The Influence of Government Policies on Healthcare Financing in India: A Focus on Ayushman Bharat

Healthcare financing in India has always been a tightrope walk between affordability and accessibility. For a long time, Indian patients have faced high treatment costs and inequitable healthcare access. According to a report by Niti Ayog, 7% of India’s population is pushed towards poverty due to healthcare costs. In this precarious situation, Government policies emerge as a balancing pole in bringing affordable and accessible Indian healthcare. One of the most sought initiatives of the Indian Government in reshaping healthcare is Ayushman Bharat Yojana. This scheme has not only uplifted millions but also revolutionised how financial sectors can serve healthcare and how these two could create a big difference in building healthy India.

Redefining Healthcare Access Through Ayushman Bharat Yojana

Launched in 2018, Ayushman Bharat, formally known as Pradhan Mantri Jan Arogya Yojana (PM-JAY) is a healthcare insurance scheme. This scheme aims to provide financial protection to economically vulnerable people and empower them to get the best treatment at a lower cost. It is the world’s largest government-funded healthcare scheme, redefining the accessibility and affordability of healthcare services by providing health coverage of INR 5 lakh per family every year for tertiary and secondary care hospitalisation. It is expected to cover 50 crore vulnerable families and provide them with affordable treatment.

This initiative doesn't just heal, it transforms the whole healthcare financing. By enabling cashless transactions, Ayushman Bharat has paved the path for a digital revolution in healthcare financing. As of March 2023, it has benefitted 23.3 crore beneficiaries along with 4.49 crore hospital admissions.

With this scheme, hospitals and healthcare providers have been nudged to upgrade their billing systems and integrate digital tools, promoting efficient and convenient financial practices.

Transitioning Towards Smooth Financial Evolution

While government policies have ensured that no patient is turned away from medical services due to financial reasons, the system has not been entirely free from hurdles. Many healthcare providers grapple with the problem of delayed payments from insurance companies, supply chain inefficiencies, and claim rejection rates that can affect their cash flows. There are innovative solution providers that are helping to lessen the burden on the system. They have ensured the services they are offering are free from obstacles. They bridge the gap between government and providers by offering real-time insights, claim statuses, and pre-approved funding. This makes insurance claims more accessible for families and it saves them from financial burden. According to a report by the National Institute of Health (NIH), 39.88 % of families not covered under the Ayushman Bharat scheme face significant financial costs as compared to those who are covered under the scheme.

These solutions are becoming indispensable for providers too who are navigating government-backed schemes like Ayushman Bharat by offering operational efficiencies and medical equipment financing.

Government Policies and Digital Disruption

Government policies always have a larger impact on surrounding systems. The success of Ayushman Bharat has spurred other states to adopt similar health coverage programs. However, the sheer scale of these schemes necessitates robust revenue cycle management and efficient claim processing. This has opened up doors for tech-enabled platforms to offer a unified solution that offers timely responses, automated claim management, reducing errors, and speeding up settlements.

These systems empower providers by offering them dashboards through which they can easily obtain their claim patterns and flag any potential delays before they escalate into a crisis. By reducing dependencies on cumbersome manual processes and paperwork, they allow hospitals and health care providers to focus on what they are specialised in - giving timely treatment and saving lives.

The Future of Healthcare Financing

As healthcare financing evolves, the role of government policies and expenditures remains crucial. Though the share of the government in health expenditure has increased from 1.13 % in 2015-16 to 1.84% in 2021-22, the implementation of policies on a large scale remains a critical issue. It requires collaboration between various stakeholders such as providers, issuers, patients and financial enablers. A well-established financial platform ensures that the process of insurance filing to settlement is smooth and efficient. Moreover, they will also help in delivering automated claim management systems and upfront capital making the whole process easier for hospital and healthcare providers.

In a broader narrative of healthcare financing, every stakeholder has an equal and important role to play in building a sustainable and equitable future. As Indian healthcare continues to expand and is expected to reach USD 638 billion by 2025, a cohesive approach is needed to be followed by robust policies and financial innovations. After all, they are the key players in achieving the vision of universal healthcare access.

(This article is authored by Mr. Vikrant Agrawal, Co-founder, Care.fi)