Universal Healthcare in India: Poverty, Insurance Design, and the Gap between Nominal Coverage and Effective Access: A Comparative Law and Economics Analysis

Author

Shehvar Saleem, Mohd Salah Khan, Md Saqib Ansari

Abstract

 India’s health financing architecture presents a puzzle that neither doctrine nor economics resolves alone. The Supreme Court has read a right to emergency medical treatment into Article 21 since the late 1980s, yet more than four in ten rupees spent on healthcare in India are still paid out of pocket at the moment of illness, and tens of millions of households are pushed into poverty by medical costs every year. Since 2018 the state’s principal response has been Ayushman Bharat, the Pradhan Mantri Jan Arogya Yojana (PM-JAY), an insurance scheme that assigns a notional entitlement of five lakh rupees per family without committing the state to build, staff, or finance the hospital capacity needed to redeem it. This paper argues that the persistence of catastrophic health expenditure, notwithstanding both a constitutional right and a large insurance scheme, is best explained as a mismatch between the legal form of the entitlement and the economic institutions required to make it operative. Using the United Kingdom’s National Health Service as the principal comparator for a coherent single-payer model, and the United States to illustrate the costs of a competitive private-insurance market, the paper examines three institutional models of universal healthcare — direct public provision, mandate-based regulated insurance, and India’s own targeted, reimbursement-style insurance — and argues that reimbursement-based insurance, however generous its nominal benefit, fails when the beneficiary cannot front the cost of care or providers are not paid promptly, a legal design failure as much as a financing shortfall. Both comparator models present limitations likely to be more severe if transplanted onto India’s scale and infrastructure: the NHS’s waiting-time rationing would predictably lengthen, while the American model illustrates the costs of affordability gaps, administrative complexity, and industry lobbying. The paper argues that India’s own insurance-based model, despite serious documented deficiencies that are principally financial, administrative, and regulatory rather than defects of design, is the more institutionally suitable foundation for reform. It estimates the fiscal cost of closing the financing gap and concludes that Article 21 jurisprudence, read with Article 47 and the Court’s reimbursement case law, already supplies the doctrinal resources for a more demanding standard of entitlement than the one currently instantiated in policy, provided that standard is paired with financing commitments, wider provider participation, and strengthened regulatory capacity.

Keywords

Universal Healthcare, Law and Economics, Effective Access, Healthcare Insurance Design, Nominal vs. Effective Coverage

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