PMJAY: Promises & Challenges

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PMJAY: Promises & Challenges 1

Pradhan Mantri Jan Arogya Yojana (PMJAY) is a health-insurance scheme being launched by Hon’ble Prime Minister Narendra Modi. It was announced in the last budget and will be officially launched on 23rd September this year. It is an enterprising, determined and note-worthy social health insurance (SHI) being launched in India by the Modi government, and definitely deserves more than a passing glance.

Like any other program, it will take at least a few years after its implementation before it can be effectively analyzed and assessed for its predicted and inevitable pros and cons. For PMJAY to be fully comprehended, one needs to understand the broader context of the existing health conditions and health-care systems in India.

Health standards in the country have significantly increased in the last few decades, in terms of life expectancy. However, the healthcare conditions are way below par. The health ministry’s National Health Accounts have shown that full expenditure on health by the government is only 1.1% of GDP, which is significantly lower than the WHO recommended 4% on GDP. Over 70% of the health expenditure in India is privately financed, and more than 62% is out of pocket (OOP) expenditure by patients themselves, grossly lower than the WHO recommended OOP limit of 40%.

Even the allocation of public health expenditure is not up to the mark. A very meager amount of public health expenditure is put in preventive care, even though it is common knowledge that preventive care is much more equitable than curative care. And yet, India’s primary health centers are poorly staffed and inadequately equipped, while the private health care is too expensive.

 Promises of PMJAY

  • PM JAY will provide healthcare insurance up to Rs.5,00,000 per family per year, for secondary and tertiary in-patient treatment by private and public hospitals.
  • It aims to support the poorest 40% population in India, which consists of about 500 million people and 100 million families.
  • The performance-linked payment system has been designed to give incentive to hospitals to provide better services.
  • The hospitals will also be reimbursed through the concerned appointed insurance agencies or trusts.
  • National Health Authority will implement and coordinate this program.
  • Memorandum of Understandings (MOUs) have been signed with 30 states and Union territories of India, and the state is responsible for empaneling hospitals under this scheme, along with the implementation mode and agencies.
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  • This scheme is bound to have unknown financial costs that one cannot predict beforehand. Therefore, agencies cannot predict the required adequate premium.
  • Coverage Erosion is a risk factor. When costs escalate, the SHI package is reduced and coverage gaps occur, leading to an increase in OOP expenditure.
  • Private health care providers can push high-cost treatments not under the SHI to increase their profits, and therefore again increasing the OOP expenditure of vulnerable patients.
  • There is always the possibility of implementation failure, and the scheme not being fully executed as planned.
  • This scheme protects the poorest 40% of India. However, there is a lack of protection for the middle segment, who are dependent on the organized sector and do not have access to health insurance.


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