top of page

'Modicare' 101: India's Universal Healthcare Scheme

Faseeha Hashmi

Health care in India has long been an expensive ordeal; however, the introduction of the National Protection Health Scheme (also known as Ayushman Bharat) aims to change this. Officially launched by Prime Minister Narendra Modi‘s government on 23 September 2018—two years after its reveal during the 2016 budget—the scheme is anticipated to expand health insurance coverage to almost half of India’s population, making it the world’s largest government-funded healthcare program.


Healthcare affordability and its relation to poverty were most recently illustrated in the World Bank and World Health Organisation’s “Tracking Universal Health Coverage: 2017 Global Monitoring Report,” which revealed that 800 million people worldwide spend up to 10% of their household budgets on health expenses. The burden of healthcare expenses for 100 million of these people places them in extreme poverty—forced to survive on less than USD 1.90 per day.

A 2010 study revealed that 63 million Indians fall beneath the poverty line annually, owing primarily to health costs. This situation has been further exacerbated by the dire need for reform within India’s healthcare sector—which is predominantly state-run in operation—with government-funded hospitals often understaffed and ill-equipped.

Dubbed ‘Modicare’ by the press, the public healthcare scheme has drawn immediate comparisons to the former US President Barack Obama’s Patient Protection and Affordable Care—also known as ‘Obamacare’. However, what differentiates ‘Modicare’ is its targeting of the poorest of the poor among India’s demographic—including those unemployed and unable to afford health care. Conversely, Obamacare was implemented primarily to benefit middle-class Americans. Launching the nation-wide plan from the Indian city of Ranchi, Prime Minister Modi affirmed, “This is the world’s biggest healthcare scheme, benefiting more than the combined population of the United States, Canada and Mexico.

Modicare also forms the centrepiece of Modi’s major re-election campaign for mid-2019. Accordingly, political opponents and critics of Modi have labelled the scheme as a populist gesture—one squarely aimed at obtaining favour [6]with his Hindu-based constituency and Hindu nationalist Bharatiya Janata Party (BJP)—that overlooks the individual needs of other ethnic and religious groups throughout the country.

However, given the popularity and appeal of his new public healthcare policy, Modi appears committed to challenging that image, styling himself as a populist politician who seeks to eliminate the tragic relationship between money lending and affordable health care, safeguard the financial security of Indian households, and create an affordable healthcare system for the common people.

What are the perks?

Under Modicare, 40% of the Indian population—including the poorest of the poor—will be able to benefit from new health insurance measures. Although the healthcare scheme does not cover the entire population, the development and scaling of Modicare’s coverage represents the most comprehensive federal healthcare initiative undertaken by the Indian government to-date, and an encouraging iterative step toward universal healthcare coverage.

Modicare has been heralded as a potential game-changer for poverty in India, with health care being one of the most financially debilitating expenses for India’s poor. Although relatively affordable in the West, specialised care has become inordinately expensive within developing nations—where the low per capita GDP combined with the high cost of medical treatment gives rise to comparatively unaffordable options for cancer management—which can jeopardise a patient’s financial situation and compel them to sell their material assets. Competent management of the financial burden that is health care could thus prove to be a long-term boon to India’s economy and GDP.

Who’s paying the price?

India possesses one of the lowest healthcare budgets in the world. In 2017, the country spent roughly 1% of its GDP on health care, paling in comparison to the global average of 10% in 2015. The government’s low spending rate on health care places much of the burden upon patients and their families—as evidenced by the high proportion of out-of-pocket spending rates vis-à-vis developed nations—with out-of-pocket expenses accounting for 67% of total health spending. This has resulted in India’s ranking of 145th out of 195 countries in terms of quality and accessibility of health care.

Where heavy expenses largely fall upon patients, Modicare has appealed most strongly to those currently unable to afford health care. The cashless and paperless nature of the system is designed to virtually enable Indian citizens to effortlessly access their local public and participating private medical facilities.

As the world’s largest publicly funded health service, Modicare is expected to cover up to 500 million individuals from financially vulnerable households, with the project’s total annual cost estimated at around Rs 110 billion (USD 1.7 billion). This equates to the government subsidising healthcare premiums costing between Rs 1,100 to 1,200 per family annually, encompassing 100 million households.

What’s the catch?

The pitfalls of the project lie within its failure to equitably support inpatient care, tendency to over-prioritise both outpatient and specialised care needs through the upgrade of 150,000 sub-centres to health and wellness centres, and the absence of adequate accountability mechanisms combined with anticipated challenges concerning the overutilisation of healthcare services.

Furthermore, although a share of the 2018/19 healthcare budget has been allocated to the prevention of non-communicable diseases (e.g. diabetes), some politicians have criticised the government for not going far enough. Sufficient funding for preventative care and community awareness-building models have time and again proven to nip future health complications in the bud. Countries like Canada, United Kingdom, Sweden, Germany, Japan and France all provide comprehensive healthcare models, where prevention is better than the cure for those considered most vulnerable in society (i.e. children and pregnant women).

Further, academics emphasise that the amount allocated for funding is simply insufficient, as India’s healthcare facilities often lack basic amenities, infrastructure, and healthcare workers. Post-operative care is also costly and requires in-hospital care—a burden for which the government is unprepared. This is exacerbated by ambiguity over whether states such as West Bengal and Karnataka will actually join the scheme, with the federal government only promising to cover only Rs 70 billion of the Rs 110 billion program cost.


Where the majority of India’s past centralised healthcare schemes have focused upon infectious diseases (e.g. HIV and malaria), Modicare signals a shift in healthcare perceptions in line with the country’s rapidly modernising economy. Where the times have changed, so has the response, and India is undergoing a fundamental transformation of its decentralised state-based healthcare system towards a centralised federal one.

Modicare represents a bold undertaking by Delhi, and an important step towards the achievement of universal healthcare coverage across India that will help to keep the country on track to fulfil its commitments under Goal 3 of the United Nation’s Sustainable Development Goals—to ensure healthy lives and promote well-being at all ages.

In conclusion, the performance and outcome of this ambitious scheme shall exist as a prudent lesson in governance for India’s senior leadership for decades to come, with Modicare anticipated to have significant flow-on consequences for India’s development and prosperity as an emergent superpower.

Faseeha Hashmi holds a Master of International Relations from the University of Melbourne, with an interest in community engagement and global politics.



bottom of page