Out-of-pocket, out of reach: India’s unequal healthcare burden

By Bharti Rawat* 

India’s public health story is often framed as one of steady progress—rising institutional deliveries, expanding insurance schemes, and broader access to care. Yet beneath these gains lies a quieter, more persistent crisis: the financial shock of falling ill.

Recent findings from the National Statistics Office’s 80th round health survey (2025) underscore a structural reality that has changed little over time—healthcare in India is still financed largely out of people’s own pockets. For millions of households, illness is not just a medical event; it is an economic disruption that can destabilise already fragile livelihoods.

The data are telling. The average expenditure on hospitalisation across all healthcare facilities exceeds ₹34,000. Even public hospitals, often considered the system’s safety net, involve an average cost of ₹6,631, with a median of ₹1,100. These figures may appear modest in aggregate terms, but they obscure the lived reality of a vast population dependent on informal work and irregular incomes. For such households, even a few thousand rupees can mean borrowing at high interest, selling assets, or cutting back on essential consumption.

Healthcare costs are also inherently unpredictable. They arrive suddenly, often recur, and disproportionately affect those least equipped to absorb them. Outpatient care adds another layer to this burden. While some public services are free, the average expenditure across providers stands at ₹861 per episode. For chronic conditions requiring repeated consultations, medicines, and diagnostics, these expenses accumulate quickly into a significant financial strain.

A key pattern in the data is the continued reliance on private healthcare, particularly in urban areas. This is often interpreted as a matter of choice, but the reality is more complex. Gaps in public infrastructure—whether in availability, quality, or accessibility—frequently compel patients to seek private care. The result is a steady escalation in out-of-pocket expenditure, with private hospitalisation costs pushing beyond what many households can reasonably afford. What appears as preference is, in many cases, a compulsion shaped by systemic inadequacies.

Government schemes and insurance coverage have attempted to mitigate these pressures, but their impact remains uneven. The persistence of high out-of-pocket expenditure suggests that financial protection is still partial, leaving significant gaps in coverage, especially for outpatient care, medicines, and diagnostics.

The burden of healthcare spending is also deeply unequal. For wealthier households, medical expenses may be manageable, even if inconvenient. For poorer families, however, they can be catastrophic. The same ₹10,000 bill carries vastly different consequences depending on income, savings, and access to social support.

Rural populations face compounded disadvantages. Limited healthcare infrastructure often necessitates travel, adding transport costs and income loss due to time away from work. In such contexts, the true cost of illness extends well beyond hospital bills. Women, too, shoulder hidden financial pressures. While institutional deliveries have increased significantly, indirect costs, postnatal care, and other health needs continue to impose economic strain that is rarely captured in headline indicators.

This points to a broader paradox in India’s health system. Access has expanded—most notably in maternal healthcare, where institutional deliveries now account for over 96 percent of births. Public health programmes have widened their reach, and utilisation of services has increased. Yet this expansion has not translated into commensurate financial protection. More people are accessing healthcare, but they are also paying more for it. Without adequate safeguards, increased utilisation risks deepening inequality rather than alleviating it.

Out-of-pocket health expenditure is therefore not merely a health concern; it is an economic one. High and recurring medical costs can push households into debt, reduce spending on nutrition and education, and reinforce cycles of vulnerability. Illness, in this sense, becomes both a consequence and a driver of poverty.

Addressing this challenge requires more than incremental policy adjustments. As long as healthcare financing remains heavily dependent on out-of-pocket payments, the system cannot be considered equitable. Strengthening public healthcare infrastructure, ensuring the availability of free or low-cost essential services, regulating private sector costs, and expanding effective financial protection mechanisms are all necessary steps. But beyond these measures lies a more fundamental shift: recognising healthcare not as a commodity, but as a public good.

The evidence is clear. While policy narratives emphasise access and coverage, the everyday reality for many Indians is defined by the cost of staying healthy. Until out-of-pocket expenditure is substantially reduced, healthcare in India will remain not just a matter of public health, but of economic survival.

Source: National Statistics Office (NSO), Household Social Consumption: Health, NSS 80th Round (2025).

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*Master of Public Health, Dr. B.R. Ambedkar University, Delhi