This Health System Summary is based on India: Health System Review (HiT) published in 2022. Health System summarizes central features of India’s health systems and analyzes available evidence on the organization, financing and delivery of health care. It also provides insights on key reforms and the varied challenges testing the performance of the Indian health system.
1. How is the health system organized?
Public sector health services in India are organized as a three-tier hierarchical system, comprising primary (subcentres and PHCs), secondary (CHCs, taluka and district hospitals) and tertiary (medical colleges and teaching hospitals) health-care facilities. Since health is a state subject, each state operates its kind health facilities. The Central Government oversees policy-making, planning, guiding, assisting, evaluating and coordinating the work of state health authorities. The Central Government also finances national health programmes. Funding from state governments accounts for two-thirds of public health expenditure in India, the rest consisting of Central Government contributions. Payment for accessing healthcare services offered by private providers is mainly in the form of out-of-pocket (OOP) expenses and insurance financing. Privately purchased or publicly funded insurance schemes provide partial or full coverage for hospitalization at empanelled hospitals for enrollees, but most private outpatient care is paid for out of pocket.
2. How much is spent on health services?
Public funding, collected through tax, non-tax, borrowing and capital are the major sources of funding for health in India. Public funding, provided by both the Central and state governments, currently constitutes approximately one-third of all health spending. Overall, healthcare spending in India is highly tilted towards private financing. India’s overall health spending (public and private) is currently estimated to be 3.8% of its GDP, lower than the LMIC average health spending share of GDP of around 5.2%. The percentage of total health expenditure in India coming from public funds is below the Asian countries' average, above Bangladesh but below Srilanka, Indonesia, China and Thailand.
Indian households heavily rely on Out of Pocket spending to finance their healthcare needs. India’s health system is overwhelmingly financed by out-of-pocket (OOP) expenditures incurred by households around 63% of all health spending. Shortages in public funds and growing demand for private care led to an increased dependence on OOPE health care expenditures. OOP payments on drugs constituted the largest proportion of the total OOP payments. Inpatient care includes co-payments for services such as beds, diagnostics, procedures and surgeries which are fixed and not exempted. The outpatient care is met mostly out of pocket because most states have limited availability of drugs, or the patients are forced to buy from an outside facility. The government has taken a free medicine initiative (PMBJP initiative) for reduced essential medicines. The government has also given a limited exemption to the poor and large sections of the middle income through State-sponsored health insurance programmes although this varies across the Indian states.
Fig .1. Government health expenditure % of current health expenditure- in selected Asian countries in 2018
Payment for accessing healthcare services offered by private providers is mainly in the form of out-of-pocket (OOP) expenses and insurance financing. Privately purchased or publicly funded insurance schemes provide partial or full coverage for hospitalization at empanelled hospitals for enrollees, but most private outpatient care is paid for out of pocket. The Public health system gives universal, state-based coverage for most benefits available, including preventive, promotive and curative care services. Under National Health Mission, the focus is largely on reproductive, maternal, and child health conditions, besides benefits involving the prevention and treatment of communicable diseases. Benefits are given, universal entitlement however preferential treatment for the poor. The vast majority of health insurance products in India cover only hospitalization expenses, but not outpatient care.
Fig.2 Trends in Current Health expenditure 2000-2018
The GOI Pradhan Mantri Jan Arogya Yojana (PM-JAY) insurance scheme provides coverage of INR 5 lakhs (around US$ 7000) to more than 107 million poor and marginalized households largely focused on inpatient hospitalization covering nearly 1592 packages. ESIS provided insurance coverage to 132 million beneficiaries (employees and their dependents) in 2020. Apart from that, the CGHS provides coverage to an estimated 3.4 million Central Government employees, pensioners and their family members as of 2018. The benefits of both the schemes cover largely curative services including inpatient and outpatient benefits. In India, the patient choice depends mostly on the ability to pay for health care. There is no concept of GPs in the public health system. Every specialist visit requires registration fees. Health personnel in private for-profit and private not-for-profit facilities (e.g., specialists, general practitioners and paramedics) are paid consultation fees directly by the households if the consultation occurs in outpatient clinics. For inpatient care, households pay the hospitals a fee-for-service that includes payments for consultations, bed charges, surgeries, if any, diagnostics and drugs. Curative care accounts for nearly 80% of outpatient care. And about 60% of hospitalization in India, is directly paid for by households (hospitals and GPs) using fee-for-service.
3. What resources are available for the health system?
India’s health workforce was estimated at 5.7 million in 2018, however, as per a study the active health workforce size is estimated to be significantly lower at 3.12 million. The number of medical colleges and training slots/seats has been steadily rising and is reflected in the growing numbers of doctors registered with state medical councils. The number of doctors (9.28 per 10 000 population); and nurses and midwives (23.89 per 10 000 population; 2019 data) in India is still lower than in China and Brazil but slightly higher than in Sri Lanka and Thailand. India’s health workforce is heavily concentrated in the urban sector i.e. 64%. Only 1/5thof the doctors and 3/10th of nurses and midwives employed are concentrated in the public sector. Moreover, there is an overall shortage of healthcare professionals, which is aggravated by the emigration of qualified medical professionals. This is a trend seen in Indian states which most experience challenges in improving recruitment and retention of the physician workforce.
4. How are health services delivered?
Healthcare services are delivered by a range of public and private providers. Public sector health providers function at different levels within states and are accountable to local administrative authorities. They can also be open to scrutiny through the Right to Information Act. There is a broad range of private providers, from individual practitioners to hospitals, that are subject to a variety of regulations, with various levels of adherence. Health services in the public system include both curative and preventive services. The provision of personal curative health services is predominantly carried out by private providers. In the last two decades, there has been an increase in the use of public sector facilities for outpatient care. Nearly 70% of all outpatient visits, about 58% of all inpatient episodes, and approximately 90% of medicines dispensed, and diagnostic facilities in India are currently provided by either for-profit or not-for-profit providers in the private sector.
The primary care service in India is expected to be the first point of contact for common conditions in the district and medical college hospitals. However, the low quality, cost, effectiveness and limited breadth of services available in primary care facilities vary depending on the disease being managed and considerably across providers. It also provides long waiting, inefficient and highly disorganized patient pathways without a referral in the Indian healthcare system. Other concerns about public sector service quality range from inadequacies related to human resources for health (shortages, absenteeism, low motivation, corruption), shortages of essential medicines in public health facilities, unavailability of diagnostic services, and unsatisfactory staff behaviour towards patients. The problem is further exacerbated by the very limited set of interventions available at the primary care level. This has led over time to patients switching to private providers, even though it comes at a higher out-of-pocket (OOP) cost. Private healthcare providers in India range from super-specialty corporate hospitals located mostly in major urban centres, and outpatient clinics in large and small towns, alongside semi-qualified or unqualified medical practitioners. Diagnostic services and pharmaceuticals are also provided by private sector providers. Thus, the National Health Policy (NHP), 2017 and Ayushman Bharat, 2018 by the government focus on comprehensive primary care and “upgrading” the existing subcentres into health and wellness centres (HWC), and making PHCs the fulcrum of preventive, promotive and curative care. Primary health care services through the HCWs are being strengthened to include (among others) essential and emergency health services, address NCDs including mental health, and also provide services to improve dental health, ophthalmological services, and elderly care. By February 2021, about 80% of existing subcentres and PHCs had been converted into HWCs. In India, day-care services, emergency care and palliative care are provided in both public and private hospitals. However, there is a need to strengthen access to daycare services such as in the management of end-stage renal diseases. For emergency services, the majority of ambulances in service do not provide advanced life support. Further, there is a lack of capacity and responsiveness on EMS at the national level. Apart from that, a limited number of rehabilitation institutes and PMR departments offer holistic care for persons with disabilities across India. Long-term care services have an increasing demand due to the increasing elderly population in India, however, have been accorded low priority. Elderly care is weak due to a lack of medical services and social support. Palliative care for improved quality of life of patients is inadequate and inaccessible. There is a large gap between the needs and available services.
5. What reforms are being pursued?
Health policy has been devolved in India since 1946. India has gone through three major national health reforms/policy development phases. These reform initiatives represent major shifts in policy approaches towards the financing and delivery of health care. Some of these developments are:
· establishment of the NRHM, 2005 (community involvement, flexible financing, ASHAs, safe deliveries, and human resource management
· establishment of government-funded health insurance schemes (RSBY, PM-JAY and state government-based health insurance schemes);
· reforms in the pharmaceutical arena, moving from process to product patent system, etc. 2005; including drug and medical device price ceiling, 2013, 2015;
· the Clinical Establishments Act, 2010 and Rules, 2012;
· Universal Health Coverage for India, 2011 (free, comprehensive primary health care services);
· third National Health Policy 2017; (Increase health expenditure by the government as a percentage of GDP from the existing 1.15% to 2.5% by 2025) and
· Ayushman Bharat 2018 (government-funded health insurance scheme)
· Establishment of the National Medical Commission in 2020 as a replacement for the Medical Council of India.
6. How is the health system performing?
The Indian health system’s performance has gained remarkable success in the form of increased life expectancy at birth and improved Maternal and child health indicators. However, access to basic services such as immunization and ANC has inequally improved. Despite improvements in communicable diseases, tuberculosis remains a concern, with rising numbers of multidrug-resistant variants. Dengue and Chikungunya have posed a regular threat to urban health planners. Noncommunicable diseases (NCDs) are increasingly emerging as a challenge, with NCDs and injuries together accounting for over half the disease burden. There is a lack of appropriate financial protection from ill health that induced Households’ OOP spending to continue to be high. The improved publicly financed insurance is protecting the poor focusing on health-related financial risks however the extent of protection is limited. According to the Indian financial managing report, there has been underspending and diversion of resources to other purposes plaguing funding allocations for the NHM. Apart that. There have been increasing delays in transferring funds from state treasuries to SHS ranging from 50 days to 271 days during 2014–2015 and 2015–2016. The programme named “National Disease Control Programme (NDCP)” underperformed under the NHM due to the underutilization of funds.
Quality of delivery services in the public sector remains a concern, including difficulties in handling birth complications, shortfalls in healthcare facilities, shortages of key essential medicines, and diagnostics, deficient infrastructure, and a shortage of clinical and support staff. Inaccessibility to quality services and affordability of services have left about 100 million urban poor with weak health outcomes and considerable financial risks. National programmes such as the NRHM attempt to ensure horizontal equity among states in public health financing and service delivery by providing more allocation to states that are underperforming and are unable to mobilize adequate resources because of economic disadvantages.
The latest report from the World Bank named India as the most inefficient health system. Efficiency can be considered in two dimensions: allocative and technical efficiency. Inefficiencies in operation and management, and lack of funding from the government for public sector units. There are major rural–urban differences in the availability of services and weaknesses in the referral at all levels of the health system.
Efficiency in primary health care remains a major challenge. An inadequate health workforce is a major source of inefficiency in delivering government healthcare services in India. Overreliance on patented or branded drugs relative to generic medicines, inappropriate use of medicines, diagnosis and procedures. However, performance concerning efficiency varies across private sector facilities, some showed that efficiency improvements are achieved largely by technological change.
The NHP 2017 provides an explicit framework for the expansion of the health system to help achieve universal access to public health. The underlying principles are that the Indian Health System should be funded predominantly through rising tax revenues that care be universal, and access to health services be based on need but not on ability to pay for services. Apart from that, the quality and distribution should be balanced. This would provide several key benefits including high levels of protection against the financial consequences of ill health, the equity from the rich to poor and economically vulnerable population groups. While the COVID-19 pandemic has been responsible for major challenges to the health system such as lack of access to primary care services, and an underfunded health system. Efforts to improve the implementation of the regulations aimed at controlling costs and quality must be accompanied by transparent and socially accountable regulatory processes with fewer bureaucratic hassles.
This paper is an ongoing study by our Health Care Researcher Ms. Shipra Agarwal.
- Selvaraj S, Karan K A, Srivastava S, Bhan N, & Mukhopadhyay I. India health system review. New Delhi: World Health Organization, Regional Office for South-East Asia; 2022 India health system review (who.int)