Understanding the Impact of Subsidized Health Insurance on Health Outcomes: Evidence from India

Abstract

In this paper, we examine the impact of a large, publicly funded, targeted scheme on healthcare utilization and outcomes in India. For the study, we focus on the rollout of Ayushman Bharat, a large government-funded scheme that aims to provide financial protection to households with low income. Using differences in eligibility and exposure within the program, the study compares outcomes between eligible and non-eligible households before and after the intervention. In the main analysis, the study uses difference-in-differences estimates to compare the outcomes. In addition, the study exploits variations across baseline healthcare facilities and differences between states that opted in to the policy and those that opted out. The study’s results show that the outcome for eligible households improved after the scheme intervention. But there is very little evidence that the scheme actually reduced out-of-pocket expenditure. The result also shows no clear evidence of impact in areas with different levels of healthcare facilities, or between states that opted into the program and those that did not. Finally, the results suggest that targeted health insurance schemes do improve some health outcomes but do not provide strong evidence for financial protection for vulnerable households. The important point to keep in mind is that the findings are based on correlational rather than causal estimations. Therefore, it should be interpreted with caution. The study also highlights that expanding insurance coverage alone is not sufficient. Awareness, access, and implementation should also be achieved for better outcomes.