Syllabus: GS-II & V: Health

Why in the News? 

Healthcare in India is increasingly becoming a financial risk, not just a medical concern. According to the Public Health Foundation of India, millions of Indians are pushed below the poverty line every year due to high medical expenses — a phenomenon known as catastrophic health expenditure. With nearly 80 percent of healthcare costs paid out-of-pocket, illness has become one of the biggest drivers of debt, asset loss, and long-term poverty.

Why Are Indians Falling into Medical Debt?

• High treatment cost in private/corporate hospitals
  
• Poor quality and overcrowding in public hospitals → forces migration to private care
  
• Low insurance penetration (only 15% have any form of health cover)
  
• Medical inflation: projected 13-14% in 2025, higher than global average
  
• Unethical practices: over-prescription, unnecessary tests, profit-driven hospital billing
  
• Hidden costs in insurance: co-pays, sub-limits, exclusions, waiting periods
  

Result: A family falls sick → sells land, gold, livestock → borrows at high interest → slips into intergenerational debt.

Ayushman Bharat and ABDM – Relief or Limited Impact?

• Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana: ₹5 lakh per family health cover, but limited to poorest households (bottom 40%).
  
• Ayushman Bharat Digital Mission (ABDM): aims to build digital health IDs and health records database.
  
• Limitations:
  
  • Does not cover outpatient care, diagnostics, medicines (60% of total spending)
    
  • Many private hospitals refuse PM-JAY patients or push “non-package” costs
    
  • Public hospitals lack capacity, forcing patients back to private sector
    

Why Corporate Healthcare Is Seen as Costly

• Shift from charity-based trust hospitals to profit-based corporate chains
  
• Hospitals earn through procedures, not prevention → unnecessary surgeries/tests
  
• Drug-device lobby influences treatment decisions
  
• Online marketing and pharmaceutical doctor-targeting increase irrational prescriptions
  

Medical care becomes a business → patient becomes a consumer.

5 Key Terms Explained

What the Government Needs to Do

• Increase public health spending to 2.5% of GDP (current allocation lower than target)
  
• GST exemption on individual health insurance to reduce premium burden
  
• Price regulation for medicines, implants, diagnostics
  
• Strengthen primary care, preventive health, and rural health workforce
  
• Create independent medical cost regulator for hospital bill transparency
  
• Promote generic medicines and Jan Aushadhi outlets
  
• Mandatory audit of insurance claim rejections and hospital billing
  

India’s Healthcare Paradox

• India has world-class hospitals for the rich, but health debt for the poor.
  
• Lifestyle diseases (diabetes, cancer, heart disease) are rising faster than incomes.
  
• When illness becomes a financial disaster, health becomes a poverty trap.
  

Exam Hooks

Key Takeaways:

• 80% OOPE = major cause of poverty
  
• Insurance covers hospitalization, not full cost cycle
  
• Medical inflation 13–14% (2025) → higher than global average
  
• Only 15% population has meaningful health cover
  
• Strengthening public health + regulation of private sector = urgent reforms
  

Mains Question:
“High out-of-pocket expenditure is the most significant driver of poverty in India. Critically examine how current health policies address this challenge and suggest reforms.”

One-Line Wrap:
Illness in India is no longer just a health risk — it is a financial shock that the poor often cannot survive.

SOURCE