NEW DELHI: In a stark indicator of India’s shifting healthcare landscape, individual health insurance premiums have now exceeded the combined central government allocation for the Department of Health and Family Welfare and the Department of Health Research.
An analysis of annual reports from the Insurance Regulatory and Development Authority of India and corresponding Union Budget documents shows that while insurance premium collections briefly dipped in the immediate post-pandemic years (2021–22 and 2022–23), they have since surged past the national health budget.
Even when related spending by other ministries—such as Defence and Labour—is taken into account, India’s total public health expenditure remains low: just around 2% of the Union Budget and 1.5% of GDP, falling short of the 2.5% target set by the National Health Policy.
This trend signals more than a budgetary shift—it reflects a structural transformation in how healthcare is accessed and funded in India. Increasing reliance on private insurance points toward a market-driven model where care is increasingly linked to ability to pay, raising serious equity concerns, particularly for the uninsured and underinsured.
Critics argue that insurance-based healthcare, especially when not backed by strong public infrastructure, can exacerbate inequalities. A large share of India’s workforce remains in the informal sector and lacks access to comprehensive insurance. Public health facilities, meanwhile, continue to be underfunded and overstretched.
Moreover, private insurance schemes often come with coverage exclusions, co-payments, and claim caps, limiting their effectiveness in protecting individuals from high medical costs. Many policies do not cover outpatient care—the most commonly used form of healthcare—and focus disproportionately on hospital-based curative services. This not only limits the scope of care but also diverts resources away from preventive and community health initiatives, which are crucial for long-term wellbeing.
Health economists warn that this could weaken public support and political commitment to strengthening universal health services. Over-reliance on insurance risks creating a two-tiered system: one for those who can afford private plans, and another, often neglected, for those who cannot.
While insurance can supplement healthcare access, experts caution that it cannot substitute a well-funded public health system. Fragmented care, exclusion of the most vulnerable, and a drift away from viewing health as a public good care.