Health Systems Disparities and Publicly Funded Health Insurance Outcomes in India: Insights from Comprehensive Annual Modular Survey, 2022-23

India’s health systems vary significantly across its states and Union Territories due to institutional, social, economic and historical factors. Publicly funded health insurance schemes (PFHI), mainly Ayushman Bharat-Prime Minister Jan Aarogya Yojana (AB-PMJAY) introduced in 2018 and state health insurance schemes introduced over the past two decades, aim to improve access to healthcare and reduce financial burden. This study examines the relationship between the diverse state health systems across 36 states and union territories (UTs) of India and PFHI outcomes using the Comprehensive Annual Modular Survey, 2022–23 data covering over 302,000 households. States and UTs are classified as high or low health systems performers based on the state health index (representing the capability of primary healthcare), the district hospital index (indicating the strength of public district hospitals), and the state’s prior experience with health insurance before the launch of AB-PMJAY (representing implementation experience).

The study results reveal that states with better health systems show higher PFHI coverage. A higher state health index is associated with lower outpatient out-of-pocket expenditure (OOPE) (coefficient - 0.100, p<0.01). A higher district hospital index is associated with lower inpatient OOPE (coefficient - 0.297, p<0.01). Prior insurance experience is associated with higher inpatient utilisation. In addition to its independent effect on OOPE, better district hospitals appear to improve the efficacy of PFHI in achieving its intended outcomes. The interaction terms between PFHI and the district hospital index indicate higher inpatient utilisation (adjusted odds ratio (AOR) 1.164, p<0.01), lower inpatient catastrophic health expenditure (CHE) (AOR 0.883, p<0.05) and lower inpatient OOPE (coefficient - 0.252, p < 0.01).

The findings support strengthening primary health care and public hospital systems, especially in low-performing states, to amplify the benefits of PFHI. The study also supports expanding PFHI to cover outpatient care. By aligning PFHI with reliable public health system improvements, India can enhance healthcare access and equity, increase financial protection, and achieve universal health coverage.

What is already known on this topic

As reflected in the state health index and district hospital index, India’s health system is diverse and influenced by social, economic, historical and institutional factors. Publicly funded health insurance (PFHI) schemes aim to improve healthcare access and reduce financial burdens.

What this study adds

Findings reveal that states with better health systems are associated with higher PFHI coverage, higher inpatient care utilisation, and better inpatient care financial protection, among others.

How this study might affect research, practice, or policy

Policymakers can use insights from the study to prioritise investments in primary health care and district hospital infrastructure, particularly in low-performing states, to amplify PFHI outcomes.