Myth of coverage: How state delay, private sector disinterest caused PM-JAY to fail

The Pradhan Mantri Jan Arogya Yojana (PM-JAY), India’s flagship health insurance scheme launched in 2018, provided cushion to only 14.25 per cent of people hospitalised for the novel coronavirus disease (COVID-19) between April 2020 and June 2021. 

The scheme’s failure during the pandemic was expected. Since health is a state subject and PM-JAY is implemented by the state governments, several of them delayed in including COVID-19 under the scheme. 

For example, Madhya Pradesh formally included COVID-19 treatment under the scheme as late as May 7, 2021, when the second wave was at its peak. A similar lapse was also reported in Telangana. The delay in state notification and lack of clarity meant private hospitals avoided admitting patients under PM-JAY. 

This is the reason almost 90 per cent of COVID-19 hospitalisations under the scheme took place in the four states that included the disease under PM-JAY at the beginning of the outbreak.

Karnataka treated the highest (0.13 million) COVID-19 patients under the scheme, followed by Andhra Pradesh (0.12 million), Maharashtra (0.1 million) and Kerala (0.07 million).

Uttar Pradesh, which reported 1.7 million cases till December 6, 2021, saw 909 hospitalisations under the scheme. In Bihar, which saw 0.72 million cases, the number of PM-JAY hospitalisations was 17.

Another major reason was that the private sector hospitals were not engaging in the full capacity in the initial months of the pandemic. Shailender Kumar Hooda, associate professor, Institute for Studies in Industrial Development, and has been researching on health economics and policy, said:

Hospitals were not providing corona-related treatment in a full-fledged manner. Especially in the first wave, only the public sector was taking care of COVID-19. Later, the private facilities joined. In some metropolitan cities, some hospitals came forward but they charged enormously.

Gradually they shifted but even then only around 60 per cent hospitals engaged themselves, he added. "In small urban and remote parts, private hospitals were not engaging themselves with COVID-19 treatment."

In many cases hospitals denied treatment because they weren’t getting proper reimbursement from the government under PM-JAY. 

Private hospitals were not enthused to join PM-JAY because it’s not sustainable as the rates offered by the government are so low, said Mysore Sanjeev, Managing Director, Proxima Corporate Services Private Ltd.

The company has been conducting analysis on COVID-19 and the efficacy of PM-JAY under a public-private partnership initiative called Jeevan Raksha, supported and guided by Public Health Foundation of India (PHFI).

“They don’t see merit in it to get empanelled and service a particular category. Then you also have to wait for months to get the payment from the government so where is liquidity to run the hospital,” Sanjeev said.

A district grievance manager for PM-JAY in Uttar Pradesh, on the condition of anonymity, said they receive a considerable number of complaints everyday against private hospitals. “Many complaints do not get registered as people do not know how to lodge them,” said the official. 

The reason private hospitals avoid treating patients under PM-JAY is because it is not profitable, he added. “For instance, private hospitals usually charge Rs 12,000 for a bone fracture treatment. Under PM-JAY, they receive Rs 4,000 for the same treatment.” 

RV Asokan, honorary secretary-general of the Indian Medical Association (IMA), said there is also a trust deficit that the government has towards the private sector.

“At least 300 surgeries and procedures covered under the scheme can only be done at government hospitals. What is the point of keeping private hospitals out of the list,” he said, adding that PM-JAY is a colossal failure and has made no impact on the ground.

Hospitals are of the view that the COVID-19 scenario increased their overall costs and they were not reimbursed accordingly under the scheme. Mangesh Pate, National Secretary of Hospital Board of India, IMA, said that in the COVID-19 scenario, it has been different for the hospitals and doctors, as compared to normal routine admission procedure and management protocol. 

Explaining his point, he gave the example of the cost of medical oxygen to hospitals during COVID-19.

When we give oxygen to patients in a normal scenario, patients usually need anything between two-five litres or eight litres maximum, he said, adding: 

When we deal with COVID-19 patients, most of the patients need something between 2-15 litres. Nearly 15-20 per cent of patients who go on prolonged treatment like a non-invasive ventilation or invasive ventilation; they need anything from 15-90 litres. The requirement was very high at that time. Industrial oxygen was to be converted into medical oxygen and transported across India. Because of this, the cost of medical oxygen to the hospitals was very high. A jumbo cylinder which has around 7000 litres of medical oxygen was available in normal cost at Rs 110-115 per cylinder but during COVID-19, the doctors and hospitals had to purchase each jumbo cylinder starting from Rs 750 to Rs 2,000.

A patient who is on 10 litres of oxygen per minute will need 600 litres of oxygen per hour and for 24 hours, almost 15,000 litres, he explained. “On this 15,000 litres, the wastage is supposed to be calculated around 15-20 per cent. So it reaches upto 20,000 to 21,000 litres, consisting of three jumbo cylinders.”

Based on this, hospitals have to shell out per patient minimum Rs 3,000 per day, the official added. “Patients in high dependency units (HDU) and ICUs need much more oxygen. Now payments are to be made towards equipment, human resources and then safety measures. So PM-JAY or any health insurance scheme was not effective.”

Some 30 per cent, or 400 million individuals, are the “missing middle” who still lack any form of financial protection for health. India’s out-of-pocket expenditure is 63 per cent of the current health spending, among the highest in the world.

Over 7 per cent of India’s population is pushed into poverty every year due to healthcare costs, PM-JAY was launched to provide greater financial protection against health shocks and improve delivery of healthcare for better health outcomes. However, it has not helped reduce out-of-pocket expenditure because of the inherent problems associated with such schemes. 

PM-JAY is more of a discount that patients get and not free cashless treatment, which is the basic premise on which it was launched, said Sulakshana Nandi, national joint convenor of Jan Swasthya Abhiyan.

“People’s out-of-pocket expenditure has not decreased under PM-JAY, because private hospitals are mainly in urban areas and most people who use the scheme are from rural or peri-urban areas.”

“Yet, during the allocation of the Union health budget, we have seen that the government continues to prioritise PM-JAY at the cost of other health programmes, such as disease control programmes and child health programmes,” she added. 

What’s worse, 75-80 per cent of the budget meant for PM-JAY gets diverted to private hospitals, she added. “This money could easily have been diverted to the public healthcare sector to improve its services.” After all, it’s the public sector that has been mainly catering to COVID-19 patients, especially those from the poor economic sections, Nandi noted. 

This is the second in a reported series on the effectiveness of government and private health insurance schemes in India. Also read the first and third parts. It first appeared in the December 16-31 print edition of Down To Earth. 

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