably, the Supreme Court has asked the central government to fix rates for private hospitals, a decision challenged by a doctors’ association. The court is expected to hear the matter in September.
Even in the immediate context, the health cover will mean little if, in an emergency, a senior citizen is forced to shuttle from one hospital to another in search of a facility that accepts the Ayushman Bharat PMJAY card. Despite an effort by the NHA to clear pending bills faster (reports continue to emerge of the scheme “bleeding” private hospitals), not much has been done in this regard.
In the early years of the scheme, this problem was recognised, and discussions pivoted around possible incentives to boost private hospital enrolment.
There were talks about whether private hospitals that are part of PMJAY could become eligible for bank loans using the money the government owes them as collateral.
However, not much came of it, and with Covid-19 striking in 2020, everything else took a back seat.
Also Read: Census, privatisation absent from Budget 2024. It’s a calculated political move
Tax incentives as a solution
If some of the best hospitals continue to stay out of PMJAY, concerns about the quality of empanelled hospitals will also arise.
This issue was flagged by the CAG last year in its performance audit of the scheme. It found that many empanelled hospitals “neither fulfilled minimum criteria of support system and infrastructure nor conformed to the quality standards and criteria prescribed under the [PMJAY] Guidelines.”
Even a simple measure in the Union Budget, such as a modest tax rebate for empanelled hospitals, would have made a difference. There is precedent around the world where public-private partnerships have been used to ensure universal health coverage through tax incentives, among other measures.
For instance, Egypt offers a 10-year tax-free period for private hospitals in return for providing 10 per cent of their bed capacity free of charge. Many other countries, including those in Southeast Asia, with resource limitations, have started buying from the private sector to compensate for their own capacity constraints, using tax incentives both to increase coverage and regulate the private sector.
The Indian government has a similar policy under the Digital Health Incentives Scheme (DHIS), which offers a small premium to private facilities for creating digital health records. Compliant companies can earn financial incentives of up to Rs 4 crore based on the number of digital health records created and linked to Ayushman Bharat Health Account (ABHA) numbers of the patients.
A similar approach could have dramatically changed the reach and quality of services provided by PMJAY and made its expansion, when it came, a meaningful intervention for the senior citizens of the country.
The Union Budget 2024 failed both to take stock and plan ahead.
Abantika Ghosh is a former journalist and author. She is currently working with Chase India. She tweets @abantika77. Views are personal.
(Edited by Prasanna Bachchhav)