Ayushman Bharat’s next test: Are we paying for the right healthcare?

As Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) approaches eight years since its September 2018 launch, it has much to be proud of. About 100,000 people receive free hospital treatment daily, and by June 30, 2026, it had financed 12.69 crore admissions worth `1.92 lakh crore, with better financial protection and earlier access to treatment. Very few public programmes anywhere have expanded healthcare access at this scale and pace.

But scale brings its own challenges. Having shown that publicly financed health assurance can expand access, PM-JAY must now ask a harder question: are we always paying for the right care?

This is not simply about fraud, which is relatively easy to define: a service not provided, documents fabricated, a claim falsified. Clinical decision-making is far more complicated: whether a Caesarean was necessary, a hysterectomy avoidable, or a knee replacement should have followed conservative treatment first often involves judgement, not black-and-white rules.

We were conscious of this when designing PM-JAY. Certain procedures were particularly susceptible to moral hazard, where insurance itself can influence the type or quantity of care provided. So we built safeguards: reimbursement for normal and Caesarean deliveries was kept equal so payment would not reward surgery; vulnerable procedures faced pre-authorisation and stricter documentation; some were reserved for public hospitals, where supplier-induced demand was highest-risk.

These safeguards mattered, but no scheme can anticipate every clinical situation across thousands of conditions, nor can an insurer substitute its judgement for the doctor’s. It is precisely in these grey areas that PM-JAY’s next generation of oversight needs to evolve.

Caesarean sections illustrate the problem. NFHS-6 shows Caesarean deliveries rose from 21.5 per cent in 2019-21 to 27.2 per cent in 2023-24; 54.1 per cent of private-facility births were Caesarean, against 16.9 per cent in public ones. This doesn’t tell us how many were unnecessary, nor should it deny a woman a Caesarean when she needs one. WHO prescribes no ideal rate but recommends examining patterns through tools like the Robson classification. A blanket cap misses the mark: what really matters is why rates swing so distinctly across hospitals, states and sectors.

A similar pattern is emerging in orthopaedics. Total knee replacement is covered under PM-JAY, and since October 2024, citizens aged 70 and above qualify irrespective of socio-economic status. As this population grows, oversight should shift towards age-, severity and indication-based review, so that surgery follows clinical need and, where appropriate, conservative treatment first.

Hysterectomy makes an even stronger case for looking beyond the claim. The concern isn’t new: under the Rashtriya Swasthya Bima Yojana, which preceded Ayushman Bharat, reports of indiscriminate hysterectomies in states such as Uttar Pradesh and Bihar became a serious worry. An early National Health Authority analysis of 17,333 hysterectomy claims under PM-JAY (September 2018-April 2019) found the median age was just 44, and nearly 69 per cent were performed in private hospitals. It did not conclude the procedures were unnecessary but found substantial variation and recommended better capture of clinical indications and consideration of alternatives.

Hysterectomy can be lifesaving when appropriately indicated; the concern arises when an irreversible procedure becomes the first response to a condition with effective alternatives. Claims oversight must examine not just whether a procedure was performed, but whether it was appropriate and alternatives were considered. For heavy menstrual bleeding, the UK’s NICE recommends a hormonal levonorgestrel-releasing intrauterine system (LNG-IUS) first, with hysterectomy appropriate where indicated but only after fewer invasive options and the woman’s informed choice.

The stakes extend beyond the hospital stay. In younger women, hysterectomy that also removes the ovaries brings forward the loss of oestrogen, accelerating the onset of osteoporosis and cardiovascular disease. Around 46 million Indian women over 50 already live with osteoporosis, and coronary artery disease is a leading cause of death among postmenopausal Indian women. Weaker bones and joints can, in turn, feed into the same knee-replacement claims PM-JAY now covers, so an avoidable hysterectomy today can quietly add to tomorrow’s orthopaedic burden.

The cost of an intervention is not merely what is paid today. A hysterectomy in a young woman shifts her long-term health, and a Caesarean carries over into future pregnancies. High-cost elective procedures should not be rationed by age, but by disease severity, functional impairment, prior conservative treatment and comorbidities, especially when public resources finance the procedure.

PM-JAY must shift from claims assurance to clinical assurance. The Health Benefit Package should adequately cover non-surgical alternatives to prevent financial incentives from tilting medical decisions towards unnecessary procedures. Pre-authorisation must capture meaningful clinical indications rather than creating administrative paperwork. Data analytics can flag unusual utilisation patterns for targeted audits, accounting for hospital size and specialty.

Clinicians must help design these safeguards so rules examine patterns without hindering patient care. Moving beyond basic fraud prevention, PM-JAY must now ensure treatments are clinically appropriate and necessary.
PM-JAY’s next test is not to reduce the number of surgeries, or to make an insurer a doctor. The objective is to ensure financial incentives and oversight systems support sound clinical judgement. Public money should pay for the right intervention, at the right stage, with an eye on the patient’s health over a lifetime. The natural next stage in PM-JAY’s evolution, from financing more healthcare, is to financing better healthcare.