Federal govt rules out funding provincial health cover, asks provinces to adopt contributory insurance

The federal government has decided not to provide funding for provincial health coverage, including insurance schemes, and has asked provinces to move towards full-fledged health insurance on a contributory basis, citing strict compliance with the 18th Constitutional Amendment, Dawn reported. 

The decision follows recent approvals to extend the Prime Minister’s Sehat Sahulat Programme (SSP), with a revised cost of about Rs40 billion, to federally administered territories, Islamabad Capital Territory, Azad Jammu and Kashmir and Gilgit-Baltistan, until June 30, 2027.

Against this backdrop, proposals to include Sindh’s Tharparkar district under the SSP were not endorsed. During deliberations at the Central Development Working Party and the Executive Committee of the National Economic Council, it was argued that extending the programme to a single provincial district would trigger similar demands from other provinces, despite health being a devolved subject.

According to official directives, a high-level meeting chaired by the prime minister on January 2 approved the continuation of the SSP beyond June 30, 2025, exclusively for ICT, AJK and GB. The Ecnec subsequently cleared the modified programme under the universal health coverage framework for permanent residents of these areas.

Earlier, a special committee constituted under an Ecnec decision of August 7, 2025, reviewed the SSP and noted that the programme had completed its lifecycle on June 30, 2025, after multiple extensions. The committee recommended shifting the completed project to the recurrent budget and limiting its scope to essential indoor healthcare services for vulnerable populations.

The committee directed the Ministry of National Health Services to submit a project completion report and proposed that provinces, along with AJK and GB, should continue their own social health protection schemes using provincial resources. It also cited constraints in the Public Sector Development Programme, noting that it was already overstretched and unable to absorb additional federal liabilities.

While opposing the inclusion of provincial districts under the SSP, the committee suggested that the health ministry, in coordination with provinces, explore a pilot model based on claim co-payments and develop a roadmap towards contributory social health insurance.

The SSP was originally approved in February 2018 with an estimated cost of Rs34 billion to provide health coverage to households below the poverty line, using data from the Benazir Income Support Programme. Over time, the programme was expanded through revisions, but the federal government began withdrawing provincial contributions in line with the devolution of health responsibilities under the 18th Amendment.