Chanakya IAS Academy Blog


The article discuss about the poor healthcare system in India and the way forward.

  • India’s healthcare system is underfinanced and relies too heavily on out-of-pocket (OoP) spending.
  • According to India’s draft National Health Policy 2015, the country’s OoP expenditure for health (at 60% of total health expenditure) is one of the highest in the world.
  • Linked to these expenses, 55 million Indians fell into a poverty trap because of their healthcare spending during 2011-12.
  • We need, initiation of the ‘National Health Assurance Mission’ to provide universal, accessible and affordable healthcare—and to give high priority to chronic diseases such as obesity, diabetes, cancer and cardio-vascular disease by investing in research and development of solutions. Unfortunately, not enough has happened at the ground level yet.

The challenges

  • Low government spending:
    • Global evidence on health spending shows that unless a country spends at least 5-6% of its gross domestic product (GDP) on health—and the major part of it is from government expenditure—basic healthcare needs are seldom met. In India, public spending on health is 1.1% of GDP.
  • Low insurance penetration:
    • There is also very low health insurance coverage in the country. About 300 million people or 25% of India’s population is covered with some form of health insurance, according to the World Bank.
    • According to the latest National Sample Survey Organisation Survey on Health and Morbidity (2014), only 13% of the population is covered by government-funded insurance schemes.
  • Complex system:
    • The healthcare financing system in India is highly fragmented and has multiple components and models. Tax-financed healthcare systems provide primary to tertiary level of care.
    • Several publicly managed insurance schemes cater to government employees, while the private insurance sector largely caters to higher income groups, mostly employed in the private sector.
    • Unfortunately, most of these insurance plans are largely limited to covering inpatient hospital care as opposed to primary care medications needed to treat chronically ill patients.
  • Changing disease profile:
    • Another important factor is that over the past 10-15 years, India’s disease burden has shifted from communicable to non-communicable diseases (NCDs). This is thanks to urbanization, industrialization and fast-paced socioeconomic development, and because infectious diseases have been brought under control.
    • Poverty is a significant risk factor for contracting NCDs, and these diseases in turn can quickly lead to personal financial crises.
    • Unfortunately, while NCDs are now recognized as a significant threat, there is a dearth of solutions. According to the latest figures available, in 2015-16, only 3% of the total health budget was earmarked for NCD programmes.
  • The way ahead:
    • Investing in health is a no-brainer. A healthy population is the engine behind sustainable economic growth; the alternative is a growing economic burden.
    • An increase in healthcare spending should be considered an investment, not a cost.
    • India desperately needs a holistic care system that is universally accessible, affordable and at the same time effectively reduces OoP expenditure.
    • Increasing private investment in healthcare for broader and more comprehensive insurance is necessary.
    • Developing subscription-based primary healthcare clinics and plans are also options. At the same time, it is important to come up with viable mechanisms that will exempt the poor from payments and provide them both health and financial protection.
  • Other steps:
    • Strengthening tertiary tier healthcare;
    • Developing local health systems to be able to screen the maximum number of people; Providing extensive diagnostics and free essential drugs;
    • Offering disease-specific insurance schemes;
    • Providing coverage even to those in unorganized sectors; using corporate social responsibility involvement to strengthen healthcare;
    • Switching focus from patient care to preventive care, will all go a long way.


India desperately needs a holistic care system that is universally accessible, affordable and at the same time effectively reduces OoP expenditure. A healthy population is the engine behind economic growth; the alternative is a growing economic burden. Comment.

Suggested Approach:

  • Current problems with the healthcare system.
  • How healthcare system will improve economic parameters.
  • Suggestions to improve healthcare system.


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Read 2088 times Last modified on Friday, 19 August 2016 11:51

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