IAS Gyan

Daily News Analysis


21st September, 2023 Health

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Context: A new report by the World Health Organization and the World Bank revealed that the progress of Universal Health Service Coverage (UHC) has stalled since 2015 and that people who access health services face more financial hardship. The report found that more than half of the world's population — 4.5 billion people — did not have full access to essential health services as of 2021.

Key Highlights of the Report

  • Stagnation in UHC Growth: Since 2015, progress in achieving Universal Health Service Coverage (UHC) has stalled, with no improvement observed between 2019 and 2021.
    • Universal Health Coverage (UHC) aims to ensure that all individuals have access to comprehensive health services without experiencing financial hardship.
  • Global Health Coverage Gap: As of 2021, more than half of the world's population (4.5 billion people) lacked full access to essential health services, indicating a substantial gap in global health coverage.
  • Financial Hardship: In 2019, two billion individuals faced financial difficulties due to out-of-pocket (OOP) health expenses. This included 344 million people living in extreme poverty. This financial burden of healthcare costs is a significant concern.
  • Long-Term Impact of COVID-19: While not explicitly considered in the report, the authors suggest that the ongoing and long-term consequences of the COVID-19 pandemic might have contributed to the observed challenges in UHC and financial protection.
  • Worsening Health Service Coverage: Among the 194 countries assessed, 108 countries experienced either deteriorating or no significant change in health service coverage (SDG Indicator 3.8.1) since the establishment of the Sustainable Development Goals (SDGs) in 2015.
  • Improvement in Infectious Diseases: The most notable improvements in service coverage have been observed for infectious diseases, with an average yearly growth rate of 7%.
  • Challenges in Non-Communicable Diseases and Maternal Health: There has been little to no progress in service coverage for non-communicable diseases and maternal, newborn, and child health services in recent years, as highlighted by the World Health Organization (WHO).
  • Barriers for Vulnerable Groups: Disadvantaged demographic sub-groups, such as the poorest, least educated, and rural residents, face significant obstacles in accessing healthcare services. For instance, distance to healthcare facilities is a substantial barrier, particularly for women aged 15-49 in rural areas.
  • Catastrophic OOP Health Spending: The number of people experiencing catastrophic OOP health spending (exceeding 10% of the household budget) has steadily increased globally, from 588.2 million in 2000 to 1.04 billion in 2019.
    • In 2019, approximately 13.5% of the global population spent over 10% of their household budget on healthcare, representing a 77% increase in the population facing substantial OOP health costs from 2000 to 2019.
    • The Western Pacific region, followed by Southeast Asia, had the highest number of individuals experiencing catastrophic OOP health spending, with the WHO Africa region ranking third.
    • Even small OOP health expenditures can push poor and low-income households into poverty. An estimated 1.3 billion people, including 300 million already in extreme poverty, were further impoverished due to these payments.
  • OOP health spending hinders global poverty eradication efforts. Mitigating this impact can be achieved by reducing OOP health payments for those near the poverty line and exempting impoverished individuals from such payments.
  • The report concludes that the world is not on track to achieve universal health coverage by the targeted year 2030.

Out-of-pocket (OOP) spending on health


  • Out-of-pocket (OOP) spending on health refers to the direct payments made by individuals and households to access healthcare services, medications, and treatments. In many countries, including India, OOP spending has been a longstanding and significant issue in the healthcare landscape.

Reasons for High Out-of-Pocket Spending on Health in India

Limited Public Healthcare Coverage  

  • Underfunding: Public healthcare facilities, including government hospitals and clinics, often suffer from inadequate funding. This results in a shortage of staff, essential medicines, and medical equipment, leading to suboptimal healthcare services.
  • Geographical Disparities: The distribution of public healthcare infrastructure is uneven, with urban areas having better access compared to rural and remote regions. This forces residents of underserved areas to seek private healthcare services.
  • Quality Concerns: Public healthcare facilities are perceived as providing lower-quality care due to overcrowding, long wait times, and staff shortages. Many individuals opt for private healthcare for perceived better quality, even if it comes at a higher cost.

Inadequate Health Insurance

  • Low Penetration: A significant portion of the Indian population remains uncovered by health insurance. Many people, especially in rural areas and lower-income groups, lack access to affordable health insurance plans.
  • Limited Benefits: Even when insurance is available, the coverage may be inadequate, with restrictions on the types of treatments and services covered. High deductibles and co-payments can still leave individuals with substantial OOP expenses.
  • Lack of Awareness: A lack of awareness and understanding of health insurance options among the population hampers the adoption of insurance policies.

Low Government Health Expenditure

  • Insufficient Infrastructure: Limited government health expenditure has resulted in a shortage of healthcare infrastructure, including hospitals, clinics, and primary care centres. This inadequacy forces people to seek private healthcare services, which are often more costly.
  • Inadequate Workforce: Low government spending has translated into a shortage of healthcare professionals. Overburdened healthcare staff may not provide timely and effective care, prompting individuals to opt for private healthcare providers.
  • Limited Preventive Care: Public health programs for preventive care and health education have been underfunded. This lack of emphasis on prevention can lead to higher incidences of diseases, increasing the demand for curative healthcare services.

Impact of High Out-of-Pocket Spending

Financial Distress

  • Depletion of Savings: When individuals are required to pay a significant portion of their healthcare expenses out of pocket, it can lead to the depletion of their savings. This can erode their financial stability and leave them vulnerable to unexpected future expenses.
  • Borrowing and Indebtedness: Many individuals resort to borrowing money, often at high-interest rates, to cover healthcare costs. Accumulating debt to pay for medical bills can lead to long-term financial struggles and even bankruptcy in severe cases.
  • Economic Consequences: Families experiencing financial distress due to OOP spending may cut back on other essential expenses, such as education or nutritious food, which can have long-term repercussions on overall well-being and economic prospects.

Barriers to Access

  • Delay in Seeking Care: Fearing the financial burden, individuals may delay seeking medical attention until their condition worsens. This delay can lead to the progression of diseases and complications, making treatments more challenging and expensive.
  • Avoidance of Preventive Care: People may avoid routine check-ups and preventive healthcare measures due to concerns about cost. This can result in the missed opportunity to detect and address health issues at an early stage when they are more manageable and less costly.
  • Unequal Access: The burden of OOP spending affects individuals differently. Those with limited financial resources may forego necessary healthcare altogether, while wealthier individuals can access care without significant financial strain. This creates disparities in healthcare access.


  • Disproportionate Impact on Low-Income Groups: Lower-income individuals and families are more likely to bear a higher relative financial burden when paying for healthcare services. This disparity in spending deepens existing socio-economic health inequalities.
  • Rural-Urban Divide: Rural populations, where access to healthcare facilities is often limited, are disproportionately affected by high OOP spending. They may have to incur additional expenses, such as travel and accommodation, to access healthcare in urban areas.
  • Gender Disparities: High OOP spending can also impact gender equality in healthcare, as women, particularly in low-income households, may face barriers to seeking care due to financial constraints.

In summary, high out-of-pocket spending on health in India has far-reaching consequences, including financial distress, barriers to accessing timely healthcare, and exacerbation of healthcare inequities. Addressing these impacts requires comprehensive healthcare reforms, increased insurance coverage, and measures to reduce the financial burden on individuals, especially those from marginalized and lower-income groups.

Steps Taken by India to Address OOP Spending

  • India has implemented several steps to address high out-of-pocket (OOP) spending on healthcare. These measures aim to reduce the financial burden on individuals and improve healthcare access and affordability.

Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY)

  • PM-JAY is one of India's flagship healthcare initiatives. It aims to provide financial protection to vulnerable families by offering health insurance coverage for hospitalization expenses.
  • PM-JAY provides coverage of up to INR 5 lakhs per family per year, making it one of the largest government-sponsored health insurance schemes globally. This coverage significantly reduces OOP expenses for hospitalization, including expenses related to surgeries, diagnostics, and treatments.

National Health Mission (NHM)

  • NHM is an umbrella program launched in 2005 to improve public healthcare services in India. It includes multiple components aimed at strengthening healthcare infrastructure and enhancing the quality of care.
  • NHM focuses on the development and upgrading of healthcare facilities, including hospitals, primary health centres, and sub-centres. This expansion of infrastructure contributes to reducing the demand for private healthcare services and, consequently, OOP spending.
  • NHM invests in the training and capacity building of healthcare workers, including doctors, nurses, and community health workers, to ensure the availability of skilled professionals in underserved areas.
  • One of NHM's key components is improving maternal and child health. By providing better access to essential healthcare services, NHM indirectly reduces the need for costly treatments and OOP spending associated with maternal and child health issues.

Janani Suraksha Yojana (JSY)

  • JSY is a component of the NHM aimed at promoting institutional deliveries and reducing maternal and neonatal mortality.
  • JSY provides financial incentives to pregnant women who choose to give birth in healthcare facilities. This encourages women to seek institutional care during childbirth, reducing maternal and newborn mortality while minimizing OOP expenses.

Generic Drug Promotion

  • India has implemented policies to promote the use of generic drugs, which are more affordable than branded medications. This initiative aims to reduce the cost of medicines, making them more accessible and reducing OOP spending on pharmaceuticals.

Telemedicine and Telehealth Services

  • India has increasingly adopted telemedicine and telehealth services, especially in rural and remote areas. This expansion of telehealth services improves access to healthcare without the need for extensive travel, thereby reducing associated costs.

Health and Wellness Centers (HWCs)

  • India is working on transforming its existing primary health centres into Health and Wellness Centers (HWCs). These centres focus on providing comprehensive primary healthcare services, including preventive care and management of non-communicable diseases, reducing the need for costly treatments.

These steps collectively reflect India's commitment to addressing high OOP spending on healthcare by expanding health insurance coverage, improving healthcare infrastructure, and promoting preventive and cost-effective healthcare services. These efforts aim to reduce the financial burden on individuals and promote equitable access to quality healthcare.

Addressing high out-of-pocket (OOP) spending on healthcare in India presents several challenges

Limited Coverage of Health Insurance Schemes

  • While initiatives like Ayushman Bharat have extended health insurance coverage, there are still many individuals, especially those in informal and unorganized sectors, who do not have access to formal insurance schemes. Expanding coverage to include these marginalized groups remains a challenge.
  • Administrative errors can lead to eligible individuals being excluded from insurance schemes, depriving them of financial protection against healthcare costs.

Quality of Healthcare Services

  • There is a significant variation in the quality of healthcare services, both in the public and private sectors. Concerns about substandard care in public facilities often lead people to opt for more expensive private healthcare, increasing OOP spending.
  • Building trust in public healthcare facilities is a challenge, as they are often perceived as overcrowded, understaffed, and lacking essential resources. Improving the quality and perception of public healthcare is essential to reduce OOP spending.

Informal Healthcare Providers

  • A substantial portion of healthcare in India is provided by informal or unregistered healthcare providers. These providers operate without government oversight, leading to unregulated practices and unpredictable healthcare costs.
  • Informal healthcare providers may lack formal medical training, potentially resulting in inadequate care and complications that require expensive treatments. Integrating these providers into the formal healthcare system while ensuring safety and quality is a significant challenge.

Healthcare Infrastructure

  • There is a shortage of healthcare infrastructure, particularly in rural and underserved areas. This inadequacy forces individuals to seek care in urban areas, incurring additional costs for travel and accommodation.
  • A shortage of healthcare professionals, including doctors, nurses, and paramedics, affects the delivery of healthcare services. Recruiting and retaining skilled healthcare workers in rural and remote areas is challenging.

Behavioural Factors

  • Many individuals in India prioritize curative care over preventive care, leading to the late detection of diseases and higher OOP spending on advanced treatments. Encouraging a shift toward preventive healthcare is a behavioural challenge.
  • Cultural beliefs and traditional practices sometimes lead individuals to seek care from informal providers or delay seeking formal healthcare. Addressing these cultural factors requires sensitive healthcare education and awareness campaigns.

Fiscal Constraints

  • India faces fiscal constraints when allocating resources to healthcare, education, infrastructure, and other essential sectors. Balancing the need for increased healthcare spending with other developmental priorities poses a challenge.

Data and Monitoring

  • Accurate and timely data on healthcare utilization and expenditures are crucial for policy formulation and monitoring. Challenges in data collection and quality hinder evidence-based decision-making.

Way Forward

Universal Health Coverage (UHC)

  • Comprehensive Coverage: India should continue its efforts toward achieving UHC, where all citizens have access to a full range of essential healthcare services without facing financial hardship. This involves extending health insurance coverage to include the entire population, including those in informal sectors.
  • Financial Protection: UHC not only aims to provide healthcare services but also to ensure financial protection. It should significantly reduce OOP expenses, ensuring that individuals and families are not forced into poverty due to healthcare costs.

Strengthen Public Healthcare

  • Quality Improvement: Enhancing the quality of care provided at public healthcare facilities is essential to build trust and encourage people to utilize these services. This includes adequate staffing of public hospitals, ensuring the availability of essential medicines, and upgrading infrastructure.
  • Rural Healthcare: Special attention should be given to improving rural healthcare infrastructure and services to reduce the need for long-distance travel and associated costs.

Community-Based Health Insurance

  • Inclusivity: Expanding community-based health insurance models can help cover individuals who are outside the formal employment sector and those who may not be reached by larger government schemes. These models can be tailored to local needs and preferences.
  • Risk Pooling: Community-based insurance encourages communities to pool resources, spreading the financial risk of healthcare costs across a wider group and making coverage more affordable.

Regulation and Transparency

  • Price Regulation: Stricter regulation of healthcare providers and facilities can help prevent excessive billing. Setting price controls for medical procedures and treatments can curb overcharging by private providers.
  • Transparency in Billing: Implementing transparent billing practices ensures that patients understand the cost of healthcare services upfront. This transparency helps individuals make informed decisions about their healthcare options.

Health Education

  • Preventive Care Promotion: Promoting health education and awareness campaigns can encourage preventive care behaviours. This includes regular check-ups, vaccinations, and lifestyle modifications, which can reduce the incidence of diseases and the need for costly treatments.
  • Early Intervention: Educating the public about recognizing early signs of illnesses and seeking prompt medical attention can prevent conditions from becoming severe, thus reducing healthcare expenses.


  • India's path forward to reduce OOP spending on healthcare involves a holistic approach that combines universal health coverage, public healthcare improvement, community-based insurance, regulation, transparency, and health education. These strategies aim to make healthcare services more accessible, affordable, and equitable for all citizens while mitigating the financial hardships associated with healthcare expenses. Achieving these goals will contribute to better health outcomes and an improved quality of life for the people of India.

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RIGHT TO HEALTH: https://www.iasgyan.in/daily-current-affairs/right-to-health


Q. What are the primary reasons for the high level of out-of-pocket spending on healthcare in India, and what steps has the Indian government taken to address this issue? How do these factors impact the financial well-being and access to healthcare for different segments of the population?