Give Patients a Genuine Choice Between Public and Private Healthcare

Universal healthcare should guarantee access to treatment without forcing every patient into exactly the same delivery system.

India has both a large public healthcare network and a substantial private healthcare sector. A universal system should use the strengths of both.

Citizens should always have access to the guaranteed public system, while people with private insurance should remain free to use their insurance and choose private care when their policy covers it.

There is also an important financing issue. If a patient with private insurance chooses treatment at a government hospital, the hospital should not necessarily provide that treatment entirely from its taxpayer-funded operating budget while the patient’s insurance remains unused.

India already has a foundation for allowing public hospitals to generate treatment revenue. Under Ayushman Bharat PM-JAY, public hospitals can submit claims for eligible treatment and independently manage revenues generated from those claims.

The broader principle should be:

Universal healthcare should guarantee care for everyone without eliminating patient choice or wasting existing insurance coverage.

Every citizen should have the right to receive medically necessary treatment through the public healthcare system under the universal healthcare guarantee.

At the same time, individuals should remain free to buy private health insurance and use private hospitals under the terms of their coverage.

The system should therefore provide two complementary routes:

Universal healthcare guarantee → Public healthcare available to everyone
Private insurance → Additional provider choice and coverage
Having private insurance should not remove a person’s right to use the public healthcare system.

But when an insured patient chooses to use their private insurance at a government hospital, the hospital should be permitted to bill the insurer for covered treatment, subject to standardized prices and insurance rules.

This would create a more logical flow of healthcare funding:

Insured patient chooses government hospital → Hospital provides treatment → Private insurer pays covered amount → Revenue returns to public hospital

Give Public Hospitals a Mixed Funding Model

Government hospitals perform responsibilities that cannot be financed simply by billing individual patients.

They maintain emergency departments, teaching programmes, intensive-care capacity, public-health functions and services for patients who cannot pay. They may also need to maintain capacity even when beds or equipment are not continuously utilized.

Government hospitals should therefore continue receiving appropriate base public funding for infrastructure and public-service obligations.
But that should not prevent them from earning treatment revenue where another legitimate payer exists.

Their financing could therefore combine:

Base public funding + Universal healthcare payments + Private insurance reimbursements + Other authorized treatment revenue

Revenue earned by a public hospital should be transparently accounted for and substantially retained to improve that hospital—such as equipment, maintenance, medicines, staffing support, and patient services—rather than disappearing into an unrelated general budget.

PM-JAY already demonstrates part of this principle: its hospital-empanelment guidelines explicitly describe public facilities as having an opportunity to mobilize and independently manage revenue earned from claims for treating beneficiaries.

Preserve Genuine Patient Choice

Patients should not be pressured to use private insurance merely because they have it.

An insured citizen should still be able to choose the universally guaranteed public route under the system’s rules.

Likewise, someone wanting to use private insurance should be able to choose a participating private hospital—or an eligible public hospital operating as an insured provider.

The principle should be:

Public entitlement remains universal → Private insurance remains optional → Patient chooses → Payment follows the chosen coverage

Hospitals and insurers should disclose expected charges and coverage before non-emergency treatment so patients understand whether they will need to pay out of pocket.

Australia provides a useful example of public and private healthcare operating alongside one another while preserving patient choice.

Australians with Medicare can receive treatment as public patients in public hospitals. People with private health insurance can instead choose to be treated as private patients in either a public or private hospital, depending on their coverage. Importantly, having private insurance does not prevent someone from choosing to be treated as a public patient.

Australia also allows private insurers to make payments for private patients treated in public hospitals. Federal rules set minimum insurer benefits for private patients in public hospitals, while states and territories determine applicable hospital fees and charges.

India should design its own financing arrangements rather than copy Australia’s system. But the underlying principle is valuable:

Universal public coverage and private insurance do not have to compete.

They can coexist within the same healthcare system.

Combined with the proposed Healthcare Pricing Commission, India could create a clearer model:

Every citizen has guaranteed care → Patients retain provider choice → Insurance follows insured patients → Public hospitals can earn appropriate treatment revenue → Public resources remain focused on guaranteeing healthcare for everyone

Universal healthcare should guarantee that everyone can receive treatment—not dictate that everyone must receive it in exactly the same way.