Economics Extended Essay: Title: Effectiveness of PMJAY-CMCHIS in Improving Standard of Living of

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Economics Extended Essay

Title: Effectiveness of PMJAY-CMCHIS in improving standard of living of
Jallipatti residents in Tiruppur district
Research question: To what extent has the provision of PMJAY-CMCHIS

health insurance scheme of 2018 improved the health and thereby the living
conditions of the residents of Jallipatti village, Tiruppur district, India?
Word count: 3997

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Acknowledgements:
I would like to express my gratitude to everyone who helped and offered me their unwavering
support in the completion of my Extended Essay. I wish to thank my friends and family for their
support throughout, the people of Jallipatti who had agreed to partake in the survey, the Public
Information Officers (PIO) for providing the requested data, the doctors who had agreed for an
interview to better understand the scheme and the lawyer who assisted me in filing RTI requests
to the Government in the process of data collection. A special mention goes to the YouTube
channel “Statistics for linguists” for taking his/her time to create a separate video to help me
understand how to conduct Fisher's exact test in jamovi software. I also wish to extend my heartfelt
appreciation for my math teacher who helped me with the statistical test and finally my EE
supervisor, who helped me throughout the course of this Extended Essay.

Table of Contents:
1. Introduction: 4
2. Research Methodology: 7
2.1 Primary data: 7
2.1.1 Fisher’s exact test: 7
2.2 Secondary data: 8
3. Analysis: 9
3.1.1 Healthcare, social surplus, and welfare loss: 11
3.1.2 How PMJAY-CMCHIS theoretically corrects welfare loss: 12
3.1.4 Evaluating the scheme’s approach in improving provision of healthcare: 16
3.2 Improving standard of living: 19
3.2.1 Hypothetical effects on standards of living and FoP productivity: 19
3.2.2 Life expectancy: 19
3.2.3 Mortality rate: 22
3.2.4 Effects of lower OOPE: 23
3.2.5 Effects on AD, GDP & Poverty: 24
3.2.6 Major limitations of this scheme: 26
4. Conclusion: 29
5. Bibliography: 31
5.1 Websites referred: 31
5.2 Research papers referred: 33
5.3 Books referred: 34
6. Appendices: 35
6.1 Appendix 1: RTI (Right to Information) requests filed 35
6.2 Appendix 2: Responses to RTI requests filed 37
6.3 Appendix 3: Interview transcripts 43
6.4 Appendix 4: Data collected from Jallipatti Primary Healthcare Center 47
6.5 Appendix 5: Distance between Jallipatti and District collector office 49
6.6 Appendix 6: Calculations and working: 50
6.7 Appendix 7: Survey questions 52
6.8 Appendix 8: Survey responses: 58
1. Introduction:
India’s enormous population of 1.3 billion1 aspires to become a 5 trillion dollar economy by 2025.2
The path to this ambitious target is littered with hurdles, including India’s low living standards and
lack of access to basic necessities such as quality healthcare and education. A WHO study found
that 67.78%3 total health expenditure in India is financed by Out Of Pocket Expenditure (OOPE),
vastly greater than the global average of 18.2%.4 Another study which quantified financial burden
of households discovered that over 7%5 Indians were pushed into poverty specifically because of
debt incurred to cover healthcare expenses. This not only reduces consumption of healthcare but
is also a financial burden on consumers, restricting their spending on other merit goods such as
education. This leads to a market failure as merit goods are being under-consumed compared to
social-optimum. In the long-run, this problem may manifest as a deterioration in the productivity
of the factors of production. Both these impacts could have disastrous consequences to the
economy, supporting the case for the Government to intervene and correct the market failure.
In September 2018, the Indian Union Government introduced a new healthcare insurance scheme,
the “PMJAY (Pradhan Mantri Jan Aarogya Yojana)” , for the economically backward.6 This
1
World Bank. "World Development Indicators (WDI)." Data Catalog | Data Catalog, 30 July 2021,
datacatalog.worldbank.org/dataset/world-development-indicators. Accessed 23 Mar. 2021.
2
Beniwal, Vrishti, and Ruth David. "Modi Courts Investors With Plans for $5 Trillion Economy."
BloombergQuint, 24 Jan. 2018, www.bloombergquint.com/davos-world-economic-forum-2018/india-sets-
sights-on-five-trillion-economy-by-2025-modi-says. Accessed 23 Mar. 2021.
3
Maurya, Lalit, and Joyjeet Das. "India's Health Crisis." Down To Earth, 1 Oct. 2019,
www.downtoearth.org.in/dte-infographics/india_s_health_crisis/index.html. Accessed 25 Mar. 2021.
4
www.downtoearth.org.in/dte-infographics/india_s_health_crisis/index.html. Accessed 25 Mar. 2021.
5
Selvaraj, Sakthivel, et al. "Quantifying the Financial Burden of Households’ Out-of-pocket Payments on
Medicines in India: a Repeated Cross-sectional Analysis of National Sample Survey Data, 1994–2014."
BMJ Open, 1 May 2018, bmjopen.bmj.com/content/8/5/e018020#DC1. Accessed 26 Mar. 2021.
6
"Ayushman Bharat Highlights: ‘Game Changer’ Says PM Modi As He Launches Health Scheme."
Hindustan Times, 23 Sept. 2018, www.hindustantimes.com/india-news/ayushman-bharat-live-pm-modi-
scheme focuses on providing free healthcare coverage with minimal bureaucracy to reduce the
OOPE beneficiaries' pay for healthcare. The state of Tamil Nadu had its own version of insurance
for the underprivileged in the form of the Chief Minister’s Comprehensive Healthcare
Insurance Scheme (CMCHIS). The health ministries of the Union and State Governments signed
a Memorandum of Understanding (MoU)7 to integrate both of the schemes into PMJAY-CMCHIS
in 2018. The scheme now offers medical procedures upto ₹500,000 a year per enrolled family.8
This essay is aimed at investigating the implementation of the above policy based on the following
research question:
To what extent has the provision of PMJAY-CMCHIS health insurance scheme of 2018
improved the health and thereby the living conditions of the residents of Jallipatti village,
Tiruppur district, India?
to-launch-world-s-largest-public-health-insurance-scheme/story-BWT08t8CqQGpLUNxd2RRZN.html.
Accessed 26 Mar. 2021.
7
"PMJAY_MOU." Chief Minister's Comprehensive Health Insurance Scheme, 15 May 2019,
www.cmchistn.com/circular/PMJAY_MOU.pdf. Accessed 26 Mar. 2021.
8
National Health Authority. "About Pradhan Mantri Jan Arogya Yojana (PM-JAY)." Official Website
Ayushman Bharat | PMJAY, 25 Mar. 2021, pmjay.gov.in/about/pmjay. Accessed 26 Mar. 2021.
Image 1: Map of the Jallipatti village
Jallipatti was chosen as the geographical constraint for this research as over 60%9 of its population
are enrolled beneficiaries to the scheme, implying that most of the village’s population comprises
a socio-economic backward demographic and is hence an apt sample for investigating the
effectiveness of the scheme.
9
Refer to Appendix 2: Responses to RTI requests filed
2. Research Methodology:
2.1 Primary data:
Direct random sampling method was used to collect data from 50 samples in Jallipatti. Each sample
was asked 2 sets of questions10 based on the scheme and life expectancy. The Vernacular language
of Tamil was used at different locations and times to collect data to decrease selection bias 11 in
representing Jallipatti's population.
Semi-structured telephone interviews conducted with professionals working at health centers
under PMJAY-CMCHIS coverage helped gain a better understanding of the working of the scheme
along with its benefits and flaws.
As a measure to reduce sensitivity bias12, research participants were assured of anonymity and a
disclaimer of the survey’s intent was clearly issued. A well-known local’s company was used to
increase the trustworthiness of the study and thus reduce bias.
2.1.1 Fisher’s exact test:
Data collected from the primary research was processed using Fisher's exact test, a statistical test
used determine the existence of a non-random association between 2 categorical variables13. The
10
Refer to Appendix 7: Survey questions
11
Popov, Alexey, et al. Oxford IB Diploma Programme: Psychology Course Companion. 2nd ed., Oxford
UP - Children, 2018.
12
13
Weisstein, Eric W. "Fisher's Exact Test." MathWorld, 17 Mar. 2021,
mathworld.wolfram.com/FishersExactTest.html. Accessed 26 Mar. 2021.
test was performed on Jamovi14 to determine whether or not there is a significance between the
scheme’s inception and an improvement in the standard of living of Jallipatti beneficiaries. Thus,
the categorical variables tested were “The registration status of a person” (scheme beneficiary or
not) and the “Improvement in living standards of the participants”
2.2 Secondary data:
Many healthcare indicators for the village of Jallipatti were collected from Jallipatti’s Primary
Healthcare Center (PHC) for the 2016-20 to identify and evaluate the changes in these indicators
the scheme implemented in 2018 has caused.
Statistical information about the scheme was requested via online RTI applications15 and letters to
the Union and State Governments’ Health and Family Welfare departments.16 The RTI Act, 2005
makes accessibility to all Government data a fundamental right of each Indian citizen. 17 The
scheme’s official website18 and toll-free helpline numbers were also utilized. IB Economics
textbook by Ellie Tragakes, Government reports along with articles and research papers accessed
through the internet were referred to as well.19
14
Jamovi is a software used to perform various statistical tests
15
Refer to Appendix 1: RTI requests filed
16
Refer to Appendix 7: RTI requests filed
17
Government of India. "About Right to Information Act 2005." Right to Information, 23 Mar. 2021,
rti.gov.in/. Accessed 26 Mar. 2021.
18
Refer to Bibliography
19
Refer to Bibliography
3. Analysis:
It is necessary to check whether there is at least some correlation between being a beneficiary of
the scheme and improvement in living standards to evaluate the “effectiveness” of this scheme.
The Fisher’s exact test for Independence explained under the methodology was used for this
purpose. The below data shows the results of the test:
Table 1: Contingency table of the Fisher’s exact test for Independence
Image 2: Results of the Fisher’s exact test for Independence
Table 1 shows the frequencies at which all possible combinations of the 2 variables are taken. The
test results show the variables have a p-value of 0.00005, which is less than the statistically
significant value of p = 0.05, implying that these two variables are positively correlated.
The statistically significant relationship between PMJAY-CMCHIS and the living standards of
Jallipatti residents creates a basis for this study to further analyse how and the extent to which the
scheme has improved living standards.

10
The scheme’s primary focus is to improve provision of free, quality healthcare for the socio-
economically backward citizens.20 This could allow beneficiaries to reduce OOPE, and entitle
them to improve their living standards by increasing spending using saved money.
Consequently, this research evaluates the effectiveness of the scheme through two parameters:
1. Improving provision of healthcare
2. Improving standard of living
20
National Health Authority. "About Pradhan Mantri Jan Arogya Yojana (PM-JAY)." Official Website
Ayushman Bharat | PMJAY, 25 Mar. 2021, pmjay.gov.in/about/pmjay. Accessed 26 Mar. 2021.
11
3.1 Improving provision of healthcare:
3.1.1 Healthcare, social surplus, and welfare loss:
Healthcare is a merit good desirable for consumers, yet is underprovided by the market. 21 This
situation is a result of the positive consumption externalities associated with healthcare; unrelated
third parties are better off due to its consumption.22 People with low income levels (PMJAY-
CMCHIS beneficiaries) exacerbate this underprovision as they are willing yet not “able” to
demand healthcare, resulting in an overall lower demand compared to the hypothetical condition
of perfect income equality.
Figure 1 below depicts this problem of under-allocation of resources resulting from a lower
demand for healthcare. Note that this research considers that the supply of healthcare for Jallipatti
residents is not restricted to the geographical boundary of the village but also to the surrounding
hospitals and health centers across the district where beneficiaries could possibly access free
healthcare. This was done because Jallipatti has only 1 Primary Health Center23 and hence there
would not be enough data to collect from it to give reliable conclusions.
21
Tragakes, Ellie. Economics for the IB Diploma with CD-ROM. 2nd ed., Cambridge UP, 2012.
22
23
Government of Tamilnadu. "Health." Tiruppur District, Government of Tamil Nadu | Textile City | India,
13 Sept. 2021, tiruppur.nic.in/departments/health/. Accessed 28 Mar. 2021.
12
Figure 1: Presence of positive consumption externality in the healthcare market
The positive externality and low income causes equilibrium to be at E1 instead of socially optimum
E2 where MSB = MC. The under-allocation results in lost social surplus resulting in welfare loss
(shaded region).24
3.1.2 How PMJAY-CMCHIS theoretically corrects welfare loss:
All major Government hospitals are empanelled to the scheme by default, while private hospitals
can opt to empanel themselves. The Government remunerates the expenses that empanelled
hospitals incur for performing medical procedures for beneficiaries with a sufficient profit
margin.25 By doing this, the scheme attempts to shift the supply curve rightward by reimbursing
24
25
Refer to Appendix 3: Interview transcripts
13
the Cost of Producing (COP) healthcare for low-income patients, reducing COP at all prices and
hence making suppliers more willing and able to supply at the same prices.
The scheme anticipated private hospitals to empanel themselves to maximize revenue through
remunerations from the Government for performing procedures, further increasing supply of
healthcare. This would cause a rightward shift in the supply curve, as shown on Figure 2 below.
Figure 2: PMJAY-CMCHIS’s theoretical impact on the healthcare market
Theoretically, this brings the equilibrium to E2 in Figure 2 above, successfully internalizing the
positive externality. The equilibrium quantity increases from Q1 to Qopt and equilibrium price
increases to P2, which is substantially lower than the socially optimal price of Popt: The difference
in price between Popt and P2 would theoretically be equal to the remunerations of the Government.
This makes healthcare more affordable.

14
3.1.3 Verification of Hypothesis:
RTI responses from the Government revealed that there are 10 Government hospitals26 and 34
private hospitals27 empanelled under the scheme in Tiruppur district.
Govt. empanelled hospitals:
Figure 3: Remunerations paid to Government hospitals
Figure 328 shows the Government hospitals’ earnings per year via remunerations under the
PMJAY-CMCHIS scheme. From the year 2018 to 2019, remunerations increased by 7.59%29,
possibly due to the increasing awareness of the scheme. However in 2020, despite the
Government’s decision to insure beneficiaries against CoVid-19 treatment fees30, remunerations
have fallen, indicating an overall decrease in utilization. A majority of the Government hospitals
26
27
28
29
Refer to Appendix 6: Calculations and working
30
"Free Coronavirus Treatment Under Ayushman Bharat-PMJAY." Business Today, 24 Mar. 2020,
www.businesstoday.in/latest/economy-politics/story/breaking-govt-to-offer-free-treatment-of-coronavirus-
under-ayushman-bharat-pmjay-scheme-252918-2020-03-24. Accessed 3 Apr. 2021.
15
were dedicated for CoVid-19 treatment in 202031, thus reducing their intake of other elective
medical procedures under the scheme by 56.2%32 resulting in diminished revenue for hospitals
through remunerations.
Private empanelled hospitals:
Figure 4: Surgical and non-surgical procedures performed in private empanelled hospitals
Figure 433 shows the number of surgical and non-surgical procedures performed through the
scheme for Jallipatti beneficiaries in private empanelled hospitals. Intuitively, the assertion that
these procedures would not have been performed in the free market is plausible, since a profit-
maximizing company would lose money by admitting such patients without Government
reimbursement. This implies that this scheme has provided better and quality treatment for the
villagers free of cost, thereby improving the provision of healthcare.
31
Kannan, Ramya. "Tamil Nadu Announces Dedicated Hospital for COVID-19 Patients." The Hindu, 24
Mar. 2020, www.thehindu.com/news/national/tamil-nadu-announces-dedicated-hospital-for-covid-19-
patients/article31146741.ece. Accessed 4 Apr. 2021.
32
33
16
Figure 5: Reimbursements paid to private empanelled hospitals
Similarly, Figure 534 is reflective of the total money saved by Jallipatti beneficiaries through this
scheme every year as the reimbursements represent expenses which they would have paid for if
the scheme was not implemented. Thus, these remunerations decrease the net OOPE for
beneficiaries’ and thus increases their savings.
3.1.4 Evaluating the scheme’s approach in improving provision of healthcare:
Reimbursements paid to Government-empanelled hospitals are greater than the cost incurred to
perform a procedure, allowing them to make profits.35 However, only district head hospitals
receive procedure-based reimbursement; other Government hospitals continue to operate with
fixed funding.36 This approach helps district head hospitals to maximize their profits by
incentivizing productive efficiency, as funding is variable. Other Government hospitals, regardless
of their efficiency, get fixed funding and therefore have no real incentive to improve efficiency,
34
Refer to Appendix 2: Responses of RTI requests filed
35
36
17
worsening resource allocation. This limits the scheme's ability to decrease market failure, which
could potentially be avoided if the Government had expanded procedure-based reimbursement to
all Government hospitals.
Another hurdle in the effectiveness of the policy is the lack of awareness: utilization of the scheme
was found to be dismally low at approximately 4%37 at the state level. The Government had mailed
"intimation letters" to beneficiaries' addresses to notify them about the scheme, however data
collected indicated that only 37.5%38 beneficiaries in Jallipatti were aware of the letter,
demonstrating the inefficiency of the technique.
In addition, some private hospitals are unwilling to empanel themselves to the scheme due to poor
profit margins and dissatisfaction with the reimbursement.39 A few considered this empanelment
as a tarnish to their reputation of being a "sophisticated" hospital for the wealthy.40 On the contrary,
a few empanelled themselves for charitable purposes also.41 Some new and rising private hospitals
were also more eager to empanel themselves since their major objective was to survive amid the
competitors even if they barely make normal profit.42
37
Merwin, Radhika. "Awareness of Ayushman Bharat Scheme Still Low in TN." Business Line, 27 Feb.
2019, www.thehindubusinessline.com/economy/awareness-of-ayushman-bharat-scheme-still-low-in-
tn/article26390255.ece. Accessed 5 Apr. 2021.
38
Refer to Appendix 8: Survey responses
39
40
Pillai, Kalyani, "Assessing the Implementation of India’s New Health Reform Program, Ayushman
Bharat, in Two Southern States: Kerala and Tamil Nadu" (2020). Undergraduate Honors Theses. Paper
1523. https://scholarworks.wm.edu/honorstheses/1523
41
42
18
Although this program isn't fully effective in improving healthcare due to aforementioned reasons,
Jallipatti village is now being served by 34 private hospitals which the socio-economic backward
beneficiaries couldn’t have afforded without the scheme. Overall, PMJAY-CMCHIS has aided in
the improvement of healthcare by providing free treatment both at the nearby Government
hospitals as well as high-quality empanelled private hospitals.
The subsequent section of the research will evaluate the effectiveness of improved provision of
healthcare on living standards of Jallipatti beneficiaries.

19
3.2 Improving standard of living:
3.2.1 Hypothetical effects on standards of living and FoP productivity:
Standard of living refers to the average quantity and quality of goods and services people in a
region can afford to consume.43 PMJAY-CMCHIS helps in reducing OOPE, resulting in more
disposable income. The subsequent increase in expenditure on other goods and services may
potentially lead to better living standards. Savings are not only utilized to raise consumption of
consumer goods, but also to improve the FoP productivity of beneficiary households by spending
on merit goods such as education. By facilitating access to free healthcare, the scheme also
improves the lifespan and quality of labor.
3.2.2 Life expectancy:
This scheme’s increased healthcare provision for the economically backward could possibly
increase life expectancy and decrease mortality among the beneficiaries.
To test this hypothesis, 50 beneficiaries were interviewed at the Jallipatti PHC on their lifestyle
choices as well as their access to healthcare.44 To help calculate the life expectancy value their
responses were manually inserted into a lifespan calculator45 and the figure arrived at.
43
Lumen. "GDP and Standard of Living | Macroeconomics." Lumen Learning – Simple Book Production,
16 Mar. 2021, courses.lumenlearning.com/wm-macroeconomics/chapter/gdp-and-standard-of-living/.
Accessed 9 Apr. 2021.
44
Refer to Appendix 7: Survey questions
45
Towell, Jean. "Lifespan Calculator – Test Your Life Expectancy || NM." Lifespan Calculator, 4 May
2013, media.nmfn.com/tnetwork/lifespan/#0. Accessed 7 May 2021.
20
To improve accuracy, the statistical measure of outliers46 was calculated using Interquartile
Range47 and the data corresponding to the responses that were outside the outliers were eliminated.
Outliers are calculated to create boundaries in between which data can be considered reliable.
Height being a continuous variable, was used as the primary outlier determinant. 3 data samples48
fell outside the outlier-determined ranges were removed.
Figure 6: Change in life expectancy from 2016 to 2020
In order to check the scheme’s effect on life expectancy, Udumalpet’s 2016 life expectancy was
used as a benchmark to facilitate comparison. Udumalpet is a sub-district under which the Jallipatti
village is situated. Figure 649 shows that all 3 life expectancy classifications have improved. The
average life expectancy witnessed a 8.6%50 increase, while male and female life expectancies have
increased by 7.8%51 and 9.2%52 respectively. This signifies that the access to quality healthcare
46
47
48
49
50
51
52
21
has improved as life expectancy can’t improve without better access to medical infrastructure.
However, the 2016 life expectancy value is the life expectancy of entire Udumalpet and not for
only Jallipatti; the actual extent of the increase in life expectancy might not be entirely accurate.
There are also other factors in play with the data collection which could make these values an
overestimate or an underestimate, which are discussed below.
The life expectancy calculation involved questions on drinking, smoking, and driving habits which
could potentially result in various types of participant bias such as social desirability and sensitivity
bias.53 This could have artificially inflated the calculated average life expectancy value.
As the sample size was small due to CoVid-19 and inaccessibility to a larger sample population,
data collected from this could have significant selection bias, leading to underestimation of the
lifespan values. Data collected was only from the beneficiaries of the scheme who are
economically backward people, who therefore have a lower life expectancy than average.54
However, this increase in life expectancy might not necessarily be a causation but could also be a
mere correlation with other factors contributing to improvement in life expectancy such as more
stringent driving laws in recent years, decreasing number of accidents.
53
54
Dayanikli, Gokce, et al. "Effect of GDP Per Capita on National Life Expectancy." SMARTech Home, 18
Nov. 2016,
smartech.gatech.edu/bitstream/handle/1853/56031/effect_of_gdp_per_capita_on_national_life_expectan
cy.pdf. Accessed 17 May 2021.
22
3.2.3 Mortality rate:
Other healthcare indicators were also calculated to find if the scheme was beneficial in improving
them; Jallipatti’s Maternal Mortality Rate (MMR), Infant Mortality Rate (IMR) and Crude Death
Rate (CDR) for the years 2016-2020 were collected from Jallipatti’s Primary Healthcare Center
(PHC) to assess how the scheme has affected them.
Figure 7: Mortality rates of Jallipatti Village
As seen in Figure 755 mortality ratios show a substantial decrease from 2018 to 2020 since the
scheme’s commencement. MMR has decreased by 20.9%56 during this period, coinciding with a
9.2% increase in women's life expectancy calculated earlier, implying that women's natal care has
considerably improved. IMR also fell by 21.0%57 demonstrating the scheme's success in lowering
the village's death rates.
55
Refer to Appendix 4: Data collected from Jallipatti Primary Healthcare Center
56
57
23
MMR and IMR have been on the decline, while CDR has only shown a minimal drop, particularly
in recent years, which is attributable to the pandemic and spread of CoVid-19. Although Jallipatti's
CDR is slightly higher than the CDR of Tamil Nadu, which is 6.5 58, it is slightly lower than the
CDR of Tiruppur district, which is 7.859, depicting the scheme’s successful implementation in the
village.
3.2.4 Effects of lower OOPE:
Healthcare being an essential and merit good has an inelastic demand which cannot be postponed.
PED < 1 denotes that low-income individuals would pay for healthcare regardless of cost, dipping
into their savings or borrowing money to do so. Consequently, their financial condition could
significantly deteriorate. PMJAY-CMCHIS prevents this from happening because instead of an
OOPE, the Government reimburses healthcare expenditures.
The data-collection revealed that OOPE had decreased. Over 60%60 of the recipients surveyed said
they had saved money as a result of the scheme, with the perceived yearly savings of borrowers
approximating to a yearly average of ₹17,615.6861.
58
"Tamil Nadu Death Rate, 1920-2020 - Knoema.com." Knoema, Knoema, 13 Oct. 2020,
knoema.com/atlas/India/Tamil-Nadu/Death-rate. Accessed 2 May 2021.
59
State Planning Commission Tamil Nadu. "District Human Development Report - 2017." State Planning
Commission, 24 Aug. 2017, www.spc.tn.gov.in/DHDR/Tiruppur.pdf. Accessed 13 Apr. 2021.
60
61
24
Figure 8: Sectors with increased expenditure
Figure 862 shows that 22.9% of beneficiaries raised their housing spending and 43.8% increased
spending on education, which they could not have done without the scheme's savings. Thus, it is
seen that the standard of living has improved. This increase in investment on human capital and
resources will potentially improve productivity in the long term.
The theoretical effects of this reduction in OOPE on the AD and thereby real GDP are analyzed
below.
3.2.5 Effects on AD, GDP & Poverty:
The PMJAY-CMCHIS scheme is reflective of an increase in government spending on healthcare
(G) and thus can be interpreted as an expansionary fiscal policy, resulting in the increase in AD to
AD2 as shown in Figure 9 below. This increased expenditure has moved the AD curve to AD3
due to the Keynesian multiplier effect. Prior to the scheme’s implementation, the poor usually had
to save some money to finance sudden OOPE healthcare expenses. But this scheme’s
62
25
implementation has negated the need to do so, decreasing MPS and allowing beneficiaries to
redirect that money which would’ve been saved for other purposes. This raises the MPC and
magnitude of the multiplier effect, making the AD3 rise higher with increased induced spending.
Figure 9: Increase in rGDP as a result of the multiplier effect
This results in an increase in employment and rGDP to Y3 on Figure 9 above. Increasing
expenditure on education, may have long-term positive impacts on the economy through
improving the productivity of means of production, similar to how improved life expectancy did.
As a result, the PPC shifts outward, increasing potential GDP.
It should also be emphasized that because this plan is largely aimed at low-income families, the
majority of the gain in labor productivity would accrue to these households. A household’s income
is determined by the quality and quantity of FoP it possesses. In this scenario, as the beneficiaries
are predominantly from economically backward households, it can be assumed the FoP they offer
to the economy is primarily labor. This improvement in labor productivity helps families improve
their earnings in the long run. The poverty trap is caused by a shortage of high-quality labor or
26
households' labor immobility prohibiting them from using them. By allowing low income
beneficiaries to spend on education and re-skilling, this scheme allows people to break out from
the vicious circle of poverty and into a virtuous cycle by making them more “employable”.
Moreover, treatment under the plan is available at any empanelled hospital in the country, therefore
facilitating labor mobility.63 As a result, it will make income distribution more equitable in the
long run. This rise in spending not only improves Jallipatti's rGDP, but it also raises their living
standards.
3.2.6 Major limitations of this scheme:
PMJAY-CMCHIS' major goal is to minimize OOPE through increasing access to high-quality
healthcare for the poor.64 However, outpatient services, which account for 94%65 of healthcare
demand, are not covered by the program.66 As a result, the decrease in total OOPE for patients, as
well as the resulting rise in AD, is severely restricted. It could be presumed that the Government
had only insured beneficiaries against inpatient expenses as inpatient expenses are unpredictable
and moreover more unaffordable for the poorer demographic67, while outpatient expenses are
planned, non-emergency scenarios. Hence, the Government could’ve decided to insure poor
against unpredictable and unaffordable expenses.
63
National Health Authority. "FAQs | Official Website Ayushman Bharat Pradhan Mantri Jan Arogya
Yojana | National Health Authority." Official Website Ayushman Bharat | PMJAY, 10 May 2021,
pmjay.gov.in/webfaqs. Accessed 10 May 2021.
64
National Health Authority "About Pradhan Mantri Jan Arogya Yojana (PM-JAY)." Official Website
Ayushman Bharat | PMJAY, 10 May 2021, pmjay.gov.in/about/pmjay. Accessed 10 May 2021.
65
PIB Delhi. "Change in Medical Expenditure Patterns." Press Information Bureau, Ministry of Health and
Family Welfare, 11 Feb. 2020, pib.gov.in/PressReleasePage.aspx?PRID=1602758. Accessed 11 May
2021.
66
National Healthy Authority "What Services Are Excluded Under PMJAY?" Official Website Ayushman
Bharat | PMJAY, 20 Jan. 2020, pmjay.gov.in/node/1714. Accessed 10 May 2021.
67
Chatterjee, Susmita, et al. "Unit Cost of Medical Services at Different Hospitals in India." PMC, 23 July
2013, www.ncbi.nlm.nih.gov/pmc/articles/PMC3720595/. Accessed 29 May 2021.
27
The qualifying requirements are also extremely outdated, as they are based on the SECC 201168
(Socio-Economic Caste Census), which is nearly ten years old. Since the economic circumstances
of individual families might improve or deteriorate over a ten-year period, the census report isn't
an accurate picture of the families who truly require assistance through the plan.
In fact, it is likely that the Government was burdened unnecessarily by this scheme, as per capita
income in Tamil Nadu has grown by about 70%69 in the last ten years, showing that most
households are better off than they were in 2011. Such Government spending has an opportunity
cost since limited tax revenue as this scheme was financed at the cost of other potential
Government spending. The Government may need to fund this programme by raising indirect
taxes, which is regressive in nature and causes welfare loss as social surplus declines. Thereby,
many of the scheme's potential advantages, such as improved income distribution, more AD and
employment, lower poverty could be crowded out as a result.
A household is also excluded if they own a motor car, refrigerator, or telephone, according to the
scheme's "exclusion criterion".70 One survey respondent highlighted an example of his
acquaintance who is a delivery worker (lower middle income) and was not qualified for the scheme
only because he had a motorized 2 wheeler.71 However owning a motorized vehicle does not
68
"PMJAY - Ayushman Bharat Yojana Benefits." Scripbox, 13 Apr. 2021, scripbox.com/saving-
schemes/pmjay/. Accessed 18 May 2021.
69
Tamil Nadu Government. "Major Socio Economic Indicators." Open Government Data Portal Tamil
Nadu, 28 May 2021, tn.data.gov.in/catalogs. Accessed 28 May 2021.
70
PTI. "Ayushman Bharat Scheme: National Health Agency Issues Circular Advising States to Identify
Eligible Beneficiaries." The New Indian Express, 6 Oct. 2018,
www.newindianexpress.com/nation/2018/oct/06/ayushman-bharat-scheme-national-health-agency-
issues-circular-advising-states-to-identify-eligible-1881864.html. Accessed 19 May 2021.
71
28
necessarily guarantee a family can afford healthcare services, thus indicating the need for the
"exclusion criterion" to be revised.
Only about 3-4%72 beneficiaries utilize the scheme at the state level, and it could be even lower in
rural areas like Jallipatti due to lower awareness, indicating that the underprivileged people are
still paying out of pocket for treatment which they could be receiving through the scheme. As
previously stated, just 37.5%73 beneficiaries were aware of their status as a beneficiary as a result
of the Government's letter, highlighting the necessity for Governments to reconsider their
beneficiary notification procedures. Furthermore, low-income earners, who are the primary
beneficiaries of the scheme, may be continuously on the move due to a lack of permanent housing
in search of employment. Thus the government may be sending letters to the wrong address based
on 2011 data, demonstrating the inefficiency of this technique. Furthermore, families must travel
to the Tiruppur District Collector Office to register as a beneficiary, which is almost 30
kilometers74 apart, and poor families may find it difficult to travel that far. This might constitute a
barrier, preventing the desperate poor from registering, reducing the scheme's overall efficacy.
72
Merwin, Radhika. "Awareness of Ayushman Bharat Scheme Still Low in TN." Business Line, 27 Feb.
2019, www.thehindubusinessline.com/economy/awareness-of-ayushman-bharat-scheme-still-low-in-
tn/article26390255.ece. Accessed 19 May 2021.
73
Refer to Appendix 8: Survey results
74
Refer to Appendix 5: Distance between Jallipatti and District Collector Office
29
4. Conclusion:
This entire essay looked into the RQ which was “To what extent has the provision of PMJAY-
CMCHIS health insurance scheme of 2018 improved the health and thereby the living
conditions of the residents of Jallipatti village, Tiruppur district, India?”. The research and
subsequent analysis indicated that this scheme primarily aims to reduce OOPE by providing free
provision of quality healthcare to the beneficiaries which helps them save money. This in turn can
be used to improve standard of living by increasing spending on merit goods and healthcare
improving labor productivity.
While the scheme has certainly improved provision of healthcare by partnering with Government
and private hospitals with remunerations to hospitals for procedures done through the scheme,
there is still scope for improvement in the scheme as many private hospitals are still reluctant to
empanel themselves as part of the scheme for various reasons such as low remuneration amount
adversely impacting the potential healthcare facilities which could’ve been availed by
beneficiaries.
While over 60%75 surveyed beneficiaries had mentioned that the scheme did improve their overall
standard of living primarily by helping them improve spending on other merit goods and thereby
improving their employability and productivity. The scheme also has certain issues with the
eligibility criterion of the scheme and low utilization rates presumably because of decreased
awareness and the fact that the scheme doesn’t insure beneficiaries against outpatient healthcare
services which is the major healthcare service demanded. Therefore, the scheme doesn’t
75
30
completely achieve its aim of eliminating the OOPE by beneficiaries. The scheme’s success could
increase exponentially and thereby standard of living as well, if the scheme insured beneficiaries
for outpatient services as well, as utilization would tremendously grow.
The aforementioned analysis revealed that the scheme helps small private providers of healthcare
to sustain in this highly capital-intensive healthcare sector. Therefore, this scheme could indirectly
have prevented a vital sector of the country from turning into an oligopoly or monopoly with
abusive powers by aiding the survival of small scale private players. So the extent to which this
scheme has influenced the market structure and thus it’s impacts on concerned stakeholders, could
be further evaluated.
31
5. Bibliography:
5.1 Websites referred:
"Ayushman Bharat Highlights: ‘Game Changer’ Says PM Modi As He Launches Health

Scheme." Hindustan Times, 23 Sept. 2018, www.hindustantimes.com/india-news/ayushman-
bharat-live-pm-modi-to-launch-world-s-largest-public-health-insurance-scheme/story-
BWT08t8CqQGpLUNxd2RRZN.html. Accessed 26 Mar. 2021.
Beniwal, Vrishti, and Ruth David. "Modi Courts Investors With Plans for $5 Trillion
Economy." BloombergQuint, 24 Jan. 2018, www.bloombergquint.com/davos-world-economic-
forum-2018/india-sets-sights-on-five-trillion-economy-by-2025-modi-says. Accessed 23 Mar.
2021.
Chatterjee, Susmita, et al. "Unit Cost of Medical Services at Different Hospitals in India." PMC,
23 July 2013, www.ncbi.nlm.nih.gov/pmc/articles/PMC3720595/. Accessed 29 May 2021.
"Free Coronavirus Treatment Under Ayushman Bharat-PMJAY." Business Today, 24 Mar.

2020, www.businesstoday.in/latest/economy-politics/story/breaking-govt-to-offer-free-
treatment-of-coronavirus-under-ayushman-bharat-pmjay-scheme-252918-2020-03-24. Accessed
3 Apr. 2021.
Government of India. "About Right to Information Act 2005." Right to Information, 23 Mar.
2021, rti.gov.in/. Accessed 26 Mar. 2021.
Government of Tamilnadu. "Health." Tiruppur District, Government of Tamil Nadu | Textile

City | India, 13 Sept. 2021, tiruppur.nic.in/departments/health/. Accessed 28 Mar. 2021.
Kannan, Ramya. "Tamil Nadu Announces Dedicated Hospital for COVID-19 Patients." The
Hindu, 24 Mar. 2020, www.thehindu.com/news/national/tamil-nadu-announces-dedicated-
hospital-for-covid-19-patients/article31146741.ece. Accessed 4 Apr. 2021.
Lumen. "GDP and Standard of Living | Macroeconomics." Lumen Learning – Simple Book
Production, 16 Mar. 2021, courses.lumenlearning.com/wm-macroeconomics/chapter/gdp-and-
standard-of-living/. Accessed 9 Apr. 2021.
www.downtoearth.org.in/dte-infographics/india_s_health_crisis/index.html. Accessed 25 Mar.
2021.
32
Merwin, Radhika. "Awareness of Ayushman Bharat Scheme Still Low in TN." Business Line,
27 Feb. 2019, www.thehindubusinessline.com/economy/awareness-of-ayushman-bharat-
scheme-still-low-in-tn/article26390255.ece. Accessed 5 Apr. 2021.
Ministry of Health and Family Welfare. "Ayushman Bharat - Health and Wellness Centres."
Official Website Ayushman Bharat | HWC, 26 Mar. 2021, ab-hwc.nhp.gov.in/. Accessed 26
Mar. 2021.
National Health Authority. "About Pradhan Mantri Jan Arogya Yojana (PM-JAY)." Official
Website Ayushman Bharat | PMJAY, 10 May 2021, pmjay.gov.in/about/pmjay. Accessed 10
May 2021.
National Health Authority. "FAQs | Official Website Ayushman Bharat Pradhan Mantri Jan
Arogya Yojana | National Health Authority." Official Website Ayushman Bharat | PMJAY, 10
May 2021, pmjay.gov.in/webfaqs. Accessed 10 May 2021.
National Health Authority. "What Services Are Excluded Under PMJAY?" Official Website
Ayushman Bharat | PMJAY, 20 Jan. 2020, pmjay.gov.in/node/1714. Accessed 10 May 2021.
National Health Authority. "About Pradhan Mantri Jan Arogya Yojana (PM-JAY)." Official
Website Ayushman Bharat | PMJAY, 25 Mar. 2021, pmjay.gov.in/about/pmjay. Accessed 26
Mar. 2021.
PIB Delhi. "Change in Medical Expenditure Patterns." Press Information Bureau, Ministry of
Health and Family Welfare, 11 Feb. 2020, pib.gov.in/PressReleasePage.aspx?PRID=1602758.
Accessed 11 May 2021.
"PMJAY - Ayushman Bharat Yojana Benefits." Scripbox, 13 Apr. 2021, scripbox.com/saving-

schemes/pmjay/. Accessed 18 May 2021.
"PMJAY_MOU." Chief Minister's Comprehensive Health Insurance Scheme, 15 May 2019,

www.cmchistn.com/circular/PMJAY_MOU.pdf. Accessed 26 Mar. 2021.
PTI. "Ayushman Bharat Scheme: National Health Agency Issues Circular Advising States to
Identify Eligible Beneficiaries." The New Indian Express, 6 Oct. 2018,
www.newindianexpress.com/nation/2018/oct/06/ayushman-bharat-scheme-national-health-
agency-issues-circular-advising-states-to-identify-eligible-1881864.html. Accessed 19 May
2021.
33
State Planning Commission Tamil Nadu. "District Human Development Report - 2017." State
Planning Commission, 24 Aug. 2017, www.spc.tn.gov.in/DHDR/Tiruppur.pdf. Accessed 13
Apr. 2021.
Statistics for Linguists. "3 Fisher's Exact Test on Tables Larger Than 2x2." 9 July 2021,
YouTube, youtu.be/9DGudANB58I. Accessed 10 July 2021
"Tamil Nadu Death Rate, 1920-2020 - Knoema.com." Knoema, Knoema, 13 Oct. 2020,
knoema.com/atlas/India/Tamil-Nadu/Death-rate. Accessed 2 May 2021.
Tamil Nadu Government. "Major Socio Economic Indicators." Open Government Data Portal
Tamil Nadu, 28 May 2021, tn.data.gov.in/catalogs. Accessed 28 May 2021.
Towell, Jean. "Lifespan Calculator – Test Your Life Expectancy || NM." Lifespan Calculator, 4
May 2013, media.nmfn.com/tnetwork/lifespan/#0. Accessed 7 May 2021.
Weisstein, Eric W. "Fisher's Exact Test." MathWorld, 17 Mar. 2021,

mathworld.wolfram.com/FishersExactTest.html. Accessed 26 Mar. 2021.
World Bank. "World Development Indicators (WDI)." Data Catalog | Data Catalog, 30 July
2021, datacatalog.worldbank.org/dataset/world-development-indicators. Accessed 23 Mar.
2021.
5.2 Research papers referred:
Dayanikli, Gokce, et al. "Effect of GDP Per Capita on National Life Expectancy." SMARTech
Home, 18 Nov. 2016,
smartech.gatech.edu/bitstream/handle/1853/56031/effect_of_gdp_per_capita_on_national_life_e
xpectancy.pdf. Accessed 17 May 2021.
Kumar, M.Ranjith, and K.S. Shobajasmin. "An Analysis on Service Quality of Government and
Private Hospitals in Tamilnadu." Academic Publications, 2018, acadpubl.eu/hub/2018-120-
5/1/44.pdf. Accessed 8 May 2021.
Pillai, Kalyani, "Assessing the Implementation of India’s New Health Reform Program,
Ayushman Bharat, in Two Southern States: Kerala and Tamil Nadu" (2020). Undergraduate
Honors Theses. Paper 1523. https://scholarworks.wm.edu/honorstheses/1523
Selvaraj, Sakthivel, et al. "Quantifying the Financial Burden of Households’ Out-of-pocket

Payments on Medicines in India: a Repeated Cross-sectional Analysis of National Sample
34
Survey Data, 1994–2014." BMJ Open, 1 May 2018,

bmjopen.bmj.com/content/8/5/e018020#DC1. Accessed 26 Mar. 2021.
5.3 Books referred:
Popov, Alexey, et al. Oxford IB Diploma Programme: Psychology Course Companion. 2nd ed.,
Oxford UP - Children, 2018.
35
6. Appendices:
6.1 Appendix 1: RTI (Right to Information) requests filed:
Online RTIs filed:
1. Request 1 filed on 18/05/2021
Registration number: NHATY/R/E/21/00184

Registration number: NHATY/R/E/21/00187

Registration number: MOSPI/R/E/21/00354
36

Registration number: PLCOM/R/T/21/00101
Note: Requests 3 and 4 had information sought from various Governmental departments hence
they were requested twice.
Upon sending the first 2 requests when I spoke to a lawyer, I was informed that specifying the
related laws would leave no scope for the Public Information Officer to reject the request, therefore
the upcoming requests also contained information about related laws to ensure the required data
was provided.
37
Offline RTI filed:

The below information wasn’t available in the central Government’s RTI portal, therefore a letter
had to be sent to the concerned State Government’s ministry to receive the sought information.
38
6.2 Appendix 2: Responses to RTI requests filed:

Responses to online RTIs filed:
1. Response to Request 1:
2. Response to request 2:
39
3. Response to request 3:
40
4. Response 4 has been forwarded to multiple public authorities and departments, but no response
has been availed from them other than the intimation that the request was forwarded to other
departments.
41
Response to offline RTI requests:

Response letter received from Tamil Nadu Health Systems Project (TNHSP):
42
43
6.3 Appendix 3: Interview transcripts:

Interview 1:
Occupation: Doctor at PHC
I: Hello ma’am, how are you doing today?
P: Good. So what is this interview about?
I: This interview is regarding a research project I have been working on about the effectiveness of PMJAY-
CMCHIS in improving living standards in a village called Jallipatti. Before I move on to the questions, do
you consent to be part of this research? Everything would be anonymous and I wouldn’t use your name
anywhere on the research paper.
P: As long as my identity isn’t revealed, I am okay with it.
I: Thank you ma’am, so what benefits has PMJAY-CMCHIS brought to the people your PHC treats?
P: Well, overall I think the scheme is well-intentioned, and it certainly does benefit the people who are able
to claim it. I have personally witnessed many people who would have otherwise not been able to afford
some medicines are able to purchase it. More people have started to come to PHCs, for regular check ups
during the maternal gestation period during the time our doctors give advice on family planning and how
to take care of themselves during and after the gestation period. I am confident that we will be able to see
the demographics improve in a few years as time progresses. But ultimately this scheme attempts at bringing
a larger chunk of the poor population under the healthcare net which would reduce out of pocket and
healthcare related financial burden for them.
I: What are the drawbacks that you find in this scheme?
P: The problem is that most people who come here are not even aware that there is such a scheme at all!
Especially in a rural place like Jallipatti, many people don't know they are eligible for this scheme. In some
cases people are already enrolled and are beneficiaries of the scheme as they were just enrolled to this
scheme from its predecessors CMCHIS (Chief minister comprehensive healthcare insurance scheme) and
KKT (Kalaignar Kapitu thittam), so this scheme is also very much under utilized without the beneficiary
being informed or notified about it. So to reach maximum beneficiaries through this scheme, the
Government has to work hard on spreading awareness.
I: Thank you for your time.
Interview 2:
Occupation: Doctor at Government hospital in Tiruppur
I: Good afternoon sir, how are you?
P: I’m doing well, so I heard that you wanted to interview me regarding the PMJAY scheme?
I: Yes sir, I am currently researching regarding the effectiveness of the PMJAY-CMCHIS in improving
living standards of Jallipatti residents, so I’d like to ask a few questions to you regarding it. But before that,
do you consent to be part of this research? Your answers would only be used for the purpose of my research
project and your identity will be kept anonymous and will not be revealed.
44
P: I’m okay with that, so what do you want to know about this scheme?
I: What are the benefits the scheme has brought to the Government hospital and to the beneficiaries?
P: This scheme is very much useful as it is India’s attempt at a universal, comprehensive healthcare
insurance for the underprivileged. Various attempts and regulations have been brought in to ensure that
only people who are enrolled get free treatment through the scheme and to prevent revenue loss for the
Government. Moreover, Government hospitals as a whole have greatly benefited under the scheme as it is
a source of revenue for the Government hospitals. The operations and procedures which were previously
done free of cost, but now the Government reimburses the hospitals for procedures done under the scheme.
Hospitals can use this to increase pay to attract higher skilled medical practitioners, or they can use this to
revamp the medical facilities by improving the hospital’s medical infrastructure. Government currently
doesn’t have the funds to build hospitals with excellent infrastructure in every village as it wouldn’t be
practical. So any serious illness in the village will have to come towards urban places where there are
hospitals which can treat them. So when this money can be used to improve Government hospitals in
relatively urban areas, it is ultimately good for the people, as the quality of healthcare offered also increases.
However, there is a catch in the allocation of funds, the district head hospitals get funds based on the number
of procedures they perform, and they have a slight profit margin in that, which the hospital can use to
improve infrastructure or something like that, however all other hospitals in the district are just provided
with a specific budget for a time period, and that hospital needs to work under that budget for that time
period. The latter case might reduce quality in some cases, because funds might not be sufficient, and for
additional funds we have to place another request and that is a long, bureaucratic process.
I: Oh okay sir, so what do you think are the drawbacks in this scheme?
P: This scheme doesn’t have that many drawbacks, however there are quite a few issues on the awareness
and enrollment aspect of the scheme. To enroll in the scheme, people have to go to the district’s collector
office and get themselves added as a beneficiary in the scheme’s database. Based on their locality the
collector office might be very far or near. So getting yourself enrolled is pretty hard as far as I know.
Moreover, this is a scheme with so many enrolled beneficiaries, but barely a few people are using this for
their daily needs. Moreover, though all Government hospitals can provide under this scheme, not all private
hospitals can. The private hospitals need to empanel themselves to the scheme, and identifying whether or
not a private hospital is empanelled could be confusing for a layman. And as the public usually prefer
private hospitals thinking that they offer better quality, they end up paying more for the exact same service
which could’ve been done free of cost in a Government hospital or a private empanelled one. So the
Government needs to improve awareness about this scheme, and also try to break the notion that
Government hospitals are of poor quality by improving all healthcare facilities. Another main issue is that
outpatient services aren’t covered underneath this scheme, which indicates that this isn’t a complete
“universal” healthcare coverage scheme, because in major hospitals outpatient services are widely
demanded, so it would cost a lot more, but it would be more beneficial for people if outpatient services are
included in the scheme as well.
I: Thank you for your valuable input sir.
Interview 3:
Occupation: General physician at private multi-specialty hospital in Tiruppur
I: Good evening sir, how are you doing?
P: I’m great, so why did you want to see me?

45
I: I am currently working on a research project on the effectiveness of the PMJAY-CMCHIS on improving

the living standards of Jallipatti village residents, so I wanted to ask a few questions to you about that.
P: Okay, so what are the questions you have?
I: Sir, before that please provide your consent to partake in this research. I can assure you that your identity
will be kept confidential and that the information you provide will only be used for my research.
P: Okay, that shouldn’t be a problem.
I: Thank you sir, so first off, my question is about what are the benefits PMJAY-CMCHIS gives to the
people and private hospitals such as the ones you work in?
P: I personally feel like PMJAY-CMCHIS is just a better version of its predecessor CMCHIS. They have
increased the total amount, and have also brought in more healthcare aspects and diseases under this scheme
now. It is definitely better for the underprivileged people, but I don’t think it offers a major thing as such
schemes have been in Tamil Nadu for almost over a decade now. But I cannot understate the benefits it
provides to poor people who are in need of healthcare services though. Government has also enforced
various measures to ensure this scheme isn’t misused like scanning of barcodes of tools used in treatments
of surgery and a picture of the patient along with it for the money to be sanctioned. This prevents misuse
of the system.
I: Okay sir, what do you think are the drawbacks in this scheme:
P: Some of the drawbacks in this scheme that might need to be ironed out include the low awareness
beneficiaries have about this scheme. There are numerous cases which I’ve personally witnessed where the
beneficiary didn’t know she was under the scheme until we checked her on the database and discovered she
was part of the scheme. So when awareness of the scheme improves, people using this scheme would also
improve making it a success. And the other few issues which make private hospitals hesitant from
empanelling themselves are the prices offered to private hospitals for the procedures they perform under
the scheme. They are very low and sometimes they barely cover costs, that’s why most hospitals have
refrained from empanelling themselves as it doesn’t make monetary sense to them as profits are usually
very low or non-existent. Moreover, from what I’ve heard, empanelling a private hospital to the scheme,
and the excess steps involved in getting claims from the Government for treatments offered under the
scheme act as further disincentive for private hospitals to empanel themselves. But mainly the trend I have
noticed is that private hospitals which are new in the healthcare industry cannot face the immense
competition, and in order to establish themselves, they empanel them to the scheme for some money even
if the money provided barely meets costs. However, that isn’t the case for established private hospitals,
therefore new private hospitals are more inclined to empanel compared to renowned ones.
I: Alright sir, thank you for your time and information.
Interview 4:
Occupation: Doctor at private hospital in Tiruppur
I: Good morning ma’am.
P: Good morning, so what did you want to talk to me about?

46
I: Ma’am I am researching about the effectiveness of PMJAY-CMCHIS for the residents of the village of
Jallipatti, and would like to ask a few questions to you regarding it.
P: Okay, so what questions do you have?
I: Ma’am, before I ask the questions, do you consent to be a part of my research? I can confidently provide
assurance that the information you give will only be used for research purposes and your identity will be
kept anonymous at all times.
P: Okay, I give my consent, so what questions do you have about this Government insurance scheme?
I: What benefits do you think this scheme provides to the people and your private practice?
P: This scheme largely benefits the low income population as this helps them even get huge operations like
a heart lung transplant which would usually cost at least 20 lakhs for free. This is such a boon for the poor
people, helping them avail healthcare for free without any burden. Moreover, for small private practices
like the place where I work, being empanelled to the scheme helps drive more patients to us improving our
image amongst the public and also gaining popularity. Though profits through the scheme aren’t as much
as we’d expect, it is enough to cover our costs and mainly helps to establish ourself as a healthcare option
in the region.
I: What are the various drawbacks that you find in this scheme?
P: Well though the scheme has been built with a very progressive motive of providing the poor people free
and quality healthcare services, the database through which this scheme determines the eligibility is based
on a 2011 census. So it is extremely outdated and so the process might not serve its original purpose of
identifying the ones who are in extreme need of this healthcare service now. Some higher end private
hospitals are also reluctant to empanel themselves to this scheme as they brand themselves with exclusive
and elite care for the higher income section of the society, so if they empanel themselves, the influx of poor
people looking for treatment might damage the hospital's image intended to treat the rich. Moreover, just
like any other Government scheme, corruption and bribery to a certain extent exists in this scheme as well.
Though measures have been taken in order to minimize them, it hasn’t been eliminated yet, so it eats up the
public’s money.
I: Oh, thank you for sharing your thoughts about this scheme.
47
6.4 Appendix 4: Data collected from Jallipatti Primary Healthcare Center:
The data collected from the Primary Healthcare Center from Jallipatti:
Mortality rate 2016 2017 2018 2019 2020
Maternal 33.1 34.8 25.41 20.73 20.1

Mortality
Rate
Infant 21.3 17.89 16.2 13.1 12.8

Mortality rate
Crude Death 7.22 7.15 6.9 6.82 6.73

Rate
Picture of the Primary Healthcare Center taken by the student:

48
49
6.5 Appendix 5: Distance between Jallipatti and District collector office:
There are 3 routes which people can take, however every route is almost over 30 kilometers long.
The shortest route being 30.1 km

The second shortest route being 35.0 km
The longest route being 36.5 km
These are the most common routes which villages from Jallipatti take to reach the Tiruppur district
collector office.
50
6.6 Appendix 6: Calculations and working:
1. Increase in money reimbursed to Government hospitals through PMJAY-CMCHIS from 2018-

2019:
₹334450 – reimbursed to Government hospitals in 2018

₹359840 – reimbursed to Government hospitals in 2019
Therefore, to calculate increase from 2018 to 2019:
359840−334450
334450
× 100 = 7.59% increase
2. Decrease in number of non-surgical procedures performed in Government hospitals from 2019 to

2020:
According to RTI response,

3013 non-surgical procedures performed in 2019
1319 non-surgical procedures performed in 2020
1319 − 3013
× 100 = −56.2%
3013
Exhibiting a 56.2% decrease in non-surgical procedures performed from 2019 to 2020 in

Government hospitals.
3. Calculation of interquartile range for height:
All collected data samples were compiled into a Microsoft Excel sheet. The interquartile range’s
formula is = Q3 – Q1. With Q3 being upper quartile and Q1 being lower quartile.
The excel formula to calculate the lower and upper quartiles were used:
To find Q1:
=QUARTILE(C2:C51,1)
C2:C51 is the range of cells in which height values are, and the “1” signifies that Q1 or lower
quartile has to be calculated.
Q1 was equal to 156 cm
To find Q3,
=QUARTILE(C2:C51,3)
It is the same formula as Q1 but instead of “1”, “3” was used because we had to calculate
Q3 or the upper quartile
Q3 was equal to 167 cm
So Interquartile range = Q3 – Q1,

= 167 – 156 = 11cm
The lower outlier formula is = Q1 – (1.5 × IQR)

The upper outlier formula is = Q3 + (1.5 × IQR)
51
So, lower outlier is 156 – (1.5 × 11) = 139.5cm

Upper outlier is 167 + (1.5 × 11) = 183.5cm
There were 3 responses outside the outliers and they were response number 16, 38 and 39.
They had heights of 136cm, 132cm and 132cm respectively.
Those responses were removed to improve the accuracy of the data, and using the remaining data
life expectancy was calculated.
4. Calculation of life expectancy:

The remaining 47 responses were manually entered one by one into the life expectancy calculator
in order to derive each of their life expectancies.
The life expectancies were all typed in the final column of the excel sheet next to each respondent’s
information.
In order to calculate the average life expectancy for male, female and overall life expectancy,
various excel formulae were used.
For male life expectancy average,

=AVERAGEIF(B2:B51,”Male”,Y2:Y51)
B2:B51 indicates the range in which excel should look for “Male” because it was the gender column
And Y2:Y51 indicates the range of values which excel should use to calculate the average as they
had individual life expectancy values.
The formula gave the answer of average life expectancy for men as = 77.4 years
For female life expectancy average,

=AVERAGEIF(B2:B51,”Female”,Y2:Y51)
The formula gave the average life expectancy for women as = 82.1 years
For overall life expectancy average:

=AVERAGE(Y2:Y51)
The formula gave the answer of overall life expectancy as = 79.7 years
5. Increase in male life expectancy

2014 male life expectancy value = 71.8 years
Calculated male life expectancy value in 2021 = 77.4 years
(77.4 − 71.8)
× 100 = 7.8%
71.8
So the increase in male life expectancy would be 7.8%
6. Increase in female life expectancy:

2014 female life expectancy value = 75.2 years
Calculated female life expectancy value in 2021 = 82.1 years
(82.1 − 75.2)
× 100 = 9.2%
75.2
So the increase in female life expectancy would be 9.2%

52
7. Increase in overall life expectancy

2014 overall life expectancy value = 73.4 years
Calculated overall life expectancy value in 2021 = 79.7 years
(79.7 − 73.4)
× 100 = 8.6%
73.4
So the increase in overall life expectancy would be 8.6%
8. Change in Maternal Mortality Rate (MMR) since PMJAY-CMCHIS’s inception:
2018 MMR – 25.41

2020 MMR – 20.1
(20.1 − 25.41)
× 100 = −20.9%
25.41
Shows that Maternal Mortality Rate for Jallipatti has decreased by 20.9% from 2018 to 2020 since
PMJAY-CMCHIS’s inception.
9. Change in Infant Mortality Rate (IMR) since PMJAY-CMCHIS’s inception:
2018 IMR – 16.2

2020 IMR – 12.8
(12.8 − 16.2)
× 100 = −21.0%
16.2
Shows that Infant Mortality Rate for Jallipatti has decreased by 21.0% from 2018 to 2020 since
PMJAY-CMCHIS’s inception.
10. Calculation of average savings through the scheme:

The average values were calculated through Excel using the average formula
The respondents of the survey had provided approximate amount of money they would’ve saved
through the scheme
Using formula,
=AVERAGE(M2:M51)
The average amount beneficiaries had saved was found as the column “M” contained the amount
each respondent thought they saved.
The final average amount is: ₹17,615.68
Note: All values used were rounded off to 2 decimal places.

53
6.7 Appendix 7: Survey questions:

In order to abide by social distancing norms imposed by the state Government to curb the spread
of CoVid-19 during data collection, I decided to proceed with data collection using oral surveys.
In order to facilitate and expedite the process of data collection, I used Google Forms and entered
responses given by villagers using a smartphone to safely and quickly complete data collection.
Survey 1: Lifestyle choices related survey for approximation of life expectancy:

54
This survey was questioned in vernacular Tamil (the local language) during data collection, but
for ease of understanding it has been translated to English here.
55
Survey 2: PMJAY-CMCHIS related survey for understanding the scheme better:

56
57
This survey too was questioned using vernacular Tamil and is translated for ease of understanding.
58
6.8 Appendix 8: Survey responses:

Survey 1 responses:
59
60
61
62
63
If any, please mention drawbacks you found in this scheme:
Some notable responses included:
- A considerable number of respondents had mentioned “no drawbacks”.

- Some beneficiaries highlighted that locating a hospital empanelled in the scheme was
difficult.
- Some highlighted the instances of improving quality of healthcare in empanelled
hospitals with health care staff not being attentive.
- Few wanted them to increase the number of empanelled hospitals underneath the
scheme’s coverage.
- One respondent felt that the process which was required to become a beneficiary of the
scheme was tedious, making them go all the way to the District Collector Office which is
over 30km away.
- One participant shared the scenario of the participant's friend who was occupationally a
delivery person who owned a motored 2 wheeler vehicle. Just because he had owned
the vehicle, he was removed from his beneficiary status of the scheme. The participant
further added on, eligibility criteria has to be worked upon.
64
Survey 2 responses:
65
66
67
68

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Economics Extended Essay

Research question: To what extent has the provision of PMJAY-CMCHIS

Word count: 3997

supervisor, who helped me throughout the course of this Extended Essay.

a Memorandum of Understanding (MoU)7 to integrate both of the schemes into PMJAY-CMCHIS

Tiruppur district, India?

Image 1: Map of the Jallipatti village

effectiveness of the scheme.

2.1 Primary data:

representing Jallipatti's population.

Semi-structured telephone interviews conducted with professionals working at health centers

along with its benefits and flaws.

increase the trustworthiness of the study and thus reduce bias.

2.1.1 Fisher’s exact test:

not) and the “Improvement in living standards of the participants”

2.2 Secondary data:

the scheme implemented in 2018 has caused.

through the internet were referred to as well.19

purpose. The below data shows the results of the test:

Table 1: Contingency table of the Fisher’s exact test for Independence

Image 2: Results of the Fisher’s exact test for Independence

scheme has improved living standards.

1. Improving provision of healthcare

2. Improving standard of living

3.1 Improving provision of healthcare:

3.1.1 Healthcare, social surplus, and welfare loss:

of perfect income equality.

would not be enough data to collect from it to give reliable conclusions.

Figure 1: Presence of positive consumption externality in the healthcare market

3.1.2 How PMJAY-CMCHIS theoretically corrects welfare loss:

Figure 2: PMJAY-CMCHIS’s theoretical impact on the healthcare market

This makes healthcare more affordable.

3.1.3 Verification of Hypothesis:

private hospitals27 empanelled under the scheme in Tiruppur district.

Govt. empanelled hospitals:

Figure 3: Remunerations paid to Government hospitals

Government’s decision to insure beneficiaries against CoVid-19 treatment fees30, remunerations

Private empanelled hospitals:

Figure 4: Surgical and non-surgical procedures performed in private empanelled hospitals

villagers free of cost, thereby improving the provision of healthcare.

Figure 5: Reimbursements paid to private empanelled hospitals

beneficiaries’ and thus increases their savings.

3.1.4 Evaluating the scheme’s approach in improving provision of healthcare:

receive procedure-based reimbursement; other Government hospitals continue to operate with

incentivizing productive efficiency, as funding is variable. Other Government hospitals, regardless

could potentially be avoided if the Government had expanded procedure-based reimbursement to

all Government hospitals.

demonstrating the inefficiency of the technique.

competitors even if they barely make normal profit.42

hospitals as well as high-quality empanelled private hospitals.

healthcare on living standards of Jallipatti beneficiaries.

3.2 Improving standard of living:

3.2.1 Hypothetical effects on standards of living and FoP productivity:

improves the lifespan and quality of labor.

3.2.2 Life expectancy:

increase life expectancy and decrease mortality among the beneficiaries.

fell outside the outlier-determined ranges were removed.

Figure 6: Change in life expectancy from 2016 to 2020

overestimate or an underestimate, which are discussed below.

stringent driving laws in recent years, decreasing number of accidents.