When Ayushman Bharat and Private Insurers Feed Corporate Hospitals, Not Healing
Health insurance was sold to Indians as a humanitarian promise—a guarantee that nobody will be bankrupted or denied care for financial reasons. And, schemes like Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) were heralded as revolutionary, providing up to ₹5 lakh per family annually for serious hospitalisation.
But such noble intent cannot paper over a system that has repeatedly been captured by powerful corporate hospitals and profit-hungry insurance intermediaries. The result? More money in corporate coffers, and citizens left with the illusion of protection rather than real care.
Since its launch, Ayushman Bharat has become one of the largest health insurance programmes in the world—covering over 55 crore individuals across 12 crore families, offering annual hospitalisation benefits up to ₹5 lakh per family.
According to recent reports, the government has spent more than ₹1.29 lakh crore under Ayushman Bharat on treatments for over 9.19 crore patients—a massive public investment directed at hospital care
But the most troubling detail is who benefits from this expenditure:
- Nearly two-thirds of Ayushman Bharat costs—about ₹1.29 lakh crore—have gone to private hospitals, despite public hospitals accounting for a significant portion of empanelled institutions.
- Many beneficiaries still face out-of-pocket payments because of gaps in coverage or dubious billing practices in empanelled facilities.
Aside from government schemes, the private health insurance market itself is booming. Health insurance premiums collected in India—covering private policies and group/employer plans—have crossed ₹1 lakh crore in a single fiscal period, reflecting rapid industry growth. Premiums in the first ten months of a recent financial year reached ₹1.07 lakh crore, with individual and group insurance segments expanding.
This expansion benefits private insurers and corporate healthcare chains far more than patients. While premiums soar and claims handling becomes a battle for policyholders, insurers and hospitals are guaranteed a huge inflow of resources from both households and the exchequer—money that should have strengthened care, but instead has fuelled profit-driven healthcare.
As a matter of fact, insurance in India does not reduce healthcare costs—it merely shifts who pays. When private hospitals know the bill will be paid by the government or an insurer, they have no incentive to control costs or resist unnecessary procedures. The experience on the ground confirms this:
- Tests, scans, and interventions proliferate—often more for revenue than clinical need.
- Patients are steered toward expensive private facilities even when adequate care exists in public hospitals.
- Real oversight mechanisms, such as transparent patient histories, remain absent despite repeated calls for reform.
Insurance companies, for their part, flourish by collecting premiums—whether from government schemes or private customers—while settling claims slowly, rejecting a significant share of them, and often pushing policyholders into distress just to receive their own money. The claims process becomes a gauntlet rather than a safety net.
One of the most damning ironies of Ayushman Bharat is that a scheme meant to democratise access has instead subsidised the private healthcare market. With over 14,000 private hospitals empanelled under AB-PMJAY, beneficiaries routinely opt for private care even when public capacity exists.
This dynamic has turned a public welfare scheme into a massive revenue channel for private facilities, enabling them to expand infrastructure, charge higher rates, and shape health economics to their advantage.
Meanwhile, government hospitals remain underfunded, overcrowded, and under-utilised—not because they lack potential but because policy incentives prioritise corporate engagement over strengthening the public system.
So, What Should Change?
In my view, the Modi government’s Ayushman Bharat was conceived with a genuinely progressive intent—to shield millions of Indians from medical impoverishment. That intent, on paper, is laudable. But good intentions, without ironclad safeguards, often end up producing perverse outcomes. What was meant to be a social safety net increasingly risks becoming a steady revenue pipeline for corporate hospitals.
The problem is not insurance per se, but the ecosystem it has enabled. Under the current framework, public money is routinely funnelled into private healthcare chains with weak oversight, opaque billing practices, and little accountability. Worse, in several states, some of these corporate hospitals are owned, promoted, partnered with, or quietly patronised by political interests. When healthcare and politics intertwine with profit, patients inevitably become collateral damage.
This is not an unknown truth. Popular cinema itself has exposed this nexus—repeatedly and unambiguously. Megastar Chiranjeevi’s Shankar Dada MBBS stripped bare the moral bankruptcy of corporatised healthcare, portraying how hospitals prioritise revenue over recovery and treat patients as billing units rather than human beings. Akshay Kumar’s Gabbar Is Back went further, explicitly calling out the “medical mafia”—a ruthless cartel of private hospitals, doctors and insurers thriving on fear, unnecessary procedures and inflated bills. These films resonated with audiences precisely because they mirrored lived reality.
Yet, despite such widespread public awareness—and despite countless real-life horror stories—both the Centre and state governments continue to turn a blind eye. Why? Because corrective reform threatens entrenched interests, and priorities often lie elsewhere. Insurance companies flourish. Corporate hospital chains post soaring revenues. Meanwhile, patients drown in paperwork, co-payments, and medical debt, even while being “insured”.
Ayushman Bharat, in its current execution, exemplifies this contradiction. Instead of strengthening public healthcare, it often subsidises private profiteering. Instead of reducing out-of-pocket expenditure structurally, it masks it temporarily—while legitimising inflated claims.
Hence, the way forward must include clear, non-negotiable reforms:
- Redirect insurance reimbursements primarily to government hospitals, strengthening public healthcare infrastructure instead of subsidising private profiteers with taxpayer money.
- Mandatory transparency in treatment data, with digitally auditable patient histories to curb unnecessary tests, procedures, and hospital-induced over-medicalisation.
- Legally enforceable penalties for fraud and inflated claims—not cosmetic de-empanelment, but criminal and financial consequences that act as real deterrents.
- Massive investment in high-capacity district hospitals and PHCs, so private hospitals are no longer the default options for the poor and middle class.
Healthcare is not a market commodity. Illness is not an opportunity for profit. And citizens are not fiscal instruments for corporate growth.
If Ayushman Bharat—and health insurance more broadly—continues to channel public funds into private profit centres without structural reform, then insurance does not merely fail its promise; it becomes part of the problem it was meant to solve.
If the State truly seeks to protect lives rather than corporate bottom lines, the first step is to reclaim health insurance as a tool of public health—not corporate enrichment.
