Ayushman Bharat for all senior citizens above 70: Will providers step up?

The Union Cabinet’s recent decision to extend health coverage under the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) to all senior citizens aged 70 and above is set to benefit 60 million senior citizens. However, the private sector hospitals and industry bodies have raised concerns about the programme’s long-term sustainability and its potential impact on healthcare providers.

With this, senior citizens aged 70 and above will be eligible to receive benefits under AB PM-JAY, regardless of their socioeconomic status. They will be issued a distinct card under the scheme. Senior citizens already covered under AB PM-JAY will receive an additional top-up cover of Rs 5 lakh per year, which they will not have to share with family members under 70 years of age. For senior citizens not previously covered, the insurance cover will provide up to Rs 5 lakh per year on a family basis.

While the move aims to provide health insurance cover worth Rs 5 lakh to approximately 60 million senior citizens, healthcare professionals and experts have warned that this expanded beneficiary base may put undue strain on smaller hospitals and clinics. Senior citizens, often requiring more intensive care, will increase demand for services, raising questions about the healthcare system’s ability to cope without adjustments to reimbursement rates and payment timelines.

Potential Strain on Smaller Healthcare Providers

Those already receiving benefits under public health schemes such as the Central Government Health Scheme (CGHS), Ex-Servicemen Contributory Health Scheme (ECHS), or Ayushman Central Armed Police Forces (CAPF) can either continue with their existing schemes or opt for AB PM-JAY. Senior citizens covered by private health insurance or the Employees’ State Insurance scheme will also be eligible for benefits under AB PM-JAY.

Dr. Harsh Mahajan, Chair, FICCI Health Services Committee and Founder & Chief Radiologist, Mahajan Imaging, expressed concerns about the strain this could place on smaller healthcare facilities. “Adding 60 million elderly citizens to the scheme brings logistical challenges for hospitals, especially those with limited resources. Without timely payments and fair reimbursement rates, many of these providers may struggle to maintain the quality of care,” Mahajan said.

This sentiment is echoed by healthcare experts who argue that the current reimbursement rates under AB PM-JAY do not accurately reflect the actual cost of treatment, particularly for senior citizens who often require long-term or complex care. As a result, hospitals might either opt out of the scheme or lower the quality of care to manage costs.

Delayed Payments Could Disrupt Care Delivery

A persistent issue under AB PM-JAY has been delayed reimbursements to hospitals, which can disrupt cash flow and hinder their ability to operate effectively, say industry experts. Timely payments are especially critical for smaller hospitals and clinics that rely on regular reimbursements to cover operational costs.

Dr Girdhar Gyani, Director General of the Association of Healthcare Providers (AHP-India), emphasised the risks posed by these delays: “Expanding the scheme without ensuring fair and prompt reimbursement risks straining hospitals, particularly smaller ones, which may not have the financial capacity to continue providing services.” The AHPI has previously advocated for health insurance coverage for the elderly through representations to the Ministry. However, this expansion, which will add approximately six crore beneficiaries, also increases the demands on private healthcare providers, Gyani said.

Geriatric Care Demand Set to Rise

With India’s elderly population projected to reach 194 million (19.4 crores) by 2031, the demand for geriatric care is set to grow substantially. While expanding AB PM-JAY to cover all senior citizens aged 70 and above is seen as a necessary step, experts caution that it may exacerbate existing capacity issues within both public and private healthcare sectors.

“The government’s decision is a much-needed step towards ensuring that our elderly population has access to essential healthcare services. However, to make this expansion truly effective and sustainable, it is crucial that reimbursement rates under the scheme remain fair and that payments are made in a timely manner. This will help ensure that healthcare providers, especially smaller hospitals and clinics, can continue to participate actively and deliver high-quality care,” said Dr Santy Sajan, Group Chief Operating Officer, Paras Health.

The decision has also resonated with stakeholders in the insurance sector. Aditya Sharma, CEO of Affordplan, a fintech platform that offers  a full stack of financial services for healthcare including medical loans, and insurance, described it as "a revolutionary change for the insurance industry and healthcare funding." However, he highlighted the need for "inclusive, long-lasting financial models" to sustain this effort.

Positive Move, but Execution is Key

Amit Chhabra, CBO - General Insurance, Policybazaar.com, noted that the move would fill a critical gap in India’s healthcare ecosystem, ensuring that the growing cohort of senior citizens, who currently constitute 10.5% of the country’s population, are not left without support during their most vulnerable years. “Healthcare costs can be a significant financial burden, especially for older adults in India who may already be dealing with age-related health issues,” he said.

Although the extension of health coverage to elderly citizens is viewed as a significant development, its success hinges on overcoming the financial and logistical challenges involved. Ensuring that reimbursement rates are revised to match actual treatment costs and that payments are made promptly will be crucial to the programme's sustainability. Without these adjustments, smaller healthcare providers could face overwhelming financial pressure, potentially leading to reduced care quality or limited participation in the scheme.

As Dr Mahajan noted, “The government’s move offers much-needed financial relief to families, but the viability of this expansion depends on how well the reimbursement process is managed. Without that, the scheme’s expansion may put undue stress on the very healthcare providers it relies on to deliver care.”

Expanding Scope of Ayushman Bharat

AB PM-JAY has provided health coverage to 550 million individuals, across 123.4 million families. To date, it has facilitated 73.7 million hospital admissions, with women making up 49% of the beneficiaries. The scheme has helped with healthcare costs amounting to over Rs 1 lakh crore, according to the government.

The extension of AB PM-JAY to senior citizens was first announced by Prime Minister Modi in April 2024. This follows previous expansions, including a revision in January 2022, which increased the scheme’s coverage from 107.4 million to 120 million families. AB PM-JAY was also extended to cover 3.7 million ASHA workers, Anganwadi workers (AWWs), and Anganwadi helpers (AWHs), along with their families. 

According to the government, as on August 2, 2024, the scheme is implemented in 33 States/UTs except the NCT of Delhi, West Bengal, and Odisha.  Eligible beneficiaries can avail of cashless and paperless healthcare services related to hospitalisation across more than 29,000 empanelled hospitals in the country. In the latest national master of the Health Benefit Package (HBP), the scheme provides cashless healthcare services related to 1949 procedures across 27 medical specialties including General Medicine, Surgery, Cardiology, Oncology, etc.