Insurance not the Solution for Universal Healthcare and Broad-based Social Security System


The workers in the unorganized sector constitute about 93 per cent of the total work force in the country. Majority of these workers are without any social security coverage, especially security of health and life. The workers’ movement has been demanding comprehensive social security measures for the unorganized sector, but the government measures on such an important issue has been piecemeal, insufficient, token and without institutional mechanisms to ensure implementation of even declared health and life insurance programs on the ground. One of the major insecurities for workers in the unorganized sector is frequent illnesses and need for medical care and hospitalization of such workers and their family members. Under the neo-liberal policy regime, health and life insurance has been sold as one way of providing protection to poor households against the risk of falling into poverty because of health-related expenses. However, most efforts to provide health insurance have faced difficulties in both design and implementation. It is understandable that the poor are unable or unwilling to take up health insurance because of its cost, or lack of perceived benefits. But even when the government bears a part of the cost of insurance. the lack of health facilities on the ground, paltry insurance coverage of both life and health insurance and the lack of an effective implementation machinery has shown the limitations of seeing insurance as the only mechanism to address the huge issue of providing meaningful social security to large sections of the unorganized workforce and common people in the country.

Aam Aadmi Bima Yojna

Aam Aadmi Bima Yojna is propagated as an important health and life insurance scheme of the government of India (GoI), administered by the Department of Financial Services and run by the Life Insurance Corporation (LIC), for the unorganized sector workforce of the country. It started in 2007 but the GoI later approved the merger of Social Security Schemes viz., Aam Aadmi Bima Yojana (AABY) and Janashree Bima Yojana (JBY).The merged scheme was renamed “Aam Aadmi Bima Yojana” and came into effect from 1 January 2013. The members and possible beneficiaries under the scheme should be aged between 18 and 59 years. The members should either be the head of the family or earning member of a below poverty line family (BPL) or else should belong to a family marginally above the poverty line and coming under identified vocational groups/rural landless households. Around 48 vocational groups have been identified, which are covered under the Aam Aadmi Bima Yojna, mostly from the unorganized sector.

Low Budget Allocation

The governing legislation to provide social security to the unorganized sector workers is Unorganized Workers’ Social Security Act, 2008. In June 2017, the government has again converged the Aam Aadmi Bima Yojana with the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY). PMJJBY and PMSBY are now providing insurance cover to unorganized workers. PMJJBY provides life insurance cover of Rs 2 lakh on payment of premium of Rs 330/- per annum. PMJJBY is available to people in the age group of 18 to 50 years. PMSBY provides insurance coverage of Rs 2 lakh in the case of accidents or full disability, and Rs 1 lakh on in the case of partial disability on payment of premium of Rs 12/- per annum. The scheme is available to people in the age group of 18 to 70 years. The beneficiaries are decided by the respective State/UT governments. The total premium of Rs 342/- is shared equally between the State government and the Central government.  The total premium now is to be borne by the individual/ State Government under the full premium regime which has been in effect from 1 April 2020. This change in the sharing pattern of premium can mean that the full responsibility, even in case of BPL category, has now been completely shifted to state governments and the Centre has abdicated its responsibility.

It is not difficult to visualize that the paltry amount of health and life insurance coverage is clearly insufficient to meaningfully provide any respite to even BPL households in case of health emergency and loss of earning member of the household. This can be said without going into the analysis of the efficacy of the scheme in terms of the actual relief provided to beneficiaries covered under the scheme.

Funds under the PMJJBY/PMSBY are not allocated to State/UT Governments for implementation. However, the expenditure incurred on social security scheme of PMJJBY/PMSBY from the social security fund maintained by LIC, during last three years towards providing insurance cover is as under:


Expenditure (Rs. In Cr)








The details of the beneficiaries enrolled under PMJJBY and PMSBY are as under:










(Source: Rajya Sabha Question 1542 dated 04.03.2020 and PIB Delhi, 22 March 2021)

It is not difficult to understand that the number of beneficiaries covered under the Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) and Pradhan Mantri Suraksha Bima Yojana (PMSBY) is minuscule percentage of the large chunk of the unorganized sector workforce. Moreover the actual expenditure incurred on settling insurance claims by LIC given above shows that the coverage of the scheme is very limited when it comes to the actual implementation.

Ayushman Bharat-

Pradhan Mantri Jan Arogya Yojna

Besides this, the central government is claiming that the issue of health and maternity benefits are being addressed through Ayushman Bharat-Pradhan Mantri Jan Arogya Yojna (AB-PMJAY) which according to the government is a universal health scheme administered by the National Health Authority (NHA). The number of eligible beneficiaries under PMJAY as per the Socio Economic Caste Census (SECC) of 2011 on the basis of select deprivation and occupational criteria across rural and urban areas and with the States/UTs implementing AB-PMJAY further expanding the coverage of the scheme has come to 13.13 crore families (65 crore people). Around 73 per cent families are claimed to be covered under the PMJAY and State Schemes.

As per the scheme, the beneficiaries are eligible for the free health insurance coverage of up to Rs 5 lakh. PMJAY is an expansion of the previous Rashtriya Swasthya Bima Yojana (RSBY), launched in 2008 to provide health insurance coverage of up to Rs 30,000 per year to Below Poverty Line (BPL) families, unorganised sector workers, and other identified vulnerable groups.

Details of funds for premium payment incurred under the scheme are as under:


Expenditure (Rs. In Crore)  Amount of central share of premium released to the States

Sept. 2018 to March, 2019


April, 2019 - March. 2020


April 2020 - 28th Feb, 2021



But the allocation for much celebrated universal health insurance scheme Ayushman Bharat- Pradhan Mantri Jan Arogya Yojna (AB-PMJAY) is pegged and budgeted merely at Rs 6,400 Cr during FY 2019-20. In the revised estimate for the year this was shockingly halved to Rs 3,200 Cr. In the FY 2020-21, even amidst the Covid pandemic, allocation remained the same i.e. a mere Rs 6,400 Crore.

As per the claims submitted under PMJAY till 20 November 2019, 42 per cent were from private Empanelled Health Care Providers (EHCPs) and 58 per cent were from public EHCPs.

The average claim amount in private EHCPs was higher at Rs 17,691 than the

average claim amount in public EHCPs which was Rs 11,050. But the average claim is clearly much lower than Rs 5 lakh limit of health coverage under the scheme, which shows that patients of serious diseases are still not being addressed through this mechanism. Though the total hospitalization as on 20 December 20 2021 under PMJAY as per its website is 2.56 Crores,  the hospital empanelment as per the latest available figure on website as on August 2020 stands at mere 22,796 which again emphasizes the shortage of actual health infrastructure for ensuring quality healthcare and high pressure on limited EHCPs currently empanelled.

Besides the PMJAY, the second component under Ayushman Bharat is the establishment of 1.5 lakh Health and Wellness Centres (HWCs) which is supposed to improve the actual delivery mechanism of health services. This is to be done by transforming 1.5 lakh Sub Health Centres (SHCs) and Primary Health Centres (PHCs), the first point of contact to primary healthcare to HWCs by 2022. But for this gigantic task, considering the well-known pathetic state of this SHCs and PHCs, the budget allocation is Rs 1600 Crore for FY 2020-21 which comes to around Rs 1 lakh per health centre. It is no surprise that as per studies across India, only 5 per cent of the estimated population over 30 years of age had been screened for as basic an aliment as hypertension, which speaks volumes about our basic health infrastructure. The total allocation for the Central Health Ministry, even in the midst of the persisting Covid pandemic in 2020-21 stands at only Rs 73,931.77 crore. Last year, the ministry’s allocation was Rs 69,000 crore, which has now gone up by a little over 7 per cent.


As per the survey published in the Hindu recently on 29 January 2021, India has one of the highest levels of Out-Of-Pocket Expenditures (OOPE) of around 65 per cent on health, contributing directly to the high incidence of catastrophic expenditures and poverty. It suggested that present public expenditure of 1 per cent of GDP on health is very low and should at least be increased to 2.5 to 3.0 per cent of GDP, which can bring out-of-pocket health expenditure to a manageable level of 30 per cent. This should be the real focus of any attempt to strengthen and expand health services infrastructure in every nook and corner of the country. This can provide quality, access and guaranteed health services to every citizen of the country in timely and effective manner, which can ensure assured healthy population that is in much better position to contribute economically to well-being of the country. It will also address the issue of preventive healthcare by early diagnosis of serious diseases. Life and health Insurance based solution, which the central government is presently focussing on, will only encourage privatization and profiteering in even basic services such as health. The Covid pandemic has only shown the limitation of this model; public health infrastructure crumbled under the strain and private hospitals only made pandemic an ‘aapda mai avsar’ opportunity for hefty profiteering at the cost of vulnerable citizens. All these claims of wide life and health insurance coverage of population remained merely on paper without giving any actual relief to the poor and vulnerable sections of the population. νν