Universal Healthcare- Best Practices around the World and in India

Abstract

India has made universal health coverage a national goal, and its flagship scheme, Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (PM-JAY), has already authorised more than 8.9 crore hospital admissions worth about Rs 1.26 lakh crore (Government of India, 2025). But guaranteeing to pay hospital bills is not the same as building a health system. This paper argues that India’s central task is not to insure more hospitalisations, it is to change how it buys care. India should move from passive insurance-reimbursement toward strategic purchasing anchored in strong primary care: a single public purchaser that pays providers through closed-end methods (capitation and case-based payment) and routes patients through a primary-care gatekeeper, as Thailand did when it achieved universal coverage in 2002 (Tangcharoensathien et al., 2015). Without that shift, expanding hospital insurance while primary and community health centres stay unstaffed will keep out-of-pocket costs high and care fragmented.

What universal health coverage means

The World Health Organization defines universal health coverage (UHC) as all people being able to access the quality health services they need “without financial hardship” (WHO). Any UHC system answers three questions: who is covered, which services are included, and what share of the cost is paid for the patient. The United Nations has set 2030 as the target for UHC worldwide.

The important design point, and the one the rest of this paper turns on, is how a country reaches those goals. The WHO is explicit that the foundation is not hospitals but primary health care, which it calls “the most effective and cost-efficient way” to achieve UHC (WHO). Systems that get this right catch illness early and cheaply; systems that don’t end up paying for expensive hospital treatment that better primary care could have prevented.

Best practices around the world

Countries reach coverage through different financing models, but the high performers share one feature: a dominant public payer that sets the rules, negotiates prices, and carries most of the financing, which keeps patients’ out-of-pocket costs low.

• Britain runs a tax-financed National Health Service that both funds and delivers care; most services are free at the point of use and government finances roughly four-fifths of health spending.
• Canada and Australia use tax money to fund care that is largely delivered by others; government covers roughly 70% (Canada) and the bulk of hospital and outpatient costs (Australia), with private insurance topping up drugs, dental and vision.
• France and Germany use mandatory social insurance funded mainly through payroll and taxes; the state regulates budgets, hospital capacity and drug prices, and nearly everyone holds supplemental cover.
• Switzerland mandates that individuals buy regulated non-profit insurance, with income-based subsidies for those who cannot afford it.
• Singapore blends affordable government hospitals with large mandatory savings accounts, and the state contains costs through bulk purchasing.
• The United States is the outlier: it relies most heavily on fragmented, employment-based private insurance alongside Medicare and Medicaid, and still left about 26 million people (8% of the population) uninsured in 2023 (U.S. Census Bureau, 2024).

The lesson for India is not to copy any single country. It is that coverage becomes affordable when a strong public purchaser holds the financing and disciplines prices, and that the most fragmented, insurance-heavy system (the US) is also the one that leaves the most people out.

India’s approach: Ayushman Bharat

Ayushman Bharat, launched in 2018, tries to cover the whole continuum of care through two pillars:

1. Health and Wellness Centres (now Ayushman Arogya Mandirs) upgrade primary care, screening, non-communicable-disease management, and maternal and child health, close to where people live.
2. PM-JAY, the insurance pillar, offers up to Rs 5 lakh per family per year for secondary and tertiary hospitalisation to the poorest households.

This is no longer a plan on paper. As of March 2025, PM-JAY had authorised 8.9 crore hospital admissions worth about Rs 1.26 lakh crore, working through 30,957 empanelled hospitals (17,091 public and 13,866 private), and more than 34 crore Ayushman cards had been issued (Government of India, 2024; 2025). It is the largest health-assurance scheme of its kind in the world, and it has helped push India’s out-of-pocket spending down sharply, from 64.2% of total health spending in 2013-14 to 39.4% in 2021-22, the first year public spending overtook what families pay from their own pockets (National Health Accounts, 2021-22).

Where the model falls short

Those gains are real, but they expose the limits of an insurance-reimbursement design.

It pays for the wrong slice of care. PM-JAY reimburses hospitalisation. Yet most out-of-pocket spending in India goes on outpatient consultations, diagnostics and medicines for everyday and chronic illness, exactly the care an insurance-for-hospital-bills model does not touch. That is why, even after big progress, out-of-pocket spending is still 39.4% of the total, roughly double the share in the tax- and insurance-financed systems above, and total public health spending remains under 2% of GDP, short of the National Health Policy 2017 target of 2.5% by 2025 (ORF, 2024).

It buys care that doesn’t exist where the poor live. An insurance card is only as good as the provider you can reach. Rural Community Health Centres had just 4,413 of the 21,964 specialists they were meant to have in 2022-23, a shortfall of almost 80% (Rural Health Statistics, 2022-23). Primary Health Centres are better staffed (a doctor shortfall under 4%) but often under-equipped. Buying tertiary care without building the supply behind it tends to inflate prices and push patients into private hospitals.

History warns against thin cover. PM-JAY’s predecessor, the Rashtriya Swasthya Bima Yojana, capped cover at just Rs 30,000 per family, excluded outpatient costs, and reached only a fraction of eligible households before being folded into PM-JAY in 2018. A card, on its own, is not coverage.

The missing mechanism: strategic purchasing and primary-care gatekeeping

Thailand shows the alternative. When it reached universal coverage in 2002, it did not simply write bigger insurance cheques. Its National Health Security Office (NHSO) became an active strategic purchaser, using a purchaser-provider split to hold hospitals to account (Tangcharoensathien et al., 2015). Crucially, it changed the payment method:

• Capitation for outpatient care, providers receive a fixed sum per registered person, so they are paid to keep people healthy rather than to run up bills.
• Diagnosis-related groups (DRGs) within a fixed global budget for inpatient care, hospitals are paid a set rate per case, which contains costs.

Every citizen registers with a district primary-care unit that acts as a gatekeeper: routine specialist and hospital care must come through a referral, and patients who bypass the system pay the full cost themselves. The result is universal coverage with a low incidence of catastrophic, impoverishing health spending, and the NHSO’s bulk-buying power has cut medicine and supply prices substantially.

India’s PM-JAY, by contrast, largely reimburses providers per procedure, a design that rewards the volume of hospitalisations, not the health of the population, and does little to steer patients toward cheaper primary care first. That is the mechanism this paper argues India should change.

Recommendations

1. Make the National Health Authority a strategic purchaser, not a bill-payer. Replace open-ended, per-procedure package reimbursement with closed-end payment, capitation for primary and outpatient care and DRG-with-a-global-budget for inpatient care, so providers are paid to keep people well.
2. Build primary-care gatekeeping. Register every PM-JAY family with a named Health and Wellness Centre or Primary Health Centre, and make non-emergency specialist and hospital care flow through a referral from it, as Thailand’s district units do. This directs patients to cheaper, closer, preventive care first.
3. Extend the benefit beyond hospital walls. Add outpatient consultations, diagnostics and essential medicines, the largest source of out-of-pocket spending, to the guaranteed package, delivered through primary care.
4. Staff and equip primary care to Indian Public Health Standards (IPHS). Fill the ~80% specialist gap at Community Health Centres and the vacancies at Primary Health Centres with hard-service incentives, and use the purchaser’s bulk-buying power to cut drug and device prices.
5. Finance it. Raise public health spending toward the National Health Policy 2017 target of 2.5% of GDP, directing the two-thirds share to primary care that the policy itself sets.

Conclusion

India has already done the hard part that many countries never manage: it guarantees hospital cover to hundreds of millions of people and has cut out-of-pocket spending to its lowest level in a generation. The next leap is not more insurance, it is smarter purchasing and stronger primary care. If India makes its public purchaser strategic and puts a well-staffed primary-care gatekeeper at the front door, it can turn an impressive insurance scheme into a genuine universal health system.

Sources

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