New Delhi: Ayushman Bharat, particularly the Pradhan Mantri Jan Arogya Yojana (PM-JAY), has strengthened financial protection for millions of Indian families by reducing the amount they need to pay directly for eligible hospital treatment. Government data show that India’s out-of-pocket expenditure (OOPE) fell from 62.6% of total health expenditure in 2014–15 to 39.4% in 2021–22, while government health expenditure increased from 29% to 48% during the same period.
The decline marks an important shift in India’s healthcare financing system, where medical expenses have traditionally placed a heavy burden on household budgets.
What is out-of-pocket spending?
Out-of-pocket expenditure refers to money paid directly by patients and families for healthcare. It may include hospital charges, diagnostic tests, medicines, consultations, transport and other treatment-related costs not covered by insurance or public programmes.
High OOPE can force families to borrow money, sell assets or reduce spending on food, education and housing. It can also discourage people from seeking timely medical care, particularly when treatment involves surgery, prolonged hospitalisation or expensive medicines.
How PM-JAY provides protection
Ayushman Bharat PM-JAY provides eligible families with cashless hospitalisation benefits for approved secondary and tertiary care procedures. The scheme is intended to reduce the financial shock associated with major illnesses and hospital admissions.
Its support generally applies to expenses included in approved treatment packages, which may cover hospitalisation, surgery, medicines and diagnostic services related to the covered procedure. Patients must use eligible public or empanelled private hospitals and follow the applicable verification and authorisation process.
The programme is particularly significant for low-income households that may not have private health insurance or sufficient savings to manage a medical emergency.
Evidence of lower expenses
A 2025 study of PM-JAY beneficiaries in Haryana found that the average overall out-of-pocket expenditure was ₹14,002 among beneficiaries, compared with ₹34,093 among non-beneficiaries—a reduction of approximately 58%. Direct medical expenses for hospitalisation were 65% lower among beneficiaries, at ₹11,131 compared with ₹31,675 for non-beneficiaries.
Another assessment found that the share of household expenditure devoted to OOPE declined sharply after hospital admission among participating beneficiaries. The same study reported a fall in catastrophic health expenditure, suggesting that the scheme can reduce the risk of hospitalisation pushing families into severe financial distress.
These findings indicate that health insurance can make a major difference when patients are able to access empanelled hospitals and receive services covered under the scheme.
National financial impact
The Economic Survey 2024–25 highlighted that government-supported health insurance programmes, including PM-JAY, contributed to improved financial protection. The government estimated that such initiatives helped households save more than ₹1.25 lakh crore through reduced medical expenditure.
The reduction in OOPE has also been linked to higher public spending on healthcare and increased investment in primary healthcare. A stronger public health system can reduce the need for families to depend entirely on expensive private treatment.
Benefits for vulnerable families
The scheme is especially important for households that are most exposed to medical debt. A serious illness can quickly consume a family’s savings, particularly when the main earner is unable to work.
PM-JAY can help families by:
- Reducing hospitalisation-related expenses.
- Supporting access to major surgical procedures.
- Limiting the need for high-interest borrowing.
- Encouraging eligible patients to seek treatment earlier.
- Improving access to empanelled private and public hospitals.
- Reducing the risk of catastrophic health expenditure.
By lowering the cost barrier, the programme may also encourage families to choose institutional care instead of delaying treatment or relying on unqualified providers.
Coverage does not eliminate every expense
Although PM-JAY can substantially reduce hospitalisation costs, beneficiaries may still face expenses that fall outside the approved package. These can include outpatient consultations, medicines purchased after discharge, travel, food for attendants, additional diagnostic tests and treatment at non-empanelled facilities.
The programme’s limited coverage of outpatient care and routine medicines remains a major challenge. Many households spend a significant share of their income on these services even when hospitalisation itself is covered.
Patients should therefore confirm the details of their treatment package, hospital eligibility and any possible non-covered charges before admission whenever possible.
Uneven implementation remains a concern
The impact of PM-JAY differs across states and healthcare facilities. Studies have found that the scheme provides stronger financial protection in some locations than in others, depending on hospital capacity, administrative efficiency, awareness and regulation of private providers.
Some beneficiaries may face difficulties related to:
- Lack of awareness about eligibility or procedures.
- Limited availability of empanelled hospitals.
- Delays in pre-authorisation or claim processing.
- Informal charges for services that should be cashless.
- Difficulty obtaining medicines after discharge.
- Weak grievance redressal in certain areas.
- Travel costs for patients living far from major hospitals.
These issues can reduce the practical value of insurance coverage even when a family is formally enrolled.
Need for stronger awareness
Many eligible families remain unaware of the benefits available to them or do not know how to verify their eligibility. Greater awareness through village-level workers, local health centres, hospitals, panchayats and community organisations could improve utilisation.
Hospitals and authorities also need to clearly communicate:
- Which procedures are covered.
- Where cashless treatment is available.
- What documents are required.
- Which expenses are excluded.
- How patients can file complaints.
- How post-discharge care is supported.
Clear communication can prevent confusion and help beneficiaries make informed decisions during medical emergencies.
Strengthening public healthcare
Insurance coverage works best when supported by adequate public healthcare infrastructure. Government hospitals need sufficient doctors, nurses, diagnostic equipment, medicines and trained administrative staff to handle the increased demand created by financial protection schemes.
Expanding services in district hospitals can reduce the need for patients to travel to major cities. It can also improve access for rural households and reduce indirect costs associated with transport, accommodation and lost wages.
Investment in primary healthcare is equally important because early diagnosis and preventive care can reduce the need for expensive hospital treatment later.
A positive but incomplete shift
Ayushman Bharat has contributed to a broader improvement in India’s healthcare financing indicators, with OOPE declining substantially over the years. Evidence from beneficiary studies also suggests that PM-JAY can reduce direct hospitalisation costs and protect families from severe financial shocks.pmc.ncbi.nlm.nih+1
However, insurance alone cannot eliminate all healthcare expenses. Wider outpatient coverage, affordable medicines, better regulation of hospitals, stronger public facilities and faster grievance resolution will be necessary to deliver comprehensive financial protection.
The progress achieved through Ayushman Bharat represents an important step toward more affordable healthcare in India. Its long-term success will depend on ensuring that eligible families can actually access cashless services without hidden charges, administrative barriers or unequal treatment.