In 2021, Indians spent around ** percent of their total health spending as out-of-pocket expenditure. This was at ** percent in fiscal year 2001, showing a gradual decrease in the share of healthcare expenses that people pay directly to the providers. However, India ranked as one of the poorest in terms of this indicator and common people incurred heavy expenses due to health care.

In financial year 2020 in India, 47 percent of out-of-pocket spending for medical purposes was made at pharmacies. The next leading category for out-of-pocket medical expenditure was private general hospitals, accounting for 31 percent of out-of-pocket spending.

The Indian out-of-pocket healthcare market is poised for significant growth, driven by factors such as rising healthcare costs, an expanding elderly population, increasing prevalence of chronic diseases, and limited access to affordable health insurance. While precise figures for 2029 require a comprehensive market study, we can project a robust expansion based on observable trends. Assuming a conservative Compound Annual Growth Rate (CAGR) of 10% – a figure supported by the general growth in India's healthcare sector and increasing healthcare expenditure – and a 2025 market size of ₹5 trillion (approximately $600 billion USD, a reasonable estimate considering India's population and healthcare spending), the market in 2029 could reach approximately ₹8 trillion (approximately $960 billion USD). This significant growth will be fueled by escalating demand for private healthcare services, including specialized treatments and advanced medical technologies, which are frequently paid for out-of-pocket. However, this growth is constrained by several factors. Uneven income distribution across the population limits affordability for a significant portion, resulting in delayed or forgone healthcare. Government initiatives aimed at improving healthcare access and affordability, such as Ayushman Bharat, will influence market dynamics, potentially slowing the growth of out-of-pocket spending but also creating new avenues for private sector engagement. The market will likely witness a shift towards more affordable and accessible healthcare options to meet the demand of the burgeoning middle class, including the expansion of telemedicine and the adoption of preventative healthcare measures. Furthermore, innovative payment models and increased insurance penetration could gradually reduce the reliance on out-of-pocket expenses.

In financial year 2022, the out-of-pocket expenditure on healthcare in India was the highest in Uttar Pradesh, at almost *** billion Indian rupees. On the other hand, the state of Uttarakhand had an out-of-pocket health expenditure of approximately ** billion rupees.

IntroductionAs high out-of-pocket healthcare expenses pose heavy financial burden on the families, Government of India is considering a variety of financing and delivery options to universalize health care services. Hence, an estimate of the cost of delivering universal health care services is needed. MethodsWe developed a model to estimate recurrent and annual costs for providing health services through a mix of public and private providers in Chandigarh located in northern India. Necessary health services required to deliver good quality care were defined by the Indian Public Health Standards. National Sample Survey data was utilized to estimate disease burden. In addition, morbidity and treatment data was collected from two secondary and two tertiary care hospitals. The unit cost of treatment was estimated from the published literature. For diseases where data on treatment cost was not available, we collected data on standard treatment protocols and cost of care from local health providers. ResultsWe estimate that the cost of universal health care delivery through the existing mix of public and private health institutions would be INR 1713 (USD 38, 95%CI USD 18–73) per person per annum in India. This cost would be 24% higher, if branded drugs are used. Extrapolation of these costs to entire country indicates that Indian government needs to spend 3.8% (2.1%–6.8%) of the GDP for universalizing health care services. ConclusionThe cost of universal health care delivered through a combination of public and private providers is estimated to be INR 1713 per capita per year in India. Important issues such as delivery strategy for ensuring quality, reducing inequities in access, and managing the growth of health care demand need be explored.

From 2018 to 2019, the share of out of pocket expenditure as a share of total health expenditure in India was close to ** percent. By contrast from 2003 to 2004, this share was almost ** percent. The out of pocket expenditure as a share of total health expenditure has gradually been decreasing over the years.

BackgroundRising non-communicable diseases (NCDs) coupled with increasing injuries have resulted in a significant increase in health spending in India. While out-of-pocket expenditure remains the major source of health care financing in India (two-thirds of the total health spending), the financial burden varies enormously across diseases and by the economic well-being of the households. Though prior studies have examined the variation in disease pattern, little is known about the financial risk to the families by type of diseases in India. In this context, the present study examines disease-specific out-of-pocket expenditure (OOPE), catastrophic health expenditure (CHE) and distress health financing.Methods and materialsUnit data from the 71st round of the National Sample Survey Organization (2014) was used for this study. OOPE is defined as health spending on hospitalization net of reimbursement, and CHE is defined as household health spending exceeding 10% of household consumption expenditure. Distress health financing is defined as a situation when a household has to borrow money or sell their property/assets or when it gets contributions from friends/relatives to meet its health care expenses. OOPE was estimated for 16 selected diseases and across three broad categories- communicable diseases, NCDs and injuries. Multivariate logistic regression was used to understand the determinants of distress financing and CHE.ResultsMean OOPE on hospitalization was INR 19,210 and was the highest for cancer (INR 57,232) followed by heart diseases (INR 40,947). About 28% of the households incurred CHE and faced distress financing. Among all the diseases, cancer caused the highest CHE (79%) and distress financing (43%). More than one-third of the inpatients reported distressed financing for heart diseases, neurological disorders, genito urinary problems, musculoskeletal diseases, gastro-intestinal problems and injuries. The likelihood of incurring distress financing was 3.2 times higher for those hospitalized for cancer (OR 3.23; 95% CI: 2.62–3.99) and 2.6 times for tuberculosis patients (OR 2.61; 95% CI: 2.06–3.31). A large proportion of households who had reported distress financing also incurred CHE.RecommendationsFree treatment for cancer and heart diseases is recommended for the vulnerable sections of the society. Risk-pooling and social security mechanisms based on contributions from both households as well as the central and state governments can reduce the financial burden of diseases and avert households from distress health financing.

Out-of-pocket expenditures (in INR#) for healthcare payments and catastrophic health expenditures by insurance status and by type of health insurance scheme for illness in last 15 days and hospitalization in last 1 year.

The northern state of Uttar Pradesh in India spent around 190 billion Indian rupees on public health in financial year 2018. This was the highest that any state spent on healthcare when compared to other states in the country that year. The western state of Maharashtra ranked second with a little over 122 billion rupees public health expenditure, while the state of Jharkhand had the lowest expenditure at around 31 billion rupees.

State governments responsible for public healthcare

State governments had a lion’s share of around 63 percent in the total public health expenditure in India, compared to around 37 percent by the central government as of fiscal year 2018. This is in lieu of the Indian constitution that places the primary responsibility of providing health care with respective state governments.

Budget outlays for health

India had one of the lowest expenditures on healthcare among 36 other OECD countries. While the United States spent about 17 percent of its GDP on healthcare, India spent just around three percent on health care in 2018. As a result, private healthcare sector has been booming and Indian citizens incur high out-of-pocket costs for healthcare. It is clear that India’s health financing is in need of better funding and resources to ensure healthcare remains affordable and accessible to all.

India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: USD data was reported at 8.144 USD in 2011. This records an increase from the previous number of 7.007 USD for 2009. India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: USD data is updated yearly, averaging 8.144 USD from Dec 2000 (Median) to 2011, with 7 observations. The data reached an all-time high of 8.846 USD in 2006 and a record low of 6.794 USD in 2000. India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: USD data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s India – Table IN.World Bank.WDI: Poverty. Increase in poverty gap at $3.20 ($ 2011 PPP) poverty line due to out-of-pocket health care expenditure, expressed in US dollars (2011 PPP). The poverty gap increase due to out-of-pocket health spending is one way to measure how much out-of-pocket health spending pushes people below or further below the poverty line (the difference in the poverty gap due to out-of-pocket health spending being included or excluded from the measure of household welfare). This difference corresponds to the total out-of-pocket health spending for households that are already below the poverty line, to the amount that exceeds the shortfall between the poverty line and total consumption for households that are impoverished by out-of-pocket health spending and to zero for households whose consumption is above the poverty line after accounting for out-of-pocket health spending.; ; World Health Organization and World Bank. 2019. Global Monitoring Report on Financial Protection in Health 2019.; Weighted average;

Research on impact of publicly financed health insurance has paid relatively little attention to the nature of healthcare provision the schemes engage. India’s National Health Insurance Scheme or RSBY was made universal by Chhattisgarh State in 2012. In the State, public and private sectors provide hospital services in a context of extensive gender, social, economic and geographical inequities. This study examined enrolment, utilization (public and private) and out of pocket (OOP) expenditure for the insured and uninsured, in Chhattisgarh. The Chhattisgarh State Central sample (n = 6026 members) of the 2014 National Sample Survey (71st Round) on Health was extracted and analyzed. Variables of enrolment, hospitalization, out of pocket (OOP) expenditure and catastrophic expenditure were descriptively analyzed. Multivariate analyses of factors associated with enrolment, hospitalization (by sector) and OOP expenditure were conducted, taking into account gender, socio-economic status, residence, type of facility and ailment. Insurance coverage was 38.8%. Rates of hospitalization were 33/1000 population among the insured and 29/1000 among the uninsured. Of those insured and hospitalized, 67.2% utilized the public sector. Women, rural residents, Scheduled Tribes and poorer groups were more likely to utilize the public sector for hospitalizations. Although the insured were less likely to incur out of pocket (OOP) expenditure, 95.1% of insured private sector users and 66.0% of insured public sector users, still incurred costs. Median OOP payments in the private sector were eight times those in the public sector. Of households with at least one member hospitalized, 35.5% experienced catastrophic health expenditures (>10% monthly household consumption expenditure).The study finds that despite insurance coverage, the majority still incurred OOP expenditure. The public sector was nevertheless less expensive, and catered to the more vulnerable groups. It suggests the need to further examine the roles of public and private sectors in financial risk protection through government health insurance.

Health and Medical Insurance Market Outlook

The global health and medical insurance market size was valued at approximately $2.8 trillion in 2023 and is projected to reach around $4.5 trillion by 2032, growing at a compound annual growth rate (CAGR) of 5.4% during the forecast period. This robust growth can be attributed to a combination of factors, including rising healthcare costs, increasing awareness about the importance of health insurance, and an aging global population. The market's expansion is further supported by technological advancements that streamline the insurance process and enhance customer experience.

One of the primary growth drivers in this market is the escalating cost of healthcare services worldwide. Medical inflation is outpacing general inflation, leading to higher out-of-pocket expenses for individuals. This has created a significant demand for health and medical insurance as a financial safety net. Furthermore, advancements in medical technology and the introduction of new treatment methods are contributing to higher healthcare costs, which in turn boosts the demand for insurance coverage. Governments and private entities are increasingly collaborating to make health insurance more accessible and affordable, thus driving market growth.

Another crucial factor contributing to the market's growth is the increasing awareness and understanding of health insurance benefits among the global population. With the proliferation of information through digital media and government initiatives, more people are becoming aware of the financial and health security that insurance provides. Educational campaigns and policy reforms are playing a pivotal role in educating the masses about the necessity of health insurance, thereby leading to higher enrollment rates. Additionally, employers are also recognizing the importance of offering health benefits to their employees, which further adds to the market's growth.

The aging global population is another significant driver for the health and medical insurance market. As the population ages, the prevalence of chronic diseases and the need for long-term care increase. Older adults are more likely to require frequent medical attention, making health insurance a crucial component of their financial planning. This demographic shift is particularly pronounced in developed countries, but emerging markets are also beginning to experience similar trends. Consequently, insurance providers are developing specialized products to cater to the needs of an aging population, thereby expanding their customer base.

Regionally, the market growth is expected to vary significantly. North America currently dominates the market, thanks to high healthcare costs, comprehensive insurance plans, and government mandates like the Affordable Care Act. However, the Asia Pacific region is anticipated to witness the highest growth rate during the forecast period. This can be attributed to improving economic conditions, increased healthcare spending, and growing awareness about health insurance. Countries like China and India are implementing extensive healthcare reforms, making insurance more accessible to their vast populations. Europe and Latin America are also expected to show steady growth, supported by government initiatives and increasing private sector participation.

Type Analysis

The health and medical insurance market can be segmented by type into individual health insurance, family health insurance, critical illness insurance, and others. Individual health insurance plans are designed to cover a single person, offering customized coverage based on personal health needs. This segment is experiencing significant growth due to the increasing number of self-employed individuals and freelancers who require personal health coverage. Additionally, the rise in single-person households is contributing to the demand for individual health insurance plans.

Family health insurance plans cover the entire family under a single policy. These plans are becoming increasingly popular as they offer comprehensive coverage for all family members, often at a lower cost compared to purchasing individual policies for each member. The convenience and cost-effectiveness of family health insurance plans are driving their adoption, especially among young families who are looking to secure their health future. Moreover, insurers are offering flexible plans that can be tailored to meet the specific health needs of families, further boosting this segment.

Critical illness insurance is another vital segment

India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: % of Poverty Line data was reported at 2.545 % in 2011. This records an increase from the previous number of 2.190 % for 2009. India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: % of Poverty Line data is updated yearly, averaging 2.545 % from Dec 2000 (Median) to 2011, with 7 observations. The data reached an all-time high of 2.764 % in 2006 and a record low of 2.123 % in 2000. India IN: Increase in Poverty Gap at $3.20: Poverty Line Due To Out-of-Pocket Health Care Expenditure: 2011 PPP: % of Poverty Line data remains active status in CEIC and is reported by World Bank. The data is categorized under Global Database’s India – Table IN.World Bank.WDI: Poverty. Increase in poverty gap at $3.20 ($ 2011 PPP) poverty line due to out-of-pocket health care expenditure, as a percentage of the $3.20 poverty line. The poverty gap increase due to out-of-pocket health spending is one way to measure how much out-of-pocket health spending pushes people below or further below the poverty line (the difference in the poverty gap due to out-of-pocket health spending being included or excluded from the measure of household welfare). This difference corresponds to the total out-of-pocket health spending for households that are already below the poverty line, to the amount that exceeds the shortfall between the poverty line and total consumption for households that are impoverished by out-of-pocket health spending and to zero for households whose consumption is above the poverty line after accounting for out-of-pocket health spending.; ; World Health Organization and World Bank. 2019. Global Monitoring Report on Financial Protection in Health 2019.; Weighted average;

In 2023, India's healthcare sector was valued at roughly 372 billion U.S. dollars. It was an increase in comparison to 2020, showcasing significant growth. The sector is one of the largest contributors in terms of revenue and employment in the country. Healthcare in India The country has seen a steady increase in healthcare expenditure, both from the government and private sector. With a growing population and an expanding middle class, there is a rising demand for quality healthcare services in the country. Notably, there has been a substantial reduction in out-of-pocket healthcare expenses over the years, largely due to government-led initiatives like the Ayushman Bharat scheme and increased investments in public healthcare infrastructure. Pharmaceutical sector The pharmaceutical sector plays a vital role in enhancing healthcare affordability, not just domestically but also across multiple international markets. Known for its generic drug manufacturing capabilities and robust pharmaceutical supply chain, this sector makes a substantial contribution to the nation's economy through extensive pharmaceutical exports.

In financial year 2021 in India, household out-of-pocket spending was the leading type of healthcare spending throughout the country, accounting for around 62 percent of medical spending. Government schemes accounted for another 27 percent of spending for medical care.

Mean per capita out-of-pocket (OOP) payments for health care by states and ETL state groups in India, NSS 2004 and NSS 2014.

Out of pocket payments on healthcare in India had the largest share of ** percent in 2019 and estimated to decline to ** percent by 2030. Government spending on healthcare was expected to go up in the same time period. This was a result of the open digital health implementation.

Effects of Digital India

The digital India campaign was launched by the government n 2015. It aimed to transform India into an information and knowledge-based economy in conjunction with the country’s telecommunications sector empowered with its growing wireless broadband coverage and increasing number of smart phone users. With this novel strategy of on-the-go access to information, governance and services, the Indian economy is said to have created immense potential by adding tremendous value to the GDP in the next few years.

Healthcare scenario

Nonetheless, India’s healthcare scenario remains far from utopic. As per the guidelines and recommendations set by the WHO, India falls severely short of the number of doctors and medical experts required to serve the population. In addition, there is also a major shortage of medical infrastructure. The number of hospitals and healthcare facilities are insufficient to absorb the sick population of the country. In response to this situation, the government of India launched the Ayushman Bharat scheme in 2018. The program includes access to primary health care from a family doctor, among other facilities.

In financial year 2024, the estimated total budget allotted for the Indian health sector amounted to about ****** billion Indian rupees. Since the financial year 2018, the allocation of the health budget has consistently increased. Healthcare in India The Indian healthcare system consists of a network of private and public healthcare sectors that offer a variety of medical services to over *** billion individuals. Most Indians prefer private healthcare over public healthcare in terms of hospitals, services, and physicians. Additionally, the overall size of the healthcare market stood at *** billion U.S. dollars in 2022 and is likely to grow in the future. A new horizon of opportunities and investments has emerged in pharmaceuticals, medical technology, and services for the advancement of this sector. Private healthcare expenditure Even though the government has increased the spending of country’s GDP spending on healthcare to over *** percent, patients pay for more than half of medical expenses directly at the time of treatment. As a result, the out-of-pocket expenses were roughly about ** percent of the current health expenditure in India. These expenditures still make up a large portion of health spending in the country.

Out-of-pocket expenditure for injury related hospitalization in three public sector hospitals in North India.

International Health Insurance Market Outlook

The global market size of the International Health Insurance market reached approximately USD 25 billion in 2023 and is projected to soar to a staggering USD 50 billion by 2032, exhibiting a robust CAGR of 7.9% during the forecast period. The significant growth factor contributing to this market is the increasing awareness and need for comprehensive healthcare coverage among individuals and corporates alike. The surge in medical costs, global travel, expatriation, and the rising prevalence of chronic diseases are some of the pivotal drivers fueling this market's expansion.

One of the primary growth factors is the globalization of the workforce. With the growing trend of multinational corporations, many employees are frequently stationed abroad. This has led to a higher demand for international health insurance plans, as they offer a safety net for employees against health-related uncertainties in foreign lands. Furthermore, the increase in international students pursuing education abroad also significantly contributes to this demand. Educational institutions and parents alike are keen on ensuring that students have adequate health coverage during their stay in foreign countries.

Another critical growth driver is the rising healthcare costs worldwide. Medical inflation is a significant concern, making it imperative for individuals and families to opt for health insurance plans that offer international coverage. With the healthcare systems in developed nations often being more expensive, international health insurance provides a crucial financial buffer. This ensures that policyholders can access high-quality medical care without facing financial hardships. Additionally, the increasing prevalence of lifestyle-related diseases such as diabetes, hypertension, and cardiovascular conditions necessitates continuous medical attention, further boosting the market.

The technological advancements in the insurance sector cannot be overlooked as a significant growth factor. Digital platforms and online distribution channels have made it easier for consumers to compare and purchase international health insurance plans. The convenience of online services, coupled with the availability of customized plans, has played a substantial role in attracting a broader customer base. Insurers are also leveraging data analytics and AI to offer personalized services and improve customer experiences, thereby enhancing the market's appeal.

Hospital Cash Benefit Insurances have emerged as a valuable addition to the international health insurance landscape. These plans provide policyholders with a fixed daily cash benefit during hospitalization, which can be used to cover out-of-pocket expenses that are not typically covered by standard health insurance. This includes costs such as transportation, accommodation for family members, and other incidental expenses that arise during a hospital stay. The flexibility offered by Hospital Cash Benefit Insurances makes them an attractive option for individuals seeking additional financial security during medical emergencies. As healthcare costs continue to rise globally, these insurances offer a practical solution to manage unforeseen expenses, thereby enhancing the overall appeal of comprehensive health insurance packages.

Regionally, North America and Europe dominate the international health insurance market due to the high number of expatriates, students, and travelers. The well-established healthcare infrastructure and stringent regulatory frameworks in these regions ensure high standards of service, thus making them attractive markets. However, the Asia Pacific region is expected to witness the highest growth rate over the forecast period. The increasing middle-class population, rising healthcare awareness, and economic growth in countries like China and India are key factors driving the market in this region.

Plan Type Analysis

The international health insurance market's segmentation by plan type includes individual plans, family plans, group plans, senior citizen plans, and others. Individual plans offer tailor-made coverage for single policyholders, addressing their specific healthcare needs. This segment is particularly popular among expatriates and international students, providing comprehensive coverage without tying policies to families or groups. The flexibility and customization options available in individual plans make them highly attractive,