More than 40 crore Indians are caught in a healthcare gap: panel

Why in the News

More than 40 crore Indians, over a quarter of the population, are covered neither by government health insurance nor by private cover, a Parliamentary Standing Committee on Health and Family Welfare has found. Its report, Affordability and Accessibility of Healthcare Facilities in Public and Private Sector, was presented to Parliament last month and carries 368 recommendations. The group it identifies sits above the eligibility line for fully subsidised cover and below the income at which private care is affordable. The committee’s conclusion is that insurance alone cannot close that gap, and that the fix lies in public capacity and in regulation of private prices.

What is the ‘missing middle’ in health coverage?

1. It is a group defined by exclusion from both systems: These households are too well off to rely on government subsidies and not financially secure enough to absorb the rising cost of private care.
2. Its size is over a quarter of the population: More than 40 crore people fall into it, sitting between the poorest, who hold government protection, and the affluent, who can buy private care.
3. The risk it faces is attrition, not catastrophe: The threat is the slow erosion of household income through medicines, consultations, tests and repeated treatment, rather than a single large hospital bill.

Where do Indians actually seek care, and at what price?

1. The private sector delivers most of the care: Over 60 percent of inpatient care and 70 percent of outpatient care is provided by private facilities, so households without financial protection meet private prices directly.
2. Medicines are the single largest drain: They account for nearly 30 percent of current health expenditure.
3. Chronic illness converts a cost into a recurring one: For a person with diabetes, hypertension or cardiovascular disease, medicines, consultations and diagnostic tests become a lifelong expense, and the non-communicable disease burden is climbing steadily.
4. Childbirth shows the gap in one comparison: Average out-of-pocket spending is Rs 37,630 in private facilities against Rs 2,299 in public ones, more than sixteen times higher.

What does the financing record show?

1. Public spending sits below the policy’s own target: Government health expenditure is 1.43 percent of gross domestic product (GDP) against the 2.5 percent target set by the National Health Policy, 2017.
2. Health’s share of the budget is shrinking: It fell from 6.12 percent of total government expenditure in 2021-22 to 4.89 percent in 2022-23, below the 5.02 percent recorded in 2019-20.
3. The shortfall lands on households: Public capacity that is not built is care that is bought privately, which is what converts a spending decision into an out-of-pocket bill.

Why does insurance alone not close the gap?

1. Government cover is targeted at the poorest: Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PM-JAY) protects vulnerable households against hospitalisation costs, and the missing middle falls outside fully subsidised coverage.
2. Private cover carries its own filters: A household that buys a policy still faces premiums, exclusions, waiting periods and co-payments.
3. Both instruments insure the wrong event: Hospitalisation cover does not reach outpatient consultations, diagnostics and medicines, which is where this group’s expenditure actually accumulates.

What has the committee recommended?

1. A single regulatory floor for private providers: Nationwide implementation of the Clinical Establishments Act, so registration and minimum standards apply uniformly rather than State by State.
2. Mandatory quality standards: Facilities would be held to a defined standard of services as a condition of operation rather than as a voluntary accreditation.
3. Price transparency in private facilities: Rates for procedures, consultations and diagnostics would be published and displayed.
4. Curbs on retail pharmacy practice: The report flags excessive trade margins and the non-prescription sale of antibiotics, and recommends stronger audits and enforcement.
5. Stronger public healthcare infrastructure: The committee argued for building public capacity directly rather than relying on insurance to purchase care from private providers.

Challenges to closing the missing middle

1. A contributory product for this group has failed to launch before: The design has been proposed repeatedly and never converted into a national scheme with take-up. Eg. A NITI Aayog report in 2021 proposed extending PM-JAY to the missing middle on a contributory basis, and no national product followed it.
   The Fix: Collect the premium through an existing payment channel the household already uses, so enrolment does not depend on a separate voluntary transaction.
2. The Clinical Establishments Act is not in force everywhere: Health is a State subject, so the central Act applies only where a State has adopted it. Eg. Large States including Karnataka, Tamil Nadu and Maharashtra regulate through their own statutes instead.
   The Fix: Tie a share of National Health Mission funds to adoption of a common minimum standard, whichever statute a State chooses to enforce it under.
3. Transparency without a ceiling changes little: A published rate does not restrain a price where the patient is in no position to shop. Eg. Ceiling prices set by the National Pharmaceutical Pricing Authority cover scheduled medicines, and non-scheduled formulations sit outside that control.
   The Fix: Extend price capping to the high volume diagnostics and consumables that make up the bulk of a private bill.
4. Cheap medicine supply is a fraction of the retail network: A generic price ceiling reaches a household only where a generic outlet exists. Eg. Jan Aushadhi Kendras number about 15,000 against roughly nine lakh retail pharmacies.
   The Fix: Mandate prescription by generic name and stock the full essential drug list at every public facility, so the public system itself becomes the cheap outlet.
5. Human resources, not finance, cap public capacity: Money released for a facility does not produce the specialist who has to staff it. Eg. Rural Community Health Centres run with a shortfall of roughly 80 percent against sanctioned specialist posts.
   The Fix: Create a public health management cadre so clinical posts are not consumed by administrative duty.

Conclusion

The committee’s finding is not that coverage is absent. It is that coverage is built around hospitalisation. The expense that erodes household income is recurring and outpatient. Closing that requires a financing instrument that pays for consultations, diagnostics and medicines, and no such instrument operates at scale today. Whether the committee’s recommendations produce one, or produce another set of standards for private providers to display, is what the government’s action taken reply will show.

Back2Basics

1. The Clinical Establishments (Registration and Regulation) Act, 2010 provides for the registration and regulation of all clinical establishments, public and private, across recognised systems of medicine.
2. Health is a State subject, so the Act operates in the Union Territories and in States that adopt it by resolution, and several States regulate under their own laws instead.
3. It prescribes minimum standards of facilities and services as a condition of registration.
4. It requires establishments to display their rates and to maintain and report records to the National Council for Clinical Establishments.

Matching Previous Year Question

“[2024, GS2, 15 marks] In a crucial domain like the public healthcare system, the Indian State should play a vital role to contain the adverse impact of marketisation of the system. Suggest some measures through which the State can enhance the reach of public healthcare at the grassroots level.”