While government health expenditure grows, burden on households, out of pocket spending remains high

While India has improved public financing of health care, households and individuals still bear the heaviest burden. As per the latest figures from the National Health Accounts Estimates for India 2022–23, out of pocket expenditure (OOPE) is nearly half of the current health expenditure, and financial protection for health emergencies remains incomplete, though government and insurance spending has increased. 

Preventive care lags

Data shows that for 2022-23, the total health expenditure (THE) for India is estimated at Rs. 8,81,359, amounting to 3.37% of GDP1 and Rs. 6,373 per capita. THE constitutes the sum total of current and capital expenditures incurred by the government and private sources, including external funds and donations in the health sector in the country. 

Current Health Expenditure (CHE), which measures the final consumption of healthcare goods and services excluding cap-ex is Rs. 7,66,814 crores (87.00 % of THE).  

The National Health Accounts Estimates also asks the question who contributes to the health spend. Government’s spending on health, indicated as Government Health Expenditure (GHE), inclusive of capital expenditure, is Rs. 3,85,332 crores. This is less than half of total health expenditure and accounts for merely 1.48 % of the GDP. Of this, the Union government’s share is about 36 %, and the State governments fund the lion’s share, at over 63 %. 

An extraordinary burden is still placed on households which fork out the largest spending on health care, contributing 56.44% of the CHE. Of this, out of pocket expenditure accounts for 49.90% of CHE and 43.41% of the total health expenditure. The contribution from enterprises (including insurance contributions) is Rs. 67,808 crores, or 8.84% of CHE, while NGOs’ contribution is Rs. 3,871 crores. Under the external/donor funding 

Category, the amount is Rs. 2,570 crore. 

Social security spending on health is 11.25% of CHE, showing the inevitable growing role of pooled public financing, and private health insurance accounts for 10.66% of CHE. On the whole, primary care accounts for around 46% of current health expenditure, secondary care 34%, tertiary care 15%, and governance/supervision 4%. 

On the provider side, private hospitals take the largest share of all current health expenditure at 30.83%, followed by government hospitals -16.73%. 

Public spending falls

Another worry for a nation with a burgeoning non communicable diseases burden is the relatively low spending on preventive care. As per the NHA, preventive care forms only 8.88 % of the current health expenditure spending, while in patient and outpatient curative care together claim over 56 % as the biggest spending head, and pharmaceutical expenditure is over 29 %. The government’s own recent SRS data indicated that non communicable diseases were the cause for 60 % of all deaths in 2022-2024.  

Meanwhile, the government’s intrepretation of the NHA measures and takes credit for infinitesimal growth of public spending. According to a press release: “the share of Government Health Expenditure as a percentage of the GDP has risen from 1.15% in 2013–14 to 1.43% in 2022–23 and as per the new GDP series, it will be 1.48% in 2022-23.

Similarly, this share in General Government Expenditure has increased from 3.78% to 4.89% over the same period, underscoring the growing prioritisation of health in public spending. In per capita terms, GHE has increased nearly 2.7 times…” The decadal trend of increased Government Health Expenditure has resulted in overall reduction in the Out-of-Pocket Expenditure (OOPE) as a share of the Total Health Expenditure, the release claims.

However, claims notwithstanding, these figures are still short of the WHO Global Recommendation to dedicate at least 5 % of the GDP to public health toward meeting universal health coverage targets. It also falls short of India’s own National Health Policy which recommends the combined Central and State Government health expenditure reach 2.5 % of GDP.