💰 Economy & FinanceMAINS · GS2.13 · GS3.3

Out-of-pocket health spend falls sharply

India's tenth National Health Accounts report records government health spending tripling and the household out-of-pocket burden dropping from nearly two-thirds to under half.

What happened

The Union Health Ministry released the National Health Accounts (NHA) estimates for India 2022-23, the country's tenth such report on health expenditure.
It is prepared by the National Health Accounts Technical Secretariat (NHATS), housed in the National Health Systems Resource Centre (NHSRC) under the Ministry of Health and Family Welfare.
The estimates use the globally comparable System of Health Accounts (SHA) 2011 framework.
The headline finding: the share of Out-of-Pocket Expenditure (OOPE) in total health spending fell from 64.2% (2013-14) to 43.4% (2022-23) — money households pay directly at the point of care, the most regressive way to fund health.
Simultaneously, Government Health Expenditure (GHE) rose threefold in absolute terms and increased its share of both GDP and total health spending, signalling a shift toward publicly financed care.

Background & context

National Health Accounts is India's official accounting exercise that tracks how much the country spends on health, who pays for it, and where the money flows. It answers three questions for a given year: what was the total health expenditure, what were the sources of financing (government, households, insurers, external aid), and what were the uses (hospitals, primary care, medicines, administration). It is, in effect, the nation's health balance-sheet.

The exercise was institutionalised at NHSRC in 2014, which gave India a recurring, methodologically consistent series rather than ad-hoc one-off studies. Crucially, the estimates follow the System of Health Accounts (SHA) 2011 — an internationally standardised accounting framework developed jointly by the OECD, Eurostat and the WHO. Using SHA 2011 lets India's numbers be compared like-for-like against other countries, which earlier indigenous methods did not permit. The preparation is overseen by an expert group drawing on the Ministry of Statistics and Programme Implementation (MOSPI), NITI Aayog, the Ministry of Jal Shakti, the National Institute of Public Finance and Policy (NIPFP), the National Council of Applied Economic Research (NCAER), the Institute of Economic Growth (IEG) and the National Health Authority — the body that runs Ayushman Bharat PM-JAY.

The wider policy backdrop is the National Health Policy 2017, which set the goal of raising public health spending to 2.5% of GDP and committed to reducing the catastrophic out-of-pocket burden that pushes millions of Indian households into poverty each year. The NHA series is the principal yardstick against which that 2.5% target is measured, so each release is read as a progress report on the policy.

A point of confusion worth settling: the NHA estimates carry a reference-year lag. Because they reconcile actual spending records from the Centre, all States, local bodies and insurers, the figures for a year are finalised only a few years later — the 2022-23 estimates are released in 2026, not in 2023. This lag is deliberate; it buys accuracy over speed, and it is why the NHA year and the year of release never coincide. The series also expresses several figures against a baseline of 2013-14, the year before NHA was institutionalised, so the long-run trend (OOPE 64.2% to 43.4%) is measured across roughly a decade rather than a single year.

For Prelims

Report & edition: National Health Accounts (NHA) 2022-23, the tenth NHA report for India.
Prepared by: NHA Technical Secretariat (NHATS) at the National Health Systems Resource Centre (NHSRC), under MoHFW — institutionalised at NHSRC in 2014.
Methodology: System of Health Accounts (SHA) 2011 — the OECD–Eurostat–WHO international standard.
Government Health Expenditure (GHE): rose ~threefold from ₹1.30 lakh crore (2013-14) to ₹3.85 lakh crore (2022-23).
GHE as share of GDP: up from 1.15% to 1.43% (1.48% on the new 2022-23 GDP base series).
GHE in General Government Expenditure: up from 3.78% to 4.89%.
GHE share in Total Health Expenditure (THE): up from 28.6% to 43.7%.
Out-of-Pocket Expenditure (OOPE) share in THE: down from 64.2% to 43.4% (and as low as 39.4% during the COVID year 2021-22).
Per-capita GHE: up ~2.7 times, from ₹1,042 to ₹2,786.
Social Security Expenditure (SSE) on health: up from 6% to 9.9% — this includes AB PM-JAY, government-employee reimbursements and social health insurance.
Private Health Insurance share: up from 3.4% to 9.2%.
Primary health care spend: more than doubled, from ₹0.5 lakh crore to ₹1.4 lakh crore.
COVID effect: total health spend rose to 1.84% of GDP in 2021-22, driven by the Emergency COVID Response Packages (ECRP-I & II) and mass vaccination.

Know the four accounting buckets. Total Health Expenditure (THE) is the sum of everything spent on health in a year. It is split by source into: Government Health Expenditure (GHE) — Centre plus States plus local bodies; Out-of-Pocket Expenditure (OOPE) — direct household payment at the point of service; Social Security Expenditure (SSE) — pooled, pre-paid schemes such as PM-JAY and employee health benefits; and private/external sources — private insurance, NGOs, firms and external aid. The 2022-23 story is a rebalancing of the source mix away from OOPE and toward GHE and SSE.

For UPSC: NHA 2022-23 (10th report · SHA 2011 framework · prepared by NHSRC) — OOPE fell from 64.2% to 43.4% of total health spend, while GHE rose from 28.6% to 43.7% and reached 1.43% of GDP. The National Health Policy 2017 target is 2.5% of GDP.

What it is NOT. NHA is not the Union Health Budget — the budget is one year's allocation by the Centre, whereas NHA captures actual expenditure by Centre, States, local bodies, households and insurers combined. It is not the Economic Survey health chapter, nor the National Family Health Survey (NFHS, which measures health outcomes like fertility and anaemia, not money). OOPE is not the same as the household health budget in advance — it is the spend that actually leaves the household's pocket at the point of treatment. And a falling share of OOPE does not by itself mean households spent fewer rupees; it means the public and pooled sources grew faster, shrinking OOPE's slice of a larger pie.

The comparative set — related health-finance and health-outcome instruments to keep paired. NHA sits alongside several distinct measurement and financing tools that questions love to mix up: Ayushman Bharat PM-JAY (the ₹5 lakh-per-family hospitalisation cover that drives SSE up); Ayushman Bharat Health and Wellness Centres / Ayushman Arogya Mandirs (the primary-care arm); the National Health Mission (NHM) with its NRHM and NUHM sub-missions; the National Health Policy 2017 (the 2.5%-of-GDP target); the NITI Aayog Health Index (State-level performance ranking); and NFHS (outcome survey). Of these, only NHA and the NITI Aayog Health Index are measurement instruments; PM-JAY, the Health and Wellness Centres and NHM are spending programmes. Knowing which is a yardstick and which is a scheme is exactly the distinction a "match the pairs" or "how many of these are financing schemes" question tests.

Why it matters

High out-of-pocket spending is the single most regressive feature of a health system: it taxes the sick, falls hardest on the poor, and is the leading cause of catastrophic health expenditure — spending so large it forces a household to cut food, sell assets or borrow, often tipping it below the poverty line. India long had one of the highest OOPE shares among large economies. The NHA 2022-23 numbers show that share dropping below the symbolic halfway mark, which the Ministry attributes to expanded public provisioning, the spread of pooled insurance through PM-JAY and government-employee schemes, and a sustained rise in primary-care spending.

The problem the report quietly flags is that, even after the rise, GHE is only 1.43% of GDP — still well short of the 2.5% target the National Health Policy set for 2025. So the data carries both a success story (the OOPE decline) and an admitted gap (public spending remains low by international standards, where many peers spend 3-6% of GDP from public sources). The more-than-doubling of primary health care spending matters because primary care is the most cost-effective tier and the gateway that keeps minor illness from becoming an expensive hospitalisation. That single number — primary care up from ₹0.5 to ₹1.4 lakh crore — is the structural shift policymakers most want to see.

For Mains

Substantiation

In any answer on health financing or the burden of disease, the OOPE fall from 64.2% to 43.4% and GHE rise to 1.43% of GDP are the hard, citable numbers that turn a generic point into an evidenced one.

Data

Per-capita GHE up 2.7x (₹1,042 → ₹2,786), SSE up 6% → 9.9%, and primary-care spend more than doubling (₹0.5 → ₹1.4 lakh crore) supply precise figures for questions on public expenditure and inclusive growth.

Position

The release is the government's stated position that the shift toward publicly financed and pooled health spending is reducing the household burden — useful as the official stance in a balanced answer.

Problematisation

The report itself implies the gap: at 1.43% of GDP, public health spending is still far below the 2.5% National Health Policy 2017 target and below most peer economies — a ready way-in for the "why India under-invests in health" argument.

Deploys into: health financing and out-of-pocket burden (GS2.13, Health/HR development) · government budgeting and public expenditure priorities (GS3.3) · inclusive growth and catastrophic-expenditure poverty traps · the National Health Policy 2017 2.5%-of-GDP debate.

Ministry of Health and Family Welfare · 2026-05-27 · PRID 2265816 · PIB source ↗