Healthcare Affordability
Healthcare Affordability
GS Paper II: Issues Relating to Development and Management of Social Sector/Services relating to Health, Human Resources
Context
The Department-related Parliamentary Standing Committee on Health and Family Welfare tabled its 176th Report, titled ‘Affordability and Accessibility of Healthcare Facilities in Public and Private Sector’. The report flagged the severe out-of-pocket expenditure (OOPE) burden and the lack of financial risk protection confronting India's population.
Current Landscape: Accessibility & Affordability Deficits
- The "Missing Middle": More than 40 crore individuals (over a quarter of the population) lack financial health protection, they fall above the eligibility thresholds for subsidized government health schemes (like AB-PMJAY) but cannot afford commercial health insurance.
- Private Sector Dominance & Cost Disparities:
- The private sector delivers >60% of inpatient care and ~70% of outpatient care.
- Average hospitalization expenditure in a private facility is approximately 7.6 to 8 times higher than in a public hospital, while private outpatient consultations cost nearly 5 times more.
- Out-of-Pocket Expenditure (OOPE): Despite a decadal decline, household OOPE remains high at 43.4% of Total Health Expenditure (THE) in 2022–23, with pharmaceuticals accounting for ~21% of current health expenditure.
- Public Underfunding: Government Health Expenditure (GHE) hovers around 1.43% of GDP, trailing the 2.5% of GDP benchmark stipulated by the National Health Policy, 2017.
- Skewed Resource Allocation & Rural Deficits:
- Primary healthcare receives ~51% of sectoral allocations, whereas secondary (28%) and tertiary care (11%) face chronic capital constraints.
- Rural Community Health Centres (CHCs) experience an ~80% shortfall of specialist medical officers (surgeons, obstetricians, physicians, and pediatricians).
- Bed-to-Population Deficit: India provides roughly 1.3 hospital beds per 1,000 population, well below the World Health Organization (WHO) norm of 3.5 per 1,000, with the public sector supplying only 0.79 beds per 1,000.
Key Drivers Behind the Escalating Out-of-Pocket Burden
|
Contributing Factor |
Operational & Structural Mechanism |
|
Outpatient Care Blind Spot |
Flagship public and private health insurance schemes prioritize secondary/tertiary inpatient hospitalization, excluding outpatient consultations, routine diagnostics, and daily medicines, which together constitute over 50% of total OOPE. |
|
Rising Non-Communicable Disease (NCD) Burden |
A high prevalence of chronic ailments (11.4% adult diabetes and 35.5% hypertension) locks households into recurring, lifelong expenditure on medications, regular pathology tests, and maintenance visits. |
|
Regulatory Fragmentation |
Uneven adoption of the Clinical Establishments (Registration and Regulation) Act, 2010—notified in only ~11 states and 6 UTs (health being a State Subject under Entry 6 of List II)—leaves the private market largely free from statutory rate ceilings and standardized treatment audits. |
|
Retail Pharmacy Markups |
Limited penetration of Pradhan Mantri Bhartiya Janaushadhi Kendras (PMBJK) compared to commercial chemist chains leads to outlays on branded generics that are significantly higher than unbranded generic equivalents. |
|
Post-Pandemic Fiscal Realignment |
General government health spending as a proportion of total government expenditure dropped from 6.12% in FY 2021–22 to 4.89% in FY 2022–23 following the peak of emergency pandemic allocations. |
Key Recommendations of the 176th Parliamentary Report
- Time-Bound Expansion of Public Health Outlays: Formulate an enforceable budgetary roadmap to raise public health funding to 2.5% of GDP, followed by progressive scaling to 5% to expand free secondary and tertiary care in government facilities.
- Statutory Rate-Capping & Schedule of Charges: Legislate a binding tariff framework prescribing statutory ceilings for standard surgical interventions, diagnostic tests, ICU care, and medical implants across private clinical establishments.
- Nationwide Implementation of Clinical Establishments Act: Persuade and incentivize all State Governments to formally adopt and enforce the Clinical Establishments Act, 2010, ensuring mandatory registration, minimum infrastructure standards, and transparent billing.
- Expanding Ayushman Bharat (AB-PMJAY) to OPD Services: Broaden PM-JAY packages to cover day-to-day outpatient consultations, routine diagnostic tests, and chronic medication regimens, preventing minor ailments from causing catastrophic household debt.
- Contributory Insurance for the "Missing Middle": Design a voluntary, subsidized contributory health insurance product with standardized terms (on the lines of Arogya Sanjeevani) to extend risk pooling to the non-poor informal workforce.
- Mandatory Generic Medicine Dispensaries: Require all district hospitals, CHCs, and private hospitals empanelled under government schemes to establish in-house Jan Aushadhi Kendras and AMRIT pharmacies.
Conclusion
Addressing India's healthcare affordability crisis requires moving from hospitalization-centric insurance toward comprehensive Universal Health Coverage (UHC). Achieving the National Health Policy target of 2.5% of GDP, enforcing transparency standards on private providers, and integrating outpatient care into risk-pooling frameworks are vital steps to ensure the constitutional guarantee of the right to health under Article 21.