In the colorful and diverse country of India, the health sector shines as a symbol of hope for many people. With more than 1.4 billion people, there are many challenges in healthcare. However, under PM Modi’s leadership, the Indian government has stepped up to help with many important programs that inspire and support the citizens.
In a recent report, the think tank ORF, explains how India has become dynamic in the health sector, year by year. ORF cites the report released by the National Health Accounts (NHA) report of the Government of India from September 25, 2024 which talks about how money is spent in India’s health sector. The report focuses on two major things:
- Out-of-pocket expenditure (OOPE): This is the money that people pay from their own pockets for healthcare, like doctor visits, medicine, or hospital stays.
- Government Health Expenditure (GHE): This is the money the government spends to provide healthcare for people, like building hospitals or funding health programs.
For many years, a large part of healthcare costs in India were paid by individuals (OOPE), which put a heavy burden on many families, especially in rural and poor areas. Paying for healthcare pushes 3% to 7% of Indian families into poverty every year.
The government started focusing more on reducing this burden by spending more on healthcare and infrastructure, so people don’t have to pay as much themselves. The NHA report for 2020-21 and 2021-22 shows that these efforts are working.
Between 2013-14 and 2021-22:
- OOPE dropped from 64.2% to 39.4%. This means people are paying less from their own money.
- GHE increased from 28.6% to 48%. The government is now spending more on healthcare than individuals.
For the first time, government spending has overtaken people’s out-of-pocket spending, which is a big achievement for India’s health policy.
Source: ORF
As we can witness the graph shown above, namely Figure 1. The blue line shows the percentage of health money that people pay from their own pockets (OOPE). In 2013-14, people paid 64.2% of their health expenses. Over time, this number keeps going down. By 2021-22, people were paying only 39.4%. This means that over the years, people had to spend less of their own money on health. And, the orange line shows how much the government is paying for health (GHE). In 2013-14, the government paid only 28.6% of health expenses. But, this number keeps going up. By 2021-22, the government paid 48% of health expenses.
Over the past ten years, the total health spending (THE) as part of India’s GDP has gone down. This means the amount of money spent on health compared to the size of the country’s economy has decreased. The reason for this change is that both state and national governments are spending more money on health, which has helped lower the amount of money families have to pay from their own pockets for healthcare.
However, even though things have improved, people are still paying 39.4% of health costs out-of-pocket, which is a problem that needs to be fixed. According to the National Health Policy of 2017, the government set a goal to spend 2.5% of GDP on health by 2025. But based on the data from 2021-22, India still has a lot to do to reach this target. In simple terms, the government needs to spend more on health to reduce the burden on families and meet its own health goals.
Source: ORF
As you can see in Figure 2, the blue line shows the total health spending (THE) as a percentage of India’s GDP. It started at 4% in 2013-14, but over the years, it decreased, dropping to 3.3% by 2017-18 and staying low around 3.8% by 2021-22. This shows that the overall health spending as a part of GDP slightly reduced during these years. And, the orange line shows the government’s spending on health (GHE) as a percentage of GDP. In 2013-14, it was 1.14% of GDP, and it slowly increased to 1.82% by 2021-22. While the government is spending more on health, it still hasn’t reached the goal of 2.5% of GDP as planned by 2025.
The report further states that historically, most of the government’s health spending (GHE) has come from the state governments, with about two-thirds paid by the states and one-third by the national (union) government. However, during the pandemic, the national government started spending a little more on health than before, changing the usual pattern.
But after 2022, a problem was noticed. The national government had set aside a lot of money for health, but much of it was not used by the end of the year. This means there was a large amount of unspent money. Although the emergency need for more health spending during the pandemic is now over, the government is still setting aside more money for health than before the pandemic, which is a good sign. This could help reduce the money people pay out-of-pocket (OOPE) for health in the future.
Additionally, with the expansion of the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) to cover all people over 70 years old, there is a chance that government hospitals will be able to use these funds to improve their services. This means that the public health system will likely become better at using the money available, and this could help improve healthcare for everyone.
Source: ORF
Figure 3, The orange line shows how much the states contributed to health spending. In 2013-14, states paid 66% of the total health spending. This share stayed mostly between 60% to 68% over the years, but by 2021-22, it dropped to 58.2%. And, The blue line shows the union government’s share in health spending. In 2013-14, the union government paid 34%. Over time, the national government’s share increased slightly, especially during the pandemic, reaching 41.8% by 2021-22.
Adding on, both the state and national governments in India need to keep spending a lot of money on health after the pandemic. If they don’t, it will be difficult to reach the goal of spending 2.5% of the country’s income (GDP) on health by 2025. It is important that both levels of government continue to increase their health spending.
Health in India is a state subject. There was hope that if states got more money from taxes, they would spend more on health. For example, from 2010 to 2014, states received 32% of total tax money, and this increased to 42% from 2015 to 2019. However, this extra money did not lead to more spending on health by the states. We need to be careful and not let health funding drop again after the pandemic, as has happened in many other countries.
In addition to government spending, several programs have been created to help lower the amount of money families pay for health care. One of the biggest programs is called Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY). This program started in 2018 and has allowed 69 million hospital visits across India. Another important program is the Pradhan Mantri National Dialysis Programme (PMNDP), which has helped about 2.5 million poor patients since it started in 2016.
There are also 1.75 lakh health centers called Ayushman Arogya Mandirs (AAMs) that provide basic health care, especially in rural areas. These programs show that both state and national governments are trying to work together to improve health care.
Truly these initiatives have brought relief to millions. Today, India is not just uplifting itself in terms of economy, and finance but also health and infrastructure. The Ayushman Bharat initiative is also one of the most appreciated moves of our present government. It has opened doors to better health for millions of Indians, proving that with vision and determination, positive change is possible. Together, we are building a healthier future where every individual, regardless of their background, can thrive. Let’s celebrate these milestones and continue to support efforts that aim to uplift our nation’s health.