Affordable Healthcare: Reforms Reduce Out-of-Pocket Costs for Millions

Over the past five years, India has witnessed a steady decline in Out-of-Pocket Expenditure (OOPE) as a percentage of Total Health Expenditure (THE). This decline highlights the government’s concerted efforts to enhance healthcare affordability and accessibility. Key initiatives such as expanded health insurance coverage under the Ayushman Bharat scheme, benefiting over 55 crore individuals, and the establishment of more than 1.75 lakh Ayushman Arogya Mandirs offering free healthcare services, have significantly reduced the financial burden on individuals. For example, OOPE dropped from 48.8% in 2017-18 to 39.4% in 2021-22, demonstrating substantial progress.

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Budgetary Enhancements

A key factor in this reduction has been the significant increase in budget allocations for the Department of Health & Family Welfare. These allocations rose by 85%, from Rs. 47,353 crore in 2017-18 to Rs. 87,657 crore in 2024-25. The additional funds have been channeled into critical initiatives such as the establishment of Ayushman Arogya Mandirs and the scaling up of the National Free Drugs Service Initiative, ensuring broader access to essential healthcare services across underserved regions. Additionally, the 15th Finance Commission allocated Rs. 70,051 crore in grants for health through local governments, empowering grassroots-level interventions.

Strengthening Primary Healthcare

A cornerstone of India’s healthcare transformation is the operationalization of 1,75,418 Ayushman Arogya Mandirs (AAMs) by December 2024. These facilities, converted from Sub-Health Centres and Primary Health Centres, deliver comprehensive primary healthcare services, including preventive, promotive, curative, and rehabilitative care. For example, in rural Maharashtra, these facilities reduced travel times for villagers seeking basic health services, improving antenatal care and chronic disease management. The initiative ensures free and universal access to essential health services, encompassing reproductive health, communicable and non-communicable diseases, and mental health support.

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Expanding Health Insurance Coverage

The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB PM-JAY) plays a pivotal role in reducing OOPE by offering health coverage of Rs. 5 lakh per family annually for secondary and tertiary care. Approximately 55 crore individuals, primarily from economically weaker sections, benefit from this initiative. Recent expansions include coverage for all senior citizens aged 70 years and above, irrespective of income. However, challenges such as delays in claim reimbursements, limited awareness in rural areas, and uneven hospital empanelment across states persist, affecting its implementation.

Accessible Medicines and Diagnostics

To further alleviate financial pressures, the National Free Drugs Service Initiative and Free Diagnostic Service ensure the availability of essential medicines and diagnostic facilities at public health institutions. The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) supports over 14,000 outlets nationwide, offering quality generic medicines at affordable prices. Additionally, 218 AMRIT pharmacies provide essential drugs and medical implants at significantly reduced rates, enabling savings of up to 50% for patients.

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Addressing Non-Communicable Diseases (NCDs)

The government’s comprehensive approach to combating NCDs includes establishing 770 District NCD Clinics, 372 District Day Care Centres, 233 Cardiac Care Units, and over 6,400 Community Health Centre NCD Clinics under the National Programme for Prevention and Control of Non-Communicable Diseases. Screening initiatives integrated into primary healthcare further promote early detection and intervention.

Innovations in Mental Health

Mental health has also been prioritized through initiatives like the National Tele Mental Health Programme, launched in 2022, and the Tele MANAS Mobile App. By November 2024, 53 Tele MANAS Cells across 36 States/UTs had handled over 15.95 lakh calls. Additionally, the District Mental Health Programme extends support to 767 districts, offering training and resources to medical and non-medical professionals.

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Strengthening Infrastructure and Research

Mission-mode projects such as the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM) aim to bolster primary, secondary, and tertiary healthcare capacities. Investments in advanced Viral Research & Diagnostic Laboratories (VRDLs) enhance India’s epidemic response capabilities, with 163 laboratories established nationwide.

Community Awareness and Lifestyle Interventions

Promoting healthy living is integral to reducing healthcare costs. Initiatives like the “Eat Right India” and “Fit India” movements encourage better nutrition and physical activity. Accredited Social Health Activists (ASHAs) play a critical role in community education and early health interventions.

Sustaining Progress: Ensuring Affordable Healthcare for All

Through strategic investments, innovative programs, and a focus on universal access, the government’s multi-pronged approach has significantly reduced OOPE. For instance, initiatives like Ayushman Bharat, which provides health insurance coverage to over 55 crore individuals, and the establishment of 1.75 lakh Ayushman Arogya Mandirs offering free primary healthcare services, have directly alleviated financial burdens while enhancing healthcare accessibility and quality. Continued efforts to strengthen health infrastructure and expand financial protection are essential to sustaining this positive trajectory, ensuring affordable and equitable healthcare for all Indians.