Why Traditional Medicine Remains Outside Public Health Insurance: Financing Architecture, Institutional Path Dependence, and Lessons for India’s AB-PMJAY

Technical Summary: Why Traditional Medicine Remains Outside Public Health Insurance

Problem Statement
India's health system is characterized by medical pluralism, where Ayush systems (Ayurveda, Yoga, Naturopathy, Unani, Siddha, Homoeopathy, and Sowa Rigpa) play a substantial role in preventive care, chronic disease management, and wellness. Despite policy initiatives promoting integrative healthcare and the establishment of the Ministry of Ayush, the country's flagship publicly financed health insurance scheme, Ayushman Bharat–Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), largely excludes Ayush interventions. The scheme focuses primarily on biomedical inpatient services, leaving most Ayush practices—typically outpatient, preventive, and promotive—without reimbursement. This review investigates the structural, institutional, and evidentiary reasons for this exclusion, contrasting India's experience with global patterns of traditional medicine coverage in public insurance.

Methodology
The study employs a narrative policy review with systematic search elements, adopting an integrative health systems perspective.

• Data Sources: A comprehensive search was conducted across PubMed, Scopus, Web of Science, Google Scholar, and grey literature (WHO, World Bank, Indian government ministries, HTAIn) from September to November 2025.
• Selection: Following PRISMA-ScR principles, approximately 55 documents were synthesized after screening for relevance to financing mechanisms, insurance coverage, governance, and economic evaluation.
• Analytical Frameworks: Findings were interpreted through three complementary lenses:
  1. Universal Health Coverage (UHC): Analyzing how benefit package design defines essential services.
  2. Health Systems Political Economy: Examining institutional path dependence, historical financing arrangements, and governance structures.
  3. Health Technology Assessment (HTA): Assessing how evidence hierarchies and methodological standards affect eligibility for coverage.
• Note on Search Aids: The authors utilized Large Language Models (LLMs) as a supplementary tool to identify dispersed policy documents, with all candidate documents independently verified against original institutional sources.

Key Results
The review identifies three interacting structural dimensions that drive the exclusion of Ayush from AB-PMJAY:

1. Benefit Package Design Misalignment: AB-PMJAY operates on a catastrophic expenditure protection model, covering secondary and tertiary inpatient care via predefined procedure-based packages. Ayush systems predominantly deliver outpatient, preventive, and longitudinal care. This structural incompatibility renders most Ayush interventions ineligible under the current inpatient-centric benefit design.
2. Institutional Path Dependence: India's public insurance architecture evolved around biomedical hospitals and standardized, package-based reimbursement (tracing back to the RSBY scheme). This trajectory created entrenched provider networks and pricing frameworks oriented exclusively toward biomedical care. Unlike East Asian models where traditional medicine was institutionally embedded in state systems prior to insurance consolidation, Ayush in India remains institutionally parallel, financed through separate budgetary allocations (e.g., National Ayush Mission) rather than insurance purchasing.
3. Evidentiary Norms: India's HTA framework prioritizes Randomized Controlled Trials (RCTs), standardized outcome measures, and cost-utility analysis. These standards align well with discrete biomedical interventions but struggle to accommodate the individualized, multimodal, and context-sensitive nature of Ayush therapies. Consequently, there is a scarcity of economic evaluations for Ayush that meet conventional reimbursement criteria.

Global Comparative Findings

• East/Southeast Asia: Countries like China, South Korea, and Japan include traditional medicine in public insurance, but this follows a specific sequence: institutional embedding in state systems occurred before insurance expansion. Coverage is often selective (e.g., standardized formulations in Japan) or limited to specific service categories.
• Global South & Oceania: In Africa, Latin America, Australia, and New Zealand, traditional medicine is often recognized culturally or policy-wise but remains excluded from core insurance benefit packages, relying instead on out-of-pocket payments or programmatic block grants. India's situation mirrors these regions more closely than the East Asian models.

Key Contributions and Significance
The paper contributes to the discourse on Universal Health Coverage (UHC) and pluralistic health systems by arguing that insurance-based UHC can simultaneously expand financial protection while narrowing therapeutic pluralism.

• Structural Determinants: The authors demonstrate that the exclusion of Ayush is not a policy oversight or a lack of recognition, but a consequence of the specific design of insurance architecture, purchasing mechanisms, and evidentiary standards.
• Epistemic Legitimacy: The review posits that public insurance schemes do not merely define financial entitlements; they also define which forms of care are considered "insurable" and, by extension, epistemically legitimate.
• Policy Implications: The paper suggests that meaningful integration requires simultaneous reform in three areas:
  1. Benefit Design: Shifting from purely inpatient to outpatient-oriented purchasing mechanisms.
  2. Standardization: Adopting selective inclusion of standardized Ayush interventions (similar to Japan's Kampo model) to fit existing pricing frameworks.
  3. HTA Adaptation: Incorporating pragmatic trials, real-world evidence, and patient-reported outcomes into HTA frameworks to better evaluate complex traditional interventions.

Conclusion
The paper concludes that integrating Ayush into AB-PMJAY requires policymakers to renegotiate the institutional and epistemic boundaries of publicly financed care. It emphasizes that the benefit package is not merely a technical tool but a political instrument that shapes the future of therapeutic pluralism in India. The authors caution that integration pathways must be designed carefully to preserve the therapeutic integrity of traditional systems while ensuring financial access.