Healthcare expenses in India are becoming more stressful, and now we have a report to prove it. According to the Swiss Re Institute’s recently released Asia Life & Health Consumer Survey 2025, India reported the highest increase in stress related to paying out-of-pocket (OOP) healthcare expenditure (HCE) in 2024 than they did in 2017.
While the report suggests that this change could be attributed to many factors like medical inflation, low disposable income and inadequate public health insurance, the fact is that public health insurance schemes like Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PMJAY) and state health insurance schemes have actually expanded over the past decade.
As recently as April 21, 2025, Dr V K Paul, Member (Health), NITI Aayog mentioned that thanks to AB PMJAY, hospitalisation rates in India have increased by 40 per cent, while OOP expenditure has decreased from 64 per cent in 2013-14 to 39.4 per cent in 2021-22. He was speaking at a session chaired by Union Health and Family Welfare Minister Jagat Prakash Nadda, titled “Promoting Swasth Bharat through Ayushman Bharat PM Jan Arogya Yojana and Ayushman Arogya Mandir” during the Civil Services Day celebrations.
The Swiss Re report defines health protection gap (HPG) as the share of individual OOP HCE not covered by insurance or government schemes that causes financial strain to households. While both the emerging and advanced markets of the region saw a widening of the HPG, emerging Asia countries accounted for a concerning 73 per cent of the total gap (USD 188 billion) in 2024. The remainder, USD 70 billion, came from the advanced markets. The larger gaps in emerging markets reflect relatively low insurance penetration and much larger populations, as per the report.
The report concludes that for insurers, the message is clear: aligning with consumers’ evolving preferences through product innovation is not only a competitive imperative, but also a path toward closing Asia’s persistent protection gaps.
While the Swiss Re report aims at informing insurers on how they can address consumer sentiment and barriers to insurance purchase, public health insurers could also look for learnings.
At the very least, the survey results from India highlight the gaps in coverage. While medical inflation could explain some part of the stress related to rising OOP health expenses, access to insurance, both public and corporate, needs to improve and become more efficient, covering more areas as well as more healthcare conditions.
Besides coverage adequacy and accessibility issues, India’s government needs to find a way to align with partners in the private sector. There are reports that more hospitals are withdrawing from the Ayushman Bharat Scheme due to poor reimbursement rates and delayed payments. In the most recent instance, Haryana’s state health agency released long pending payments to empanelled hospitals only after the state’s Indian Medical Association (IMA) threatened to pull out of the scheme. Experts suggest that expansions of the insurance net were announced without the requisite financial planning, hinting at political pressures driving promises.
As a first step to address such concerns, the government could seriously consider addressing 12 high-impact bottlenecks prioritised for action in a recently released by industry association NATHEALTH (Healthcare Federation of India) in collaboration with EY India. The whitepaper titled Streamlining Compliance in the Indian Healthcare Sector, points out that healthcare is among the top three sectors in terms of compliance burden in India. A single facility is required to manage hundreds of tasks annually, many of which are duplicative or unclear. For instance, the release notes that 25–30 per cent of compliance requirements change each year, while 24 per cent of central-level regulations are specific to healthcare, far more than most other sectors.
The NATHEALTH-EY India whitepaper identifies 85 key compliance challenges across hospitals, diagnostic centres, and MedTech companies. Of these, 44 were flagged by industry as particularly onerous, either due to duplication, lack of clarity, or administrative inefficiency. Addressing these pain points will go a long way towards improving the efficiencies of hospitals, which will hopefully pass on the benefits to patients and be more amenable to partnering in public health insurance schemes.
There is no doubt that India’s corporate hospital sector continues to be in expansion mode. Rating agency ICRA has revised its outlook on the Indian hospital industry to Positive, driven by expectations of sustained robust operating performance in FY2026. Given the strong operating metrics and demand outlook, the industry players have announced sizable capital expenditure (capex) plans for the medium term. Eleven listed hospital players and two large, unlisted players are cumulatively expected to add around 14,500 beds over FY2026 and FY2027 at a total capex of around Rs. 30,000-32,000 crore. This translates to around 26 per cent of their existing bed capacity at the end of FY2025. These bed additions are expected to be across metros, tier-II and tier-III cities, with significant additions in tier-II cities like Nagpur, Lucknow, Ongole and Coimbatore to cater to the unmet demand in these regions.
As the private sector expands to tier-III cities, there is a clear case for a partnership model to ensure improved access to corporate healthcare truly benefits patients. Insurers could also take cues from the Swiss Re report to address the concerns of India’s uninsured population. While the business opportunity is large, the impact on individual patients and families needs to drive the discussion.
VIVEKA ROYCHOWDHURY, Editor
viveka.r@expressindia.com
viveka.roy3@gmail.com