Why in the News?

• The latest National Health Accounts (NHA) Estimates for FY23 show a rise in out-of-pocket healthcare expenditure and a decline in government health spending in India.

What’s in Today’s Article?

• About National Health Accounts (Objectives, Key Indicators)
• Key Findings of the Latest Report

National Health Accounts in India

• The National Health Accounts (NHA) is an official framework that tracks the flow of funds within India’s healthcare sector. It provides estimates of:

• Total health expenditure in the country.
• Government spending on healthcare.
• Household out-of-pocket expenditure.
• Private sector and insurance contributions.

• The NHA estimates are prepared by the National Health Systems Resource Centre (NHSRC) under the Ministry of Health and Family Welfare using internationally accepted accounting standards developed by the World Health Organisation (WHO) and the Organisation for Economic Co-operation and Development (OECD).
• The report helps policymakers assess whether healthcare financing is becoming more accessible, equitable, and affordable. It is also important for monitoring progress toward Universal Health Coverage (UHC).

Key Indicators in Health Financing

• Government Health Expenditure (GHE)
  • Government Health Expenditure refers to the amount spent by the Union and State governments on healthcare services, infrastructure, medicines, and public health programmes.
  • Higher public expenditure generally improves healthcare accessibility and reduces financial burdens on households.
  • India’s National Health Policy, 2017, had proposed increasing government health expenditure to 2.5% of GDP by 2025.
• Out-of-Pocket Expenditure (OOPE)
  • Out-of-Pocket Expenditure refers to direct payments made by individuals for healthcare services at the time of treatment. It includes spending on Medicines, Hospitalisation, Diagnostic services and Doctor consultations.
  • High OOPE is considered a major challenge because it can push vulnerable families into poverty and discourage timely healthcare access.
  • India has historically recorded high out-of-pocket spending compared to many developing and developed countries. 

Findings of the Latest National Health Accounts Report

• According to the latest National Health Accounts Estimates for FY23, India witnessed a rise in household spending on healthcare.
• Out-of-pocket expenditure increased sharply from around 39.4% of total health expenditure in FY22 to nearly 44% in FY23. This marks a reversal of the declining trend observed in recent years.
• At the same time, the share of government health expenditure reportedly declined by around 11% in FY23 compared to the previous year.
• The report highlighted that:

• Public spending growth slowed after the pandemic period.
• Household financial burden in healthcare increased again.
• Private expenditure regained a larger share in overall health financing.

• This change assumes significance because India had witnessed improvements during and immediately after the COVID-19 pandemic due to increased government health spending and emergency public health investments.

Reasons Behind Rising Out-of-Pocket Spending

• Several factors may have contributed to the rise in OOPE in FY23.
• Decline in Pandemic-Era Public Spending
  • During the COVID-19 period, governments substantially increased expenditure on hospitals, vaccination, testing, and emergency care. As emergency allocations reduced in FY23, public spending also moderated.
• High Dependence on Private Healthcare
  • A significant proportion of Indians continue to rely on private healthcare facilities because of concerns related to overcrowding, infrastructure gaps, and specialist shortages in public hospitals.
  • Private healthcare generally involves higher treatment costs, leading to increased household expenditure.
• Rising Medicine and Diagnostic Costs
  • Spending on medicines and diagnostics continues to constitute a large share of household healthcare expenses in India.
  • Even relatively minor medical treatments can impose financial stress on low-income families.

Government Measures to Reduce Healthcare Burden

• The Government of India has launched several initiatives aimed at reducing financial hardship in healthcare.
• Ayushman Bharat Scheme
  • The Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) provides health insurance coverage of up to Rs 5 lakh per family annually for secondary and tertiary healthcare.
  • It targets economically vulnerable households and aims to reduce catastrophic medical expenditure.
• Expansion of Health Infrastructure
  • The government has also increased investments under schemes such as:
    • PM Ayushman Bharat Health Infrastructure Mission (PM-ABHIM)
    • Establishment of new AIIMS institutions
    • Strengthening of Health and Wellness Centres
  • These measures aim to improve access to affordable public healthcare services.
• Promotion of Generic Medicines
  • The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) promotes affordable generic medicines through dedicated Jan Aushadhi Kendras across the country.
  • This initiative seeks to reduce medicine-related out-of-pocket expenses.