The Ayushman Bharat Evolution: From Targeted to Universal

The Original Vision and Its Limitations

When Ayushman Bharat PM-JAY was launched in 2018, it represented the world’s largest health insurance scheme, covering 10.74 crore families with ₹5 lakh annual coverage. The scheme’s socio economic targeting mechanism, based on the Socio-Economic Caste Census (SECC) 2011 data, aimed to identify the most vulnerable populations. However, this approach created artificial boundaries that excluded many middle-class families who couldn’t afford private healthcare but didn’t qualify for government assistance.

The scheme’s implementation revealed both strengths and weaknesses. On the positive side, it created a vast network of empaneled hospitals, established standardized treatment protocols, and introduced digital infrastructure for claim processing. The National Health Authority’s data shows that over 5 crore treatments have been authorized under PM-JAY, with a total claim value exceeding ₹70,000 crores.
However, the limitations were equally apparent. Rural areas struggled with hospital availability, with many districts having fewer than five empaneled facilities. The scheme’s focus on secondary and tertiary care, while necessary, didn’t address the primary healthcare gaps that prevented early intervention. Most critically, the income-based eligibility criteria created a coverage cliff—families just above the poverty line found themselves in a healthcare no-man’s land.

The Vaya Vandana Paradigm Shift

The Ayushman Vaya Vandana Card addresses these limitations through a fundamentally different approach. By providing universal coverage to all citizens above 70, regardless of economic status, it acknowledges that healthcare needs transcend socio-economic boundaries, particularly for vulnerable populations like the elderly. This shift is demographically prescient. India’s elderly population (60+) is projected to grow from 104 million in 2011 to 319 million by 2050. The 70+ demographic, currently around 50 million, faces the highest healthcare costs due to multiple chronic conditions, frequent
hospitalizations, and complex treatment requirements. The scheme’s universal approach eliminates the bureaucratic hurdles and social stigma often associated with means-tested programs. The rapid enrollment—over 28,000 in Delhi within a week—demonstrates pent-up demand. More significantly, it reveals the inadequacy of existing coverage mechanisms. If middle-class seniors are rushing to enroll in a government scheme, it indicates that private insurance and out-of-pocket payments have failed to provide adequate financial protection.

The Financing Crisis: Numbers Don’t Lie

The Expenditure Gap

India’s healthcare financing presents a sobering picture that no amount of political rhetoric can obscure. At 1.3% of GDP, our public health expenditure ranks among the lowest globally. To put this in perspective, countries with successful universal health systems spend significantly more: the UK (7.5%), France (8.1%), Germany (9.4%), and even middle-income countries like Thailand (2.7%) and Brazil (4.2%).

This chronic underfunding manifests in multiple ways. The per capita public health expenditure in India is approximately $19, compared to $3,000 in developed nations and $75-150 in comparable middle-income countries. Even accounting for purchasing power parity, the gap remains substantial. The Fifteenth Finance Commission’s recommendation to increase public health expenditure to 2.5% of GDP by 2025 represents progress, but even this target falls short of what’s needed for universal coverage. Health economists estimate that achieving comprehensive universal health coverage would require 3-4% of GDP in public spending, implying a tripling of current expenditure levels.

The Out-of-Pocket Burden

Perhaps more troubling is India’s reliance on out-of-pocket expenditure, which accounts for nearly 65% of total health spending—among the highest globally. This means that most healthcare costs are borne directly by families, often leading to catastrophic expenditure and
medical bankruptcy. The National Sample Survey Office (NSSO) data reveals that healthcare expenses push approximately 7% of the population below the poverty line annually. In rural areas, nearly 24% of hospitalization cases result in catastrophic expenditure (exceeding 10% of household consumption), while in urban areas, the figure is 18%. This financial burden disproportionately affects vulnerable populations. Scheduled Castes and Scheduled Tribes face higher out-of-pocket payments relative to their income levels. Women often delay or forgo treatment due to financial constraints and social prioritization of male family members’ health needs.

Insurance Coverage Gaps

Despite the expansion of health insurance through various schemes, coverage remains inadequate and fragmented. The National Family Health Survey-5 (2019-21) shows that only 41% of households have any health insurance or financial protection for health. Even among covered populations, the depth of coverage is often insufficient. Private health insurance, while growing, covers only 17% of the population, primarily urban, educated, and affluent segments. Premium increases of 15-20% annually make private insurance increasingly unaffordable for middle-class families. Moreover, private policies often exclude pre-existing conditions, impose waiting periods, and limit coverage for chronic diseases precisely the areas where coverage is most needed.

Infrastructure Deficits: The Ground Reality

Healthcare Facility Shortages

India’s healthcare infrastructure reveals stark inadequacies that undermine policy ambitions. The country has approximately 0.7 hospital beds per 1,000 population, significantly below the WHO recommendation of 3-5 beds. This translates to a shortage of over 2 million hospital beds nationally. In the state capital, state-owned healthcare facilities are actively addressing a staff shortage challenge. At King George’s Medical University (KGMU), there are currently 712 out of 1,230 sanctioned positions that need to be filled. This situation arises despite the state approving an additional 525 doctor positions last year, bringing the total number of posts to 718. According to KGMU spokesperson Dr. KK Singh, “Until last year, only 187 of the sanctioned positions were vacant. The state government has taken a positive step by approving 525 more professor positions for KGMU, and we are now working on recruitment drives to fill these roles effectively.”

At Balrampur Hospital, 34 out of 104 doctor positions are currently vacant, and at Lok Bandhu Hospital, there are 15 out of 88 sanctioned positions available. This information, shared by hospital officials under the condition of anonymity, highlights the ongoing efforts to enhance staffing and improve healthcare services in the region. With focused recruitment initiatives, there is potential for significant progress in addressing these vacancies and strengthening the healthcare workforce.

Quality Standards Crisis

“Ramesh, a 32-year-old construction worker, first visited his local clinic when he was having a persistent cough that refused to go away. For over two months, he had been suffering from coughing, recurring fever, and unexplained weight loss. The classic symptoms that should have raised red flags for tuberculosis (TB). But due to limited infrastructure and inadequate diagnostic support, his condition was misread as simple bronchitis. The technician, lacking proper training and resources, failed to spot early signs of TB. The doctor, relying on this flawed report, prescribed a general course of antibiotics and sent Ramesh home. Two more painful months passed. Ramesh’s condition worsened. His cough began producing blood, and severe fatigue left him unable to work. “

This story highlights a significant systemic failure in our country. Low-quality diagnostic services, often caused by under-resourced facilities, a lack of quality checks, and insufficient training, result in misdiagnosis, delayed treatment, worsening health, and increased healthcare costs.

According to the National Health Profile 2023, only 12% of primary health centers (PHCs) in India have diagnostic laboratories, and many of these do not meet even basic quality standards. This creates a significant diagnostic gap in rural areas, causing patients to turn to unregulated and

low-quality private labs. The consequences are severe: delayed or missed diagnoses, prolonged illness, high out-of-pocket expenses, and ultimately, preventable deaths. While decentralized diagnostics are essential, India must also invest in national reference laboratories to support complex testing and surveillance. Establishing 50 NABL-accredited reference labs, each serving approximately 25 million people, would provide comprehensive national coverage. These centers should be equipped with AI-assisted digital microscopy, real-time PCR machines, and cloud-based data systems for seamless integration into the healthcare system.

Public-private partnerships can be utilized to train laboratory personnel at these reference centers, ensuring they acquire both theoretical knowledge and practical skills. The curriculum should focus on AI tools, quality protocols, and patient-centered diagnostic delivery. Diagnostics are not merely support tools; they are central to effective healthcare delivery. Without timely and accurate testing, even the best clinical decisions can fail. As India aims for Universal Health Coverage and a $5 trillion economy, strengthening diagnostic services, especially at the grassroots level, is not optional; it is an urgent public health imperative.

Governance Challenges: The Coordination Crisis

The Federal Tug-of-War

Lately, the central government has been stepping up its role in healthcare, and there are a few reasons for this shift. One key reason is the growing significance of global public health, which is reshaping the relationship between central and state governments. Over the past ten years, we’ve seen a significant expansion in international public health standards. The World Health Organization (WHO) has introduced crucial guidelines for its member countries regarding disease tracking and responses to health threats. Often, these global regulations prioritize health emergencies, such as pandemics, over national sovereignty, which means that countries have to fulfill these international commitments.

In many federal nations, including India, governments have leveraged these international agreements to establish national health laws. This sometimes curtails the authority of state governments. A prime example is the National Rural Health Mission (NRHM), initiated by the United Progressive Alliance government in 2005. This program was heavily influenced by concepts from organizations like the World Bank and the WHO, which left states with minimal input in its development. Nowadays, the emphasis has shifted towards making districts the focal points for health initiatives, often sidelining state governments in the process of tackling coordination challenges.

The second major shift in Health federalism is currently experiencing a significant transformation, largely driven by rapid technological advancements, particularly the ongoing data revolution that utilizes data clouds transcending physical borders. This surge in health data from diverse sources necessitates centralized management to facilitate effective policymaking, which in turn impacts local autonomy.

Take, for instance, the federal government’s National Digital Health Blueprint (NDHB), which is working towards establishing an integrated health information system. The goal here is to enhance transparency, boost efficiency, and elevate the quality of care for citizens. While the NDHB is managed at the federal level and aims to collaborate effectively with both public and private entities, it unfortunately lacks the active participation of state governments.

In conclusion, the emergence of digital technology and the data revolution in healthcare are having a profound effect on health federalism. The third and most significant shift in health federalism has been triggered by the impact of the COVID-19 pandemic has changed the game when it comes to health federalism. The rapid spread of the virus pushed the Central government to act swiftly. With no clear laws in place to handle the crisis, they turned to emergency powers granted by the Disaster Management Act of 2005. This gave them the authority to enforce national lockdowns and quickly roll out measures for producing, purchasing, pricing, and distributing vaccines to help control the outbreak.

While these actions were crucial, they did impact the dynamic between the Centre and the states. As the pandemic dragged on, many states, particularly those led by opposition parties, accused the federal government of overreaching and infringing on their rights regarding health service delivery.

Moreover, the challenges in coordination between the Centre and the states during this time have prompted some experts and policymakers to advocate for reforms. They argue that the shortcomings revealed in the Indian federal system during the pandemic should lead to health being moved to the “Concurrent List.” This shift would empower the federal government to take a more significant role in health matters, much like it does in education.

Global Lessons: Learning from Success and Failure :

The British NHS Model: Universal Access Through Taxation

The National Health Service (NHS) in the UK was set up in 1948 as a groundbreaking initiative to ensure everyone has access to healthcare, funded through taxes. The beauty of the NHS is that it provides free healthcare to anyone who needs it, with a tax system that asks more from those who earn more.

The NHS boasts several advantages. It guarantees healthcare access for all, keeps costs in check, and emphasizes primary care. Thanks to this, the UK enjoys impressive health outcomes, including high life expectancy and low infant mortality rates. Most importantly, healthcare is available to everyone, no matter their financial situation.

That said, the NHS is grappling with significant challenges that could offer valuable insights for India. Ongoing funding struggles have resulted in long wait times for non-urgent surgeries, with some patients waiting over a year. Additionally, the system is feeling the strain from a growing demand due to an aging population and rising healthcare expenses.

For India, the NHS model holds important lessons. First, achieving universal access through taxation is feasible, but it demands strong political backing and adequate funding. Second, a robust primary care system can help minimize expensive hospital visits. Third, while centralized purchasing can help control costs, it might also restrict choices and stifle innovation.

Furthermore, the NHS’s recent emphasis on digital health and integrated care could serve as a roadmap for India’s digital health initiatives. However, the UK’s more uniform population and centralized management make it challenging to directly apply this model in India’s diverse and intricate landscape.

China’s Healthcare Reforms: Scale and Speed

China’s healthcare reforms since 2009 provide a fascinating look at how a large and diverse nation can transform its health system. In just ten years, China managed to achieve nearly universal insurance coverage and significantly boost public health spending.

The strategy focused on expanding insurance coverage, strengthening primary care, and reforming public hospitals. The country poured resources into healthcare infrastructure, building thousands of community health centers and training millions of health workers.

However, these reforms also highlighted some challenges. Even with universal coverage, many people still face high out-of-pocket expenses, and the quality of healthcare can vary widely from one region to another. The system grapples with issues like inefficient resource allocation and misaligned incentives.

For India, China’s journey underscores the need for comprehensive reforms that address financing, delivery, and governance all at once. Simply expanding insurance isn’t enough if the underlying supply-side issues and quality concerns aren’t tackled.

Germany’s Social Insurance Model: Balancing Public and Private

Germany boasts a healthcare system that cleverly blends social insurance with regulated competition. This setup aims to strike a balance between public services and market-driven approaches. Impressively, it covers 99% of the population, with 85% relying on statutory health insurance and the remaining 15% opting for private insurance.

There are plenty of strengths in the German system. It ensures universal coverage, enjoys high patient satisfaction, and effectively manages costs. While there’s competition among various insurance funds, it also fosters solidarity through risk pooling and contributions based on income. This combination contributes to high life expectancy and low mortality rates.

On the flip side, the system can be quite complex. The multitude of insurance funds, intricate regulations, and the mix of public and private options lead to a fair amount of administrative work. Additionally, the system relies heavily on a robust formal economy to gather insurance contributions, which poses a significant challenge for India, given its large informal sector.

India could take a page from Germany’s playbook, particularly in areas like regulated competition and risk pooling. By focusing on preventive care and effectively managing chronic diseases, Germany’s approach could provide valuable insights for India as it grapples with rising health challenges. However, for India to successfully implement social insurance, it would need to formalize its economy and enhance its regulatory frameworks.

Technology as a Game Changer: The Digital Health Revolution :

The Digital Health Mission’s Promise

India’s Ayushman Bharat Digital Mission (ABDM) is a groundbreaking initiative in the realm of digital health. Its goal is to seamlessly connect patients, healthcare providers, and health records into a unified system that spans the entire country.

At the heart of the ABDM are unique health IDs for every citizen, comprehensive lists of healthcare providers, and systems designed to facilitate easy sharing of health information. This approach aims to streamline information exchange, reduce medical errors, and enhance the overall quality of care.

So far, the initial outcomes are promising. Several states have begun issuing health IDs, and pilot projects are demonstrating the system’s potential effectiveness. The mission also emphasizes the importance of data sharing with consent and safeguarding privacy, addressing crucial concerns surrounding digital health systems.

Nonetheless, significant challenges remain. A considerable number of individuals, particularly the elderly and those living in rural areas, struggle with low digital literacy. Additionally, healthcare providers in these rural regions often lack the necessary tools and training to effectively utilize digital systems.

Telemedicine’s Transformative Potential

The COVID-19 pandemic accelerated telemedicine adoption in India, demonstrating its potential to bridge geographic access barriers. The expansion of Tele MANAS to handle over 17.6 lakh mental health calls shows how technology can address specialized care shortages.

Telemedicine offers particular promise for chronic disease management, where regular monitoring and consultation are required but don’t always necessitate physical examination. Diabetes, hypertension, and mental health conditions—major health challenges in India—are well-suited to telemedicine interventions.

However, telemedicine’s effectiveness depends on adequate digital infrastructure, provider training, and patient education. Rural areas often lack reliable internet connectivity, limiting telemedicine’s reach precisely where it’s most needed.

Artificial Intelligence and Diagnostics

AI applications in healthcare offer significant potential for India, particularly in diagnostics and screening. AI-powered screening for diabetic retinopathy, tuberculosis detection in chest X-rays, and automated ECG interpretation can extend specialist expertise to underserved areas.

Several Indian companies and research institutions are developing AI solutions for healthcare. However, most applications remain in pilot stages, and regulatory frameworks for AI in healthcare are still evolving.

The key challenge is ensuring AI applications are validated for Indian populations and healthcare contexts. Most AI algorithms are trained on data from developed countries, potentially limiting their applicability to Indian patients and healthcare settings.

The Way Forward: A Comprehensive Reform Agenda :

Short-term Priorities (1-3 years)

The immediate priority must be strengthening the foundation of India’s healthcare system while building on recent initiatives like Ayushman Vaya Vandana.

Financing Reforms: Increase public health expenditure to 2% of GDP within three years through progressive budget reallocation and new revenue sources. Implement outcome-based budgeting to ensure resources translate into improved health outcomes.

Infrastructure Acceleration: Fast-track the Health and Wellness Center program to establish comprehensive primary care networks. Focus on rural and underserved areas where infrastructure gaps are most acute. Ensure centers are adequately staffed and equipped before declaring them functional.

Human Resource Emergency Response: Implement a national healthcare workforce emergency plan including accelerated training programs, rural service incentives, and improved working conditions in public facilities. Create fast-track licensing for qualified foreign healthcare professionals to address immediate shortages.

Digital Health Foundation: Accelerate ABDM implementation with a focus on interoperability and user experience. Ensure digital systems enhance rather than complicate healthcare delivery. Prioritize rural connectivity and digital literacy programs.

Quality Assurance Systems: Establish mandatory minimum quality standards for all healthcare facilities. Implement systematic patient safety monitoring and medical error reporting systems. Create patient feedback mechanisms to drive continuous improvement.

Medium-term Transformation (3-7 years)

The medium-term focus should be on systemic transformation that addresses root causes rather than symptoms.

Universal Health Coverage Architecture: Design and implement a comprehensive UHC system that integrates existing schemes while expanding coverage to currently excluded populations. Move beyond insurance toward integrated service delivery networks.

Preventive Care Revolution: Shift healthcare focus from curative to preventive care through comprehensive lifestyle intervention programs, community health initiatives, and environmental health improvements. Integrate prevention into all healthcare settings.

Healthcare Workforce Transformation: Restructure medical and nursing education to emphasize primary care, rural service, and community health. Create new cadres of healthcare workers suited to Indian conditions. Implement continuous professional development systems.

Technology Integration: Deploy AI, telemedicine, and digital health tools at scale. Ensure technology augments human capabilities rather than replacing human connection in healthcare. Address digital divides that could exacerbate health inequities.

Governance Strengthening: Establish unified healthcare governance systems that coordinate across levels of government and sectors. Implement performance management systems that reward outcomes rather than outputs.

Long-term Vision (7-15 years)

The long-term vision should position India as a global leader in equitable, efficient, and innovative healthcare delivery.

Health System Maturity: Achieve healthcare system performance comparable to develope countries while maintaining affordability and accessibility. Establish India as a model for other developing countries.

Innovation Leadership: Become a global leader in healthcare innovation, particularly in areas relevant to developing countries. Export Indian healthcare innovations and expertise to other nations.

Health Equity Achievement: Eliminate health disparities based on geography, income, gender, and social status. Ensure that health outcomes depend on individual biology rather than social circumstances.

Sustainable Financing: Establish sustainable healthcare financing that doesn’t depend on out-of- pocket payments or external assistance. Create financing mechanisms that are equitable, efficient, and politically sustainable.

Global Health Contribution: Contribute significantly to global health improvement through research, innovation, and technical assistance. Position India as a responsible global health leader.

Conclusion: The Imperative for Transformation

India is standing at a pivotal moment in its healthcare journey. The introduction of Ayushman Vaya Vandana marks a crucial step towards achieving universal health coverage, yet numerous challenges still lie ahead. The country faces a choice: should it opt for minor enhancements, or fully commit to a transformative overhaul to meet the demands of the 21st century?

The rising demand for healthcare, driven by population growth and economic development, is stretching our current system to its limits. The COVID-19 pandemic has brought this issue to the forefront, and as we look ahead, challenges like potential new pandemics and an aging population will only complicate matters further.

Research indicates that countries that invest early and comprehensively in healthcare tend to achieve better outcomes at lower costs. For instance, Thailand’s swift transition to universal coverage and Rwanda’s rebuilding of its health system post-conflict demonstrate that significant change is achievable with strong political will and effective strategies.

However, implementing change involves making tough choices about how to allocate resources and ensuring ongoing political backing, even when the financial burden is heavy. The alternative—staying stuck in dysfunction—will only lead to more suffering and greater inequalities. The Ayushman Vaya Vandana Card offers a pathway to establishing a universal healthcare system, but simply having insurance isn’t sufficient. We need to tackle issues related to the quality of care, supply chain challenges, and gaps in preventive measures.

India’s healthcare reform must be all-encompassing, addressing financing, infrastructure, workforce, governance, and quality in tandem. Piecemeal reforms could inadvertently create new issues without resolving the core problems. Moreover, the choices India makes will resonate on a global scale. A successful transformation could demonstrate that large developing nations can achieve health equity, while a failure might imply that universal health coverage is still a luxury reserved for wealthier countries. The opportunity for transformation is narrowing. Political cycles limit the chances for reform, and the pandemic has underscored the urgency for swift action.

Ultimately, India must choose between a healthcare system where access depends on location, income, and social status, or one that ensures health as a basic right. The Ayushman Vaya Vandana Card presents the opportunity for bold action, but the key question is whether India will act now to create a healthcare system that reflects its values and goals. India’s healthcare future depends on the choices made today. The chance for real change may not come again soon. We must decide: will India take action now or stick with a failing system? For the sake of future generations, the choice is clear: comprehensive transformation must start now.

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