Strengthening Cooperative Federalism in Health: Decentralizing the Administration (PM-JAY operations) of Government of India Hospitals under AB PM-JAY

Abstract

Background: The Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) is the largest publicly financed health insurance program globally, covering over 12 crore vulnerable families in India. The program empaneled hospitals throughout the country, both government and private. Within the geographical boundaries of a state, State Health Agencies (SHAs) have administered the scheme, however hospitals run by various Government of India (GoI) ministries (e.g., Railways, Defence, Labour/ESIC, Coal, Steel, Petroleum) were directly overseen by the National Health Authority (NHA), creating a dual administrative structure within a state. On 23 June 2025, the Government of India issued a notification transferring the AB - PMJAY operations of all GoI hospitals under AB PM-JAY from the NHA to respective SHAs. Methodology: This review critically analyzes official policy documents, existing literature on federal health governance, and operational guidelines of AB PM-JAY. Comparative assessment was undertaken to examine the pre- and post-policy administrative structures with respect to the above-mentioned notification. Key themes including efficiency, accountability, resource utilization, and cooperative federalism were explored. Results: The transition of administrative authority from the NHA to SHAs is expected to streamline hospital empanelment, claims processing, and grievance redressal by better integration of GoI hospitals into state health systems. Anticipated benefits include improved efficiency, stronger accountability, better beneficiary experience, and enhanced utilization of centrally managed facilities. However, significant challenges were identified, such as inter-ministerial coordination gaps, variation in SHA capacities across states, IT system interoperability issues, claims management delays, and risks of grievance escalation. Conclusion: The transfer of GoI hospital management to SHAs represents a pivotal step in strengthening cooperative federalism in Indian health governance. The policy demonstrates the Government of India’s commitment to decentralization while retaining national-level oversight. Mitigation strategies-including capacity building for SHAs, IT standardization, robust centre-state coordination, and proactive beneficiary communication-are essential for ensuring a smooth transition. If implemented effectively, this reform could serve as a model for integrated governance in large-scale health insurance programs and contribute significantly to India’s progress toward Universal Health Coverage (UHC).