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JAY Ho: Ayushman Bharat's Jan Arogya Yojana (JAY) and Health Outcomes 287

these effects stemmed directly from enhanced care enabled by insurance coverage, others
represent spillover effects due to the same. Overall, the comparison reflects significant
improvements in several health outcomes in states that implemented PM-JAY versus those
that did not. As the difference-in-difference analysis controls for confounding factors, the
Survey infers that PM-JAY has a positive impact on health outcomes.

INTRODUCTION

9.1 As free markets under-provision public goods, a vital role of a government is to provide
public goods to its citizens, especially to the vulnerable sections in a society. While the rich can
seek private alternatives, lobby for better services, or if need be, move to areas where public
goods are better provided for, the poor rarely have such choices (Besley and Ghatak, 2004). Thus,
provision of public goods can particularly affect the quality of living of the vulnerable sections
in a society. Yet, governments may suffer from the “horizon problem” in a democracy, where
the time horizon over which the benefits of public goods reach the electorate may be longer than
the electoral cycles (Keefer 2007 and Keefer and Vlaicu 2007). The myopia resulting from the
horizon problem may again lead to under-provisioning of public goods. Therefore, the provision
of public goods that generate long-term gains to the economy and the society represents a key
aspect of governance in a democratic polity.

9.2 As healthcare represents a critical public good, successive governments have committed
to achieve universal health coverage (UHC). However, until 2018, UHC remained an elusive
dream. In March 2018, Government of India approved the Ayushman Bharat Pradhan Mantri
Jan Arogya Yojana (AB-PM-JAY) as a historic step to provide healthcare access to the most
vulnerable sections in the country. Beneficiaries included approximately 50 crore individuals
across 10.74 crores poor and vulnerable families, which form the bottom 40 per cent of the
Indian population. The households were included based on the deprivation and occupational
criteria from the Socio-Economic Caste Census 2011 (SECC 2011) for rural and urban areas
respectively. The scheme provides for healthcare of up to INR 5 lakh per family per year on a
family floater basis, which means that it can be used by one or all members of the family. The
scheme provides for secondary and tertiary hospitalization through a network of public and
empanelled private healthcare providers. It also provides for three days of pre-hospitalization
and 15 days of post-hospitalization expenses, places no cap on age and gender, or size of a
family and is portable across the country. It covers 1573 procedures including 23 specialties (see
Box 1 for details). PM-JAY also aims to set up 150,000 health and wellness centres to provide
comprehensive primary health care service to the entire population.

9.3 The evidence provided in this chapter shows strong positive effects of PM-JAY on
healthcare outcomes despite the short time since introduction of the programme. First, PM-
JAY is being used significantly for high frequency and low cost care consisting with the general
utilisation of healthcare services. Using the distribution of claims, we find that the distribution
is a long-tailed one that peaks in the range of INR 10,000-15,000. The highest number of pre-
authorization claims received were for procedures that cost in this range. The distribution is
heavily right-tailed indicating significantly fewer claims for more expensive procedures.