India has a multi-payer universal health care model that is paid for by a combination of public and government regulated (through the Insurance Regulatory and Development Authority) private health insurances along with the element of almost entirely tax-funded public hospitals. The public hospital system is essentially free for all Indian residents except for small, often symbolic co-payments in some services. Economic Survey 2022-23 highlighted that the Central and State Governments’ budgeted expenditure on the health sector reached 2.1% of GDP in FY23 and 2.2% in FY22, against 1.6% in FY21. India ranks 78th and has one of the lowest healthcare spending as a percent of GDP. It ranks 77th on the list of countries by total health expenditure per capita.
National Health Policy
The National Health Policy was endorsed by the Parliament of India in 1983 and updated in 2002, and then again updated in 2017. The recent four main updates in 2017 mention the need to focus on the growing burden of non-communicable diseases, the emergence of the robust healthcare industry, growing incidences of unsustainable expenditure due to healthcare costs, and rising economic growth enabling enhanced fiscal capacity. Furthermore, in the long-term, the policy aims to set up India’s goal to reform its current system to achieve universal health care.
In practice however, the private healthcare sector is responsible for the majority of healthcare in India, and a lot of healthcare expenses are paid directly out of pocket by patients and their families, rather than through health insurance due to incomplete coverage.
Government health policy has thus far largely encouraged private-sector expansion in conjunction with well-designed but limited public health programs.
Financing
2018
According to the National Health Accounts report, the total expenditure on health care as a proportion of GDP in 2018 was 3.2%. Out of 3.2%, the governmental health expenditure as a proportion of GDP is just 2%, and the out-of-pocket expenditure as a proportion of the current health expenditure was 42.06% in 2019 while expenditure of the government and health insurance funds increased to 57%.
2019
In 2019, the total net government spending on healthcare was $36 billion or 1.23% of its GDP. India had allocated 1.8% of its GDP to health in 2020–21.
2022
Since 2022, the healthcare funding by the central and state governments increased substantially to $74 billion. Out of pocket expenditure significantly reduced as most healthcare expenditure is met by government health insurance schemes, social health insurances such as the Employees’ State Insurance and government regulated (through the Insurance Regulatory and Development Authority) private health insurances, achieving the goal of near-universal health coverage. Since 2020, it is mandatory for private sector employees who are not affiliated to the employees state insurance to receive a government regulated (through the Insurance Regulatory and Development Authority health insurance regulator) health insurance plan through their employer while employees of the public sector receive it through the Central Government Health Plan.
