Expenditure on government-funded health schemes and private health insurance has risen since the Covid-19 pandemic, with the two categories accounting for more than a fifth of India’s total health expenditure (THE) in 2023-24 (FY24), according to the National Health Accounts estimates released by the Ministry of Health and Family Welfare.
The report showed that the combined share of these two categories rose to 21.2 per cent of THE from 15.9 per cent in 2020-21 (FY21). THE includes both current and capital expenditure incurred by government and private sources, including external funding.
Social security expenditure on health – which includes government spending on premiums for Centre- and state-funded insurance schemes – increased to 11 per cent of THE in FY24 from 8.6 per cent in FY21.
This category also includes expenditure under publicly funded health insurance programmes such as Ayushman Bharat PMJAY, state-specific health insurance schemes, employee benefit schemes, reimbursements to government employees, and social health insurance expenditure.
Similarly, spending on private health insurance increased to 10.2 per cent of THE in FY24 from 7.3 per cent in FY21.
This marks the first time that both social security expenditure on health and private health insurance expenditure have individually accounted for more than 10 per cent of THE.
The rise assumes significance because the pandemic years saw a sharp increase in government spending on vaccination, testing and public health programmes, which helped reduce the household share in overall healthcare expenditure.
“People have started to take health insurance seriously after the pandemic. While subsidised government schemes cover its employees and the lower rung of society, people who can pay for private insurance are also not wanting to pay high costs of hospital admission,” an official in the know said on condition of anonymity.
The report adds that household spending on healthcare has declined sharply over the past decade, falling from 64.2 per cent in 2013-14 (FY14) to 42.7 per cent in FY24. This is in line with the Centre’s target of reducing out-of-pocket expenditure (OOPE) to 35 per cent of THE by 2025-26 (FY26).
One key factor behind this long-term decline has been the nearly threefold increase in government health expenditure (GHE), which rose from ₹1.3 trillion in FY14 to ₹4.14 trillion in FY24.
The report adds that government expenditure on primary healthcare reached approximately ₹1.53 trillion, reflecting the preferential investment in essential and community-level healthcare services.
“This investment is particularly significant in the context of the expansion of Ayushman Arogya Mandirs (AAMs), which are bringing comprehensive primary healthcare services closer to communities,” the Health Ministry said on Sunday.
The official quoted above added that the impact of screening and awareness-generation activities was also reflected in the National Statistical Office’s 80th round health survey.
“It showed that healthcare demand nearly doubled – from 6.8 per cent to 12.2 per cent in rural areas and from 9.1 per cent to 14.9 per cent in urban areas between 2017-18 and 2025,” he added.
