Establishment of public–private partnerships is an emerging model in health care delivery. This study evaluates a pioneering social health insurance program in India that enables eligible households to access private hospitals for tertiary care services free of cost, but does not build more facilities. Leveraging policy discontinuities at state borders, we identify the program’s causal effects on utilization of private facilities and associated out-of-pocket expenditures. The results indicate a pronounced substitution effect induced by relative price changes: the program substantially increases the incidence of deliveries in private hospitals while significantly reducing out-of-pocket spending. However, we find no statistically significant effects on fertility or a key health outcome, infant mortality. %and may give rise to moral hazard behavior.