The Macroeconomics of Complete Assurance: Funding Universal Health for Every Voter in Viksit Rajasthan

Manorama Bakshi
Arjun Kumar

As India maps its strategic trajectory towards the vision of Viksit Bharat @2047, the national discourse has increasingly shifted beyond economic growth to the broader foundations of human capital. For the country to emerge as a global economic power, it requires a healthy, secure, and resilient workforce. Yet a fundamental economic challenge remains unresolved: India cannot achieve first-world economic productivity while its citizens remain vulnerable to third-world, catastrophic out-of-pocket medical expenses. Significant healthcare expenditures continue to force households to liquidate assets, incur debt, and reduce essential consumption, trapping many families in a cycle of poor health and financial insecurity.

In this national pursuit, Rajasthan has emerged as a vanguard in health policy innovation. The state’s vision document, Viksit Rajasthan @2047, sets an ambitious target of building a $4.3 trillion economy, with public welfare and social empowerment identified as its foremost developmental pillar. Achieving this vision requires continued investment in a robust and accessible healthcare system. Rajasthan has already moved beyond conventional targeted welfare programmes by pioneering a broad health assurance model. However, to truly serve as a blueprint for a developed India, the state must address the remaining operational challenges, respond to systemic critiques, assess the fiscal implications of complete universality, and ultimately extend unconditional health coverage to every voter.

1. Regulatory Rationale and Core Objectives: The Guidelines

To understand the legal and socio-economic foundations of Rajasthan’s health insurance ecosystem, one must look directly at the official program guidelines and department notifications. These documents establish a clear policy framework aimed at transforming healthcare from a privately financed expense into a state-supported safety net.

• The Rationale (Reducing Financial Vulnerability): The programme’s central rationale is to mitigate out-of-pocket expenditure (OOPE) and protect households from the financial consequences of medical emergencies. The official guidelines explicitly recognise major healthcare expenses as the single largest contributor to unexpected household debt in India. By assuming the role of the principal insurer, the state seeks to prevent families from being pushed into poverty due to high medical costs. This protection can also contribute to greater financial stability among lower- and middle-income households by allowing them to preserve savings, assets, and expenditure on other essential needs.
• The Primary Objective (Universal Access to Quality Care): The programme’s primary objective is to ensure that every resident family can access high-quality secondary and tertiary healthcare without facing prohibitive financial barriers. The guidelines position the scheme as a key policy instrument for advancing health equity across the state. This objective is pursued through a mixed-provider network comprising government health institutions and empanelled private healthcare facilities, thereby expanding the range and geographical reach of cashless treatment available to beneficiaries.
• The Administrative Logic (Interoperable Efficiency): Recent gazette notifications issued by the Finance (Insurance) Department also emphasise administrative efficiency. The scheme relies on a unified digital identity system anchored in Aadhaar and Rajasthan’s Jan Aadhaar platform to simplify enrolment, hospital admission, beneficiary verification, and claims processing. According to the guidelines, this centralized identity framework is intended to “obviate the need for a multiplicity of documents, simplify processes, and promote maximum transparency and efficiency.” In principle, this integrated system reduces documentary requirements and enables faster coordination between beneficiaries, hospitals, insurers, and government agencies.

2. The Political & Institutional Journey: From Bhamashah to MAAY

Rajasthan’s journey towards Universal Health Coverage (UHC) has unfolded through several political and administrative phases. The initial framework began with the Bhamashah Swasthya Bima Yojana (BSBY), which primarily targeted below-the-poverty-line (BPL) families. This later transitioned into the integrated tapestried approach of the Ayushman Bharat Mahatma Gandhi Rajasthan Swasthya Bima Yojana (AB-MGRSBY), bringing together state funding and the central government’s beneficiary and digital infrastructure.

A major policy shift occurred in May 2021 with the launch of the Chiranjeevi Swasthya Bima Yojana, which expanded enrollment beyond targeted groups to the wider resident population. Following a change in the state administration, the scheme was subsequently restructured as the Mukhyamantri Ayushman Arogya Yojana (MAAY) under the government led by Chief Minister Bhajanlal Sharma.

The transition to MAAY introduced several important changes intended to improve the program’s efficiency, strengthen service delivery, and align the state scheme more closely with national health systems:

• National Integration: The current administration has sought to align MAAY with the digital architecture of Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). This step resolved a long-standing limitation in the earlier framework by enabling interstate portability across a nationwide network of more than 31,000 empanelled hospitals.
• Targeted Funding Assets: In the recent state budgets, the administration established the ‘MAA Fund’ with a dedicated allocation of 3,500 crore to streamline the supply of free diagnostic testing and essential medications across public healthcare centers.
• Expanded Senior Protections: The updated framework has also introduced a dedicated window for completely free home-delivery of medicines for senior citizens aged 70 years and above, alongside the establishment of dedicated diabetic and geriatric clinics in district hospitals. Together, these measures seek to improve continuity of care for older persons and patients managing chronic conditions.

3. Core Architecture: Key Features and Coverage Matrix

The Mukhyamantri Ayushman Arogya Yojana (MAAY) stands among the most comprehensive publicly funded health assurance programmes in India. Its design centres on providing substantial financial protection against catastrophic medical expenditure while ensuring that families can access a broad range of healthcare services without facing prohibitive out-of-pocket costs.

• High Cashless Coverage Ceiling: The scheme provides annual cashless inpatient department (IPD) coverage of up to ₹25 lakh per family. This generous financial ceiling safeguards households against the costs of complex and high-value medical interventions, including organ transplantation, advanced cancer treatment, and joint replacement surgeries, thereby reducing the risk of severe financial distress.
• Integrated Accident Insurance: Every enrolled family is automatically covered under the Mukhyamantri Ayushman Durghatna Bima Yojana (MADBY), which offers accident insurance of up to ₹10 lakh in cases of accidental death or permanent disability. This integration extends financial protection beyond hospitalisation, strengthening the programme’s broader social security objectives.
• Comprehensive Treatment Coverage: MAAY covers more than 1,798 treatment packages and 3,219 clinical procedures across 31 medical specialties, including cardiology, oncology, neurosurgery, and neonatal care. This breadth of coverage enables beneficiaries to access a wide spectrum of secondary and tertiary healthcare services through a single insurance platform.
• Pre- and Post-Hospitalisation Benefits: To ease the financial burden of recovery, the scheme also covers diagnostic tests, medical consultations, and prescribed medicines for five days before admission and fifteen days after discharge, provided these services are directly related to the condition being treated. Hence, reducing the financial burden associated with the complete episode of care rather than limiting support solely to inpatient treatment.
• No Demographic Restrictions: The scheme places no restrictions on family size or age, ensuring broad household-level protection. Newborn children are automatically covered under the family health card for up to one year, even before their names are formally added to official family records, thereby preventing interruptions in access to healthcare during early childhood. 

4. The Two-Tier Eligibility Framework

To achieve broad health coverage while prioritising support for vulnerable groups, MAAY follows a two-tier eligibility model. Under this framework, economically disadvantaged families receive full financial support from the state, while other eligible households can join the scheme by paying a subsidised premium.

The Free Category

For priority groups, the Rajasthan Government bears the full cost of the actuarial insurance premium. This category includes families covered under the National Food Security Act (NFSA), beneficiaries identified through the Socio-Economic Caste Census (SECC 2011), contractual employees working in state government departments, small and marginal farmers, destitute households that received COVID-19 ex gratia assistance, and Economically Weaker Section (EWS) families. By fully subsidising these groups, the scheme seeks to ensure that financial constraints do not prevent access to healthcare.

The Subsidized Buy-In Category

Families that are not covered under the free category and are not eligible for the Rajasthan Government Health Scheme (RGHS) can enrol in MAAY by paying an annual premium of ₹850 per family. This represents half of the total premium, with the Rajasthan Government subsidising the remaining 50%. The arrangement allows a wider section of the population to access comprehensive health coverage at a relatively low cost, with the state and beneficiaries sharing the cost of the premium.

5. The Landscape of Coverage: A State-Insured

Rajasthan has witnessed a remarkable expansion in health insurance coverage over the past decade. According to the National Family Health Survey (NFHS-4) conducted in 2015-16, only 18.7% of households in the state had at least one member covered under a health insurance or financing scheme. By the time NFHS-5 was completed, this figure had risen to 87.8%, giving Rajasthan the highest rate of public health insurance coverage among all large Indian states.

This extensive coverage footprint is built on three distinct pillars:

1. Mukhyamantri Ayushman Arogya Yojana (MAAY): The cornerstone of the state’s health strategy, MAAY covers nearly 1.4 Crore families, accounting for roughly 78-80% of Rajasthan’s total population. Within this registered base, approximately 79% fall under the free category, receiving fully subsidised coverage, while the subsidized paid category accounts for 8.4% of enrollment.
2. Rajasthan Government Health Scheme (RGHS): Launched to provide specialized healthcare coverage for the state’s public sector workforce, it includes serving government employees, pensioners, Members of the Legislative Assembly (MLAs), former MLAs, and judicial officers. Together, the scheme covers over 10 million (1 crore) individual beneficiaries.
3. Private Commercial Insurance & The Uncovered Gap: Private, out-of-pocket health insurance accounts for only a small share of overall coverage, with an estimated 3% to 5% of the population relying on commercial insurance. As a result, around 10% to 12% of Rajasthan’s population remains outside any form of health insurance, largely because of documentation and registration-related barriers.

6. Fiscal Outlays and Central Integration

Providing universal health coverage requires sustained public investment, and Rajasthan’s budget allocations reflect the financial commitment needed to support a comprehensive health assurance programme. When the state first adopted a broader model of health coverage, it allocated an initial budget of around ₹2,100 crore. However, as the headline financial caps and population coverage expanded, the state’s financial liability grew substantially.

In recent years, the state’s annual allocation for the MAAY has stabilized at approximately ₹3,000 crore to over ₹4,500 crore, reflecting both wider population coverage and higher financial commitments.

To finance the scheme, Rajasthan follows a hybrid funding model linked to the Ayushman Bharat PMJAY. For beneficiaries covered under the Socio-Economic Caste Census (SECC) and eligible National Food Security Act (NFSA) categories, the Central Government provides 60% of the funding based on national package rates, while the Rajasthan Government contributes the remaining 40%.

For categories covered exclusively under the state’s expanded health assurance programme—including the subsidised population and contractual workers—as well as the enhanced coverage that extends financial protection from the national limit of ₹5 lakh to Rajasthan’s ₹25 lakh ceiling, the programme is financed entirely through state resources by the Rajasthan State Health Assurance Agency (RSHAA).

7. The Utilization Paradox: Volume vs. Value

An analysis of utilization data from Rajasthan’s health portals reveals an important contrast between the scheme’s high coverage limit and how beneficiaries actually use it. While the ₹25 lakh ceiling provides protection against catastrophic medical expenses, most claims relate to routine and lower-cost healthcare services.

Recent cross-sectional assessments of hospitalizations under the state scheme show a clear divide between package volume and total expenditure. General Medicine is the most highly utilized specialty, accounting for 14.2% of all hospital admissions. However, in terms of total cost, Cardiology leads, consuming 22.0% of the entire insurance payout pool, followed by specialized treatments in Oncology (14.8%) and Nephrology (11.2%).

The most striking statistic within the state’s utilization data highlights a significant policy paradox. Although the scheme provides coverage of up to ₹25 lakh, the median claim amount per hospitalisation is only ₹12,200, and 96.8% of beneficiaries incur annual claims of less than ₹1 lakh. Only 0.01% of patients exceed the ₹5 lakh threshold in a policy year.

These figures demonstrate that the value of the scheme lies not in the routine use of its maximum coverage limit (25 lakh), but in the financial protection it offers when families face serious or unexpected medical conditions. It removes the threat of financial ruin for the small percentage of households facing catastrophic medical crises, while the vast majority of regular state expenditure funds affordable, mid-tier secondary procedures.

8. Digital Backbones: The Milestone of ABHA Registrations

Alongside expanding health insurance coverage, Rajasthan has also emerged as a national leader in building digital health infrastructure through the Ayushman Bharat Digital Mission (ABDM). According to data from the National Health Authority (NHA), the state has generated more than 7.1 crore Ayushman Bharat Health Accounts (ABHA). This massive repository places Rajasthan as the second-highest performing territory in the entire nation for digital health integration.

The rapid scaling of ABHA registrations has strengthened the state’s digital health ecosystem by linking insurance claims, laboratory reports, prescriptions, and patients’ medical records through a secure and interoperable platform. To support this transition, the state has made the implementation of ABDM-compliant software mandatory across empanelled public and private hospitals, laboratories, and pharmacies. This integrated digital infrastructure helps streamline service delivery, improve record management, and support more efficient processing of healthcare services under MAAY by a paperless, data-driven delivery mechanism.

9. A Systemic Evaluation: Lauded Successes and Pointed Criticisms

To form a complete picture of Rajasthan’s health infrastructure, one must analyze where the scheme has won acclaim and where it has faced severe systemic pushback from clinicians, policy experts, and the public. The scheme has significantly expanded financial protection and access to healthcare, but it also faces administrative, operational, and infrastructural constraints that influence its effectiveness.

Where the Scheme is Lauded

Public health experts globally have praised Rajasthan for executing one of the most aggressive expansions of health equity in the developing world. The state has been lauded for:

• A Democratic Safety Net: By breaking the rigid “poverty line” ceiling, the scheme acknowledges that high medical expenses can also place a significant financial burden on middle-income families. The subsidized enrollment model has therefore broadened access to publicly supported health insurance beyond traditionally targeted beneficiaries.
• Unmatched Financial Security: The ₹25 lakh annual cap per family is widely cited as an exemplary benchmark for shielding citizens from the prohibitive costs of modern tertiary procedures, including advanced cardiac treatment, bone marrow transplantation, and other high-cost interventions.
• Unconditional Outbound Portability: The integration of MAAY with the national AB-PMJAY platform allows beneficiaries to receive cashless treatment at empanelled hospitals across states, improving patient choice and ensuring continuity of care beyond Rajasthan. Allowing patients to seek cashless care in premium institutions across Delhi, Gujarat, and Maharashtra has been hailed as a major victory for patient choice.

Where the Scheme is Critiqued and Faces Bottlenecks

Despite these achievements, several operational challenges continue to affect the scheme’s implementation.

• The Rejection Crisis & Privacy Violations: Recent audits from the Medical Education Department revealed an alarming reality: in several large tertiary government hospitals, up to 40% of insurance claims were rejected by Third-Party Administrators (TPAs) due to minor technicalities. More disturbingly, field reporting has exposed intrusive verification protocols imposed by TPAs. In many instances, surgery claims were summarily rejected because hospitals failed to upload highly invasive photographs of patients’ private parts or forced clinicians to open fresh surgical dressings to photograph raw stitches. Senior hospital administrations have formally protested these measures, calling them impractical, unscientific, and a gross violation of patient privacy.
• Total Jan Aadhaar Blockades: The scheme’s complete dependence on the Jan Aadhaar identity database remains its softest administrative underbelly. Clerical errors, unlinked family members, or delayed backend database syncing regularly cause pre-authorization blockades at hospital desks, forcing families to pay upfront out-of-pocket charges during acute clinical crises.
• Geographical Concentration and Private Sector Backlogs: While the state boasts an extensive network of empanelled private hospitals, they are severely maldistributed. Over 40% of private empanelled facilities are clustered within just five urban districts (Jaipur, Jodhpur, Udaipur, Kota, and Bikaner). Rural voters face a harsh reality: they hold a 25 lakh insurance card but lack accessible local specialty care. This issue is compounded by massive payment backlogs from the state to private empanelled hospitals under both MAAY and RGHS, leading some providers to limit services or decline complex referrals.
• The Medical College Paradox: While the state has successfully established new public medical colleges across various districts, recent reports highlight severe shortages of senior faculty and specialized clinicians. The result is an infrastructural paradox: the buildings and student seats exist, but the clinical depth required to anchor high-quality tertiary care in rural districts remains missing.

10. The Financial Roadmap: What Will It Take for Total Universality?

To achieve true universal health coverage under the Viksit Rajasthan framework, the state must transition from a model that requires manual registration and premium co-payments to an unconditional, systemic right for every single voter.

Although MAAY has achieved extensive coverage, around 10 to 12% of the population remains uninsured because of registration barriers. Furthermore, requiring middle-class families to pay an annual premium of ₹850 creates an unnecessary administrative barrier that leads to discourage consistent enrolment and renewal continues to discourage consistent enrolment and renewal.

Calculating the Additional Fiscal Outlay

To eliminate these barriers and establish a completely universal, automatic health safety net, Rajasthan must absorb the full cost of the remaining population. The financial requirements are straightforward:

1. Absorbing the Subsidized Co-pay Tier: Around 12 lakh families currently pay an annual premium of ₹850 to remain enrolled in MAAY. For the state to absorb this cost entirely and make the program free, it would require an additional expenditure of approximately ₹102 crore each year.
2. Enrolling the Uncovered 12%: There are roughly 24 lakh households that currently remain outside the scheme, largely because of registration and documentation barriers. Based on an estimated average actuarial premium of ₹1,600 per family, providing complete premium cover for this remaining segment requires a dedicated allocation of ~ ₹367 crore annually.
3. Factoring Incremental Claims Payouts: Bringing the remaining population into the system will naturally expand utilization. Based on the state’s historical median claim cost of ₹12,200 and an estimated 10-12% annual hospitalization rate among the newly enrolled households, the state trust must budget for an additional ₹550 crore each year to meet future claims.

Combined, Rajasthan requires an incremental investment of approximately 1,019 crore annually to provide completely free, unconditional health coverage for its entire population. Compared with Rajasthan’s total annual budget, which exceeds ₹5.37 lakh crore, this total universal health expansion costs a mere 0.18% of the state’s annual budget.

Viewed in this context, the additional fiscal commitment is relatively modest. For less than one-fifth of a percent of the state’s annual budget, Rajasthan could completely eliminate medical-debt vulnerabilities for its entire voting population and move significantly closer to universal health coverage.

11. The Way Forward for Viksit Rajasthan

Link Health Coverage with the Electoral Roll

To strengthen its progress towards Viksit Rajasthan @2047, the state must leverage this incremental investment to build a more resilient and accessible healthcare ecosystem with reforms that improve accessibility, administrative efficiency, and service delivery. Four key interventions could help strengthen the effectiveness and long-term sustainability of the programme.

• Link Enrollment to the Electoral Rolls: The state should replace the manual registration process for the paid tier of MAAY  with an automated system. By cross-referencing the state’s voter register with the Aadhaar and Jan Aadhaar databases, digital health cards can be automatically generated for every voter, turning healthcare from an administrative opt-in program into an automatic right of citizenship.
• Implement an Emergency Clinical Override: Administrative verification should not delay access to emergency medical treatment. Rajasthan should establish a real-time emergency e-KYC override across all empanelled hospitals. Patients presenting valid identity documents during medical emergencies should receive immediate pre-authorization for life-saving care, allowing any minor identity database discrepancies to be resolved after the patient is stabilized.
• Build Up Sub-District Public Medical Infrastructure: Insurance coverage is meaningful only if patients have access to functional hospitals. The state must direct a portion of its health budget toward upgrading public medical facilities outside major cities. Filling vacant faculty posts in district medical colleges and placing specialized medical staff at rural Community Health Centers (CHCs) will ensure rural populations can access quality care closer to home.
• Deploy Escrow-Backed Claim Clearing Systems: To reduce delays in reimbursement and address concerns raised by private healthcare providers, Rajasthan should strengthen its claims management system through an escrow-backed payment mechanism supported by clear, standardized,  non-intrusive verification guidelines that respect patient dignity and clinical timelines. Such an approach could help reduce unnecessary claim disputes while protecting patient dignity and improving trust between the government and empanelled hospitals. 

Conclusion: The Foundation for a Developed State

The journey toward Viksit Rajasthan and a developed nation depends not only on economic growth but also on a healthy and financially secure population. Allowing out-of-pocket medical expenses to deplete household savings acts as a persistent drag on economic growth and social mobility,  extending beyond individual families, affecting productivity, savings, and long-term economic development.

Rajasthan has already built the foundational digital and financial architecture needed to address this challenge. By committing an additional 0.18% of its annual budget to eliminate co-payments and registration barriers, the state can remove administrative friction and deliver complete, unconditional health assurance to every voter. Investing in the health of its citizens is a powerful economic multiplier, positioning Rajasthan as a progressive leader in India’s journey toward universal health coverage.

Rajasthan has already laid a strong foundation through its extensive health assurance programme and expanding digital health infrastructure. Addressing the remaining gaps in coverage by removing registration barriers and absorbing the subsidised annual premium would move the state significantly closer to universal health coverage.

An additional investment of just 0.18% of the state’s annual budget has the potential to provide comprehensive health assurance to the remaining uninsured population while strengthening financial protection for all residents. As Rajasthan works towards the vision of Viksit Rajasthan @2047, investing in universal health coverage for its citizens is a powerful economic multiplier, positioning it as a progressive leader in India’s journey toward universal health coverage.

About the Authors

Dr. Manorama Bakshi is Director & Head of Healthcare & Advocacy at Consocia Advisory, Founder & Director of the Triloki Raj Foundation, and a Senior Visiting Fellow at IMPRI.  

Dr. Arjun Kumar is the Director of the IMPRI Impact and Policy Research Institute, New Delhi. He holds a Ph.D. in  Economics from the Centre for the Study of Regional Development, School of Social Sciences, Jawaharlal Nehru University (JNU), New Delhi.

Disclaimer: All views expressed in the article belong solely to the author and not necessarily to the organisation.

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Acknowledgement: This article was posted by Pallavi Lad, a Research and Editorial Intern at IMPRI.