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India's Healthcare Burden Drops 39.4%, Govt Investment Reaches 1.84% of GDP

Historically, India has ranked among countries with the highest OOPE as a percentage of total health expenditure, impacting households.

source: PIB
source: PIB

Out-of-pocket expenditure (OOPE) refers to direct payments individuals make for healthcare services, medications, and treatments not covered by insurance or government programs. High OOPE can significantly impact individuals, especially in healthcare, where unexpected costs can be financially burdensome.

India’s progress in reducing out-of-pocket expenditure

India has made strides in reducing OOPE, though costs remain relatively high compared to global standards. National Health Accounts (NHA) data for 2021-22 indicate a downward OOPE trend, attributed to increased government health expenditure (GHE) and initiatives like Ayushman Bharat. Despite this progress, OOPE still constitutes a substantial portion of healthcare spending, with many households bearing significant medical costs.

Historically, India has ranked among countries with the highest OOPE as a percentage of total health expenditure. In 2013-14, OOPE accounted for 64.2% of total health expenditure, declining to 39.4% in 2021-22.

Government health expenditure and its impact

The rise in GHE has played a central role in reducing OOPE. From 2014-15 to 2021-22, GHE as a percentage of GDP rose from 1.13% to 1.84%, and its share in total government spending grew from 3.94% to 6.12%. During this period, per capita health spending tripled from Rs 1,108 to Rs 3,169, enabling the government to strengthen healthcare infrastructure, making services more affordable and accessible, thus alleviating OOPE burdens.

Social security expenditure on health

The government has expanded social security expenditure (SSE) on healthcare, including insurance schemes like Ayushman Bharat and various state-level initiatives. SSE’s share in total health expenditure rose from 5.7% in 2014-15 to 8.7% in 2021-22. These schemes target economically vulnerable populations, reducing reliance on personal finances for healthcare.

State-wise variations in OOPE

OOPE varies across Indian states due to disparities in healthcare access, infrastructure, and economic conditions. NHA estimates for 2018-19 show states like Bihar and Uttar Pradesh have the highest OOPE as a share of total health expenditure, at 76.2% and 71.3%, respectively, while states like Himachal Pradesh and Delhi report lower rates, around 52.3% and 53.5%. These figures suggest a higher financial burden in certain regions, highlighting the need for targeted interventions.

State/Union Territory OOPE as % of THE
Bihar 76.2%
Uttar Pradesh 71.3%
Rajasthan 69.5%
Madhya Pradesh 68.6%
Jharkhand 67.3%
Odisha 66.5%
Chhattisgarh 65.2%
Assam 64.8%
West Bengal 63.7%
Gujarat 62.5%
Maharashtra 61.4%
Karnataka 60.2%
Tamil Nadu 59.1%
Telangana 57.6%
Kerala 56.8%
Punjab 55.9%
Haryana 54.7%
Delhi 53.5%
Himachal Pradesh 52.3%

Source: National Health Accounts Estimates for India (2018-19), Ministry of Health and Family Welfare

Breakdown of health expenditure types in India

Understanding healthcare expense categories clarifies the budgetary impact on households. Key types include:

Type of Health Expenditure Description Examples Key Challenges
Out-of-Pocket Expenditures Direct payments without insurance Doctor visits, diagnostic tests High costs in private facilities
Preventive Healthcare Expenses to prevent illness Vaccinations, screenings Often overlooked, limited coverage
Hospitalization Costs Planned/emergency admission expenses Room charges, surgery fees Can lead to debt
Chronic Disease Management Managing long-term conditions Diabetes, hypertension meds Lifelong burden, often uninsured
Pharmaceuticals Drug spending Prescription drugs, supplements High costs for chronic conditions
Health Insurance Premiums Payments for coverage Private plans, government schemes Limited coverage for many
Alternative Medicine Non-allopathic treatments Ayurveda, yoga Mixed insurance availability
Dental/Vision Care Oral/eye health Cleanings, braces, glasses Not covered by insurance
Mental Health Services Psychological care Therapy, psychiatric consultations Stigmatized, costly
Rehabilitation Recovery after surgery or illness Physical therapy, prosthetics Long-term costs, often uninsured
Home Healthcare At-home medical care In-home nursing, oxygen therapy Expensive, often uninsured
Travel for Treatment Accessing distant/specialized care Travel, lodging Significant for rural patients

 

Impact of reduced OOPE

Programs like Ayushman Bharat are essential in making healthcare more accessible, easing financial burdens on low-income families, and enabling equitable healthcare access. Reduced OOPE supports better health outcomes and disease prevention, as individuals are less likely to delay care due to costs. This investment in health drives long-term economic growth and emphasizes human capital development.

Global comparison of OOPE

According to WHO’s Global Health Expenditure Database, the top 10 countries with the highest OOPE as a percentage of current health expenditure include:

Country OOPE as % of Current Health Expenditure
Afghanistan 78.8%
Nigeria 77.2%
Myanmar 74.9%
Sudan 74.0%
Yemen 72.8%
Azerbaijan 72.0%
Bangladesh 71.8%
Pakistan 71.6%
Cambodia 70.9%
Egypt 70.5%

 

Healthcare financing in India

Since independence in 1947, India has transitioned from a system dominated by OOPE to a more structured model, though challenges remain.

Post-independence focus on public health infrastructure

Early healthcare efforts focused on public health infrastructure and infectious disease control. Limited government spending and a lack of structured insurance kept OOPE high, especially as private healthcare expanded.

Initial national health programs

India launched several vertical programs targeting diseases like malaria, tuberculosis, and leprosy, providing free treatment but lacking comprehensive coverage for all conditions.

Introduction of insurance schemes

Government health insurance schemes, like Rashtriya Swasthya Bima Yojana (RSBY) in 2008, aimed at low-income populations but had limited impact due to coverage and implementation challenges.

Ayushman Bharat

Launched in 2018, Ayushman Bharat marked a significant shift by covering 40% of the population through PM-JAY and establishing 150,000 health and wellness centers. The scheme expanded insurance and emphasized preventive care, reducing OOPE by lowering dependency on secondary and tertiary care.

Rise in government health expenditure

Between 2014 and 2022, government health expenditure as a percentage of GDP increased steadily. By expanding public healthcare funding and implementing Ayushman Bharat, India has reduced household financial burdens and OOPE.

Global comparisons with developed nations

India’s healthcare financing compared to developed countries highlights different impacts on public health and financial security.

Universal healthcare in developed nations

In countries like the UK and Canada, universal healthcare funded through taxes minimizes OOPE, accounting for around 15-20% of total healthcare spending, in contrast to India’s 39.4%.

Mixed models in other nations

Countries like Germany and Japan have mixed models with public and private options, resulting in lower OOPE due to extensive insurance coverage and government subsidies.

Developing countries with high OOPE

Developing nations like Nigeria and Bangladesh face high OOPE percentages, underscoring the need for robust public healthcare funding to reduce OOPE and improve healthcare access.

Path forward for India

India’s progression from OOPE reliance to increased government spending demonstrates the impact of financial strategies on public healthcare access. Expanding insurance coverage and strengthening public healthcare are crucial steps toward universal healthcare.

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