PM-JAY Boosts Both Healthcare Delivery and Financial Security

This state-run insurance scheme's impact on health outcomes and family finances has made it a model for global adoption

- B.V.R. SUBRAHMANYAM & SHASHANK SHAH

A recent finding that could reshape public health policy globally, a new research study demonstrates that the Pradhan Mantri Jan Arogya Yojana (PM-JAY), India's flagship healthcare programme, is achieving far more than its primary objective. It is fundamentally transforming the financial resilience of India's poor, creating a silent yet powerful ripple effect throughout the economy.

The impact of the world's largest government-funded health insurance scheme reveals a remarkable 35% reduction in loan delinquency rates among beneficiaries in districts implementing PM-JAY, particularly for microfinance loans. This finding in a study by Indian School of Business (ISB) highlights a crucial yet previously unexplored connection between healthcare access and economic stability.

It addresses the out-of-pocket-expense burden: Access to quality healthcare, a basic right in developed economies, has often remained an elusive privilege for millions in India. In developing economies, health emergencies can trigger financial crises. Dependence on informal credit and the substantial financial burden imposed by out-of-pocket expenditure (OOPE) can lead to a vicious debt cycle. PM-JAY represents a paradigm shift in addressing these systemic inequities.

Prior to PM-JAY, the average OOPE was 10–12% of household income. This was disproportionately higher for rural and economically weaker households. Such expenses often forced families to use funds that could have been spent on education, housing, and nutrition. The burden was especially severe for families dealing with chronic illnesses and those requiring tertiary care. Beyond financial hardship, the psychological toll was immense, as they navigated the dual challenges of a medical crisis and financial instability.