What Happened
- A study commissioned by Niti Aayog found that PMJAY (Pradhan Mantri Jan Arogya Yojana) beneficiaries incur an average out-of-pocket expenditure of Rs 54,000 per hospitalisation at private empanelled facilities, despite the scheme promising cashless treatment.
- The finding undercuts the core promise of Ayushman Bharat — to eliminate catastrophic health expenditure for low-income households — particularly in the private hospital segment.
- Private hospitals account for 46% of all hospitals empanelled under PMJAY and contribute to 54% of all hospitalisations under the scheme, making the gap between entitlement and actual cost a systemic concern.
- Separate research has shown that among PMJAY beneficiaries using private hospitals, 78.1% incurred catastrophic health expenditure (defined as exceeding 10% of annual household consumption) in 2021, declining marginally to 70.9% in 2022.
- The Niti Aayog study raises questions about the adequacy of package rates negotiated with private providers, and about topping-up and informal billing practices.
Static Topic Bridges
Ayushman Bharat — Pradhan Mantri Jan Arogya Yojana (AB-PMJAY)
AB-PMJAY is the world's largest government-funded health assurance scheme, launched on 23 September 2018 in Ranchi, Jharkhand. It is the secondary and tertiary care insurance component of the broader Ayushman Bharat mission, which also includes Health and Wellness Centres (now Ayushman Arogya Mandirs) as its primary care pillar.
- Coverage: Rs 5 lakh per family per year for secondary and tertiary hospitalisation, covering approximately 12 crore families (55 crore beneficiaries) — the bottom 40% of the population.
- Administered by: National Health Authority (NHA) under the Ministry of Health and Family Welfare.
- Beneficiary identification: Based on Socio-Economic Caste Census (SECC) 2011 data; cashless and paperless treatment at empanelled hospitals.
- Covers ~1,949 medical procedures including pre-hospitalisation (3 days) and post-hospitalisation (15 days) expenses.
- Pre-existing conditions covered from Day 1.
- Extended in 2024 to cover all citizens aged 70 years and above, irrespective of income.
- Funding: Shared between Centre and states — 60:40 for most states, 90:10 for northeastern and hilly states, 100% for Union Territories.
Connection to this news: The Niti Aayog study exposes a fundamental gap between the scheme's cashless promise and actual patient experience at private empanelled facilities, pointing to inadequacies in package rates and compliance monitoring.
Out-of-Pocket Expenditure (OOPE) and Catastrophic Health Expenditure
Out-of-pocket expenditure (OOPE) refers to direct payments made by households at the point of receiving healthcare, excluding reimbursements. When OOPE on health exceeds a threshold share of household income or consumption (typically 10% or 25% of consumption expenditure), it is termed "catastrophic health expenditure" — a key indicator of financial protection in health systems.
- India's National Health Policy 2017 set a target to reduce OOPE as a share of total health expenditure to 50% by 2025; it stood at approximately 39% in 2021-22 (National Health Accounts).
- Government health expenditure as a percentage of GDP was ~2.1% in 2021-22 — significantly below the NHP 2017 target of 2.5% of GDP by 2025.
- "Impoverishment" due to health expenditure — households pushed below the poverty line by medical costs — is a distinct metric tracked by WHO and NSSO surveys.
- The World Health Organization's Universal Health Coverage (UHC) index evaluates both service coverage and financial protection.
Connection to this news: Despite PMJAY's design goal of providing financial protection, the Rs 54,000 average OOPE at private hospitals indicates that the scheme is not yet achieving catastrophic expenditure prevention for a large share of its intended beneficiaries.
Niti Aayog's Role in Health Policy Oversight
Niti Aayog (National Institution for Transforming India) replaced the Planning Commission in 2015. Unlike the Planning Commission, it does not allocate funds but serves as a think-tank and policy advisory body. On health, it has released assessments of state health systems, the Health Index, and evaluations of flagship schemes.
- Niti Aayog's Health Index ranks states annually on health outcomes, governance, and key policy indicators — used to incentivise performance-based funding.
- Niti Aayog has previously flagged concerns about the financial viability of private hospitals under PMJAY package rates, which are set below private market rates.
- The Ministry of Health operates through the National Health Authority (NHA) as the implementing agency for PMJAY; Niti Aayog plays an independent assessment role.
Connection to this news: A Niti Aayog-commissioned study carries significant policy weight — its findings on OOPE under PMJAY are likely to inform package rate renegotiations, audit protocols, and compliance frameworks for private empanelled hospitals.
Key Facts & Data
- PMJAY launched: 23 September 2018, in Ranchi, Jharkhand.
- Coverage: Rs 5 lakh per family per year; ~12 crore families (55 crore beneficiaries).
- Administered by: National Health Authority (NHA), Ministry of Health and Family Welfare.
- Private hospitals: 46% of all empanelled hospitals, contributing 54% of all PMJAY hospitalisations.
- Average out-of-pocket expenditure at private empanelled facilities: Rs 54,000 per hospitalisation (Niti Aayog study, 2026).
- Catastrophic health expenditure rate among PMJAY private hospital users: 78.1% (2021), 70.9% (2022).
- India's OOPE as share of total health expenditure: ~39% (2021-22 National Health Accounts).
- Number of medical procedures covered: ~1,949.
- Scheme extended in 2024: All citizens aged 70+ covered regardless of economic status.
- Funding ratio: Centre:State — 60:40 (general states), 90:10 (NE/hilly states), 100% (UTs).