Healthcare access expands, affordability still a challenge 

The National Health Authority recently announced that 90 crore citizens of India now have Ayushman Bharat Health Accounts (ABHAs), as part of the Ayushman Bharat Digital Mission. This is indeed a milestone worth celebrating as it means that 90 crore citizens now have access to India’s universal health coverage scheme. 

Experts hoped that the recently released National Health Accounts (NHA) estimates for India 2022-23 would also reveal some milestones in terms of increase in government spend on healthcare but while the numbers were in the right direction, reality did not live up to expectations. NHA 2022-23 shows that the share of Government Health Expenditure (GHE) in the country’s Gross Domestic Product (GDP) rose from 1.15 per cent in 2013–14 to 1.43 per cent in 2022–23. 

As per the new GDP series with base year 2022-23, GHE as per cent of GDP is 1.48 per cent. Similarly, GHE’s share in General Government Expenditure (GGE) has increased from 3.78 per cent to 4.89 per cent over the same period, underscoring the growing prioritisation of health in public spending. In per capita terms, GHE has increased nearly 2.7 times, from Rs. 1,042 to Rs. 2,786 between 2013-14 and 2022-23.

The report claims that the decadal trend of increased Government Health Expenditure (GHE) has resulted in overall reduction in the Out-of-Pocket Expenditure (OOPE) as a share of the Total Health Expenditure (THE). The share of GHE in THE has reportedly increased by almost 15 percentage points, from 28.6 per cent in 2013-14 to 43.7 per cent in 2022–23, but experts point out that these include the COVID years when the government increased the health expenditure significantly to 1.84 per cent of GDP in 2021-22 to manage the pandemic situation, most of which had to be spent on the world’s largest mass COVID vaccination programme. 

As public health expert and economist Nachiket Mor’s comments on LinkedIn, the more balanced conclusion is therefore that the pre-COVID decline in OOPE may have been driven substantially by expenditure compression, possibly linked to continuing household financial stress, while the post-COVID comparison between 2019-20 and 2022-23 offers a genuine sign of improved pooling and public financing. However, he points out that sadly, it offers no sign of a reversal in the stress on household income that drove the secular reduction in THE as a proportion of GDP over the last decade, beyond indicating that it did not increase further, despite the devastating impact of COVID-19. 

Similarly, there is an increase in Social Security Expenditure (SSE) on healthcare, the share of SSE in THE—which includes government-funded health insurance such as the AB PM-JAY, medical reimbursements to government employees, and social health insurance programmes—has increased from 6 per cent in 2013-14 to 9.9 per cent in 2022–23. 

But NHA 2022-23 data also shows an increase in the share of private health insurance in THE, from 3.4 per cent to 9.2 per cent. While one reading is that this indicates improved health-seeking behaviour due to awareness, and the population’s purchasing power, it could also mean that India’s citizens are forced to seek more expensive private health insurance. Hospitals have complained of delayed reimbursements and could be de-prioritising treatment under government-funded health insurance schemes such as the AB PM-JAY. 

In fact, a recent report from ManipalCigna India titled Health Quotient highlights the ‘Health Debt Trap’, where 36 per cent of the surveyed population say that investing in their health is straining their finances and 41 per cent of urban Indians say financial goals drive stress. This underlines the vicious circle of financial stress impacting health, and the cost of staying healthy adding to financial strain. 

India’s private healthcare sector continues to grow, with Grant Thornton Bharat’s latest Q1 2026 Pharma & Healthcare Dealtracker pointing to a strong focus on healthtech, AI diagnostics, and preventive care. Pharma & hospitals lead M&A activity, with a rising interest in wellness & preventive healthcare. In PE/VC, Healthtech and wellness led volumes, with strong momentum in early-stage and growth investments across digital health, AI platforms, and preventive care.

Medical devices remain active (for example, Alkem Medtech’s USD 117 million acquisition of a 55 per cent stake in Occlutech Holding). Healthtech and diagnostics also see steady traction, while single-specialty platforms (like IVF) are gaining investor attention. Investment activity was particularly robust across Healthtech and wellness segments, including AI-led diagnostics, preventive healthcare, and digital care platforms, highlighting continued interest in scalable, tech-enabled healthcare models. 

With medical inflation rising, trust in hospitals and the health insurance sector decreasing, isn’t it an irony that India’s patients face a health debt trap, while the sector continues to be attractive for investors? Is this a definition of patient centricity that we can live with? 

VIVEKA ROYCHOWDHURY,
Editor
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