India spends ₹9.05 lakh crore on healthcare, out-of-pocket expenditure declines

Total money spent on healthcare in India rose to ₹9.05 lakh crore in FY22 (latest data as per health ministry), a 22% increase compared to ₹7.39 lakh crore in 2020-21, the latest National Health Accounts (NHA) estimates released by the health ministry reveals. Out-of-pocket expenses were reduced as a percentage of total expenditure while the government expenditure increased during the period.

According to official estimates, the share of out-of-pocket expenditure declined to 39.4 % of the total health expenditure in 2021-22 against 44.4% in 2020-21. The government health expenditure rose to 48% of the total health expenditure in 2021-22, higher than 42.8% the previous year. The percentage of private health insurance in total health expenditure increased marginally to 7.4% from 7.3 % during the period under comparison.

“Decline in out-of-pocket expenditure out of total health expenditure from 64.2% in 2013-14 to 39.4% in 2021-22 reflects a very positive indicator,” says Dr V.K. Paul, member (Health), NITI Aayog. More than ₹1 lakh crore savings have accrued from the Ayushman Bharat PMJAY and this has had a positive impact on the recent NHA estimates, schemes like the Free Dialysis scheme, launched in 2015-16, have benefited 25 lakh people, he adds.

NHA estimates for 2021-22 show the share of government health expenditure (GHE) in the country's GDP has increased from 1.13% in 2014-15 to 1.84% in 2021-22. In terms of share in the general government expenditure (GGE), it increased from 3.94% in 2014-15 to 6.12% in 2021-22.

GHE constitutes spending under all schemes funded and managed by union, state and local governments, including quasi-governmental organisations and donors in case funds are channelled through government organisations. Incidentally, state governments’ share in GHE is higher than that of the central government, though, the Centre has been increasing its healthcare spend in recent years.

NHA estimates show that state governments’ share in GHE stood at 58.2% as against the Central government contribution of 41.2% in 2021-22. In the previous year (2020-21), the share of state governments’ was higher at 64.3% as compared to the Central contribution of 35.7%.

The share of Social Security Expenditure (SSE) on healthcare, which includes government-funded health insurance, medical reimbursement to government employees, and social health insurance programmes, in the country’s total health expenditure has also increased from 5.7% in 2014-15 to 8.7% in 2021-22, having a direct bearing on out-of-pocket expenditure.