JANUARY

INDIA
Private health insurance: The majority of private expenditures are out-of-pocket payments made mainly at the
point of service, and less than 5 percent are financed by voluntary health insurance (VHI). Despite tax
exemptions for insurance premiums, only upper-class urban populations are able to afford VHI, which serves
as a substitute for government health services. Given India’s expanding middle class, low VHI penetration is
surprising. It appears that in the coming years, the private insurance industry, which is still in its infancy, has the
potential to expand.
What is covered?
Services: Covered services, some of which require copayments (see below), include preventive and primary
care, diagnostic services, and outpatient and inpatient hospital care. Medications on the essential drug list are
free (if and when available), while other prescription drugs are purchased from private pharmacies.
Services available through the national health programs are free to all. India has one of the world’s largest
publicly financed HIV drug programs, and all drugs and diagnostic services for vector-borne diseases, such as
dengue fever and malaria, are free, as are insecticide-treated bed nets for malaria control. Immunizations and
maternal and child health (MCH) services are free as well (MOH, 2014).
Under the National Rural Health Mission, public health institutions in rural areas are being upgraded to meet
the benchmarks for quality laid down by the Indian Public Health Standards (IPHS) (MOH 2013), which specify
essential and desirable services that must be available in each type of health care facility. For example, at
primary health centers these include outpatient services; emergency care provided mainly by nursing staff;
referral and inpatient services; MCH-related services; school health and adolescent health services; care for
noncommunicable diseases; basic laboratory services; linkages with secondary care providers and community
health centers; basic surgical procedures; and medications on the state essential drug list and those required
under national programs. The standards also cover necessary infrastructure and human resources. In practice,
however, the availability of staff, equipment, and drugs varies significantly between and within states.
Cost-sharing and out-of-pocket spending: Most states have some user charges for outpatient visits, hospital
admission, diagnostic and prescription drugs, though there is huge variation in fee policies among the states.
More than 70 percent of total health expenditures are financed through user fees, and most out-of-pocket
spending is for hospital admissions. Nearly all admission, even to public hospitals, lead to catastrophic health
expenditures, and over 63 million people are faced with impoverishment every year because of health care
costs. In 2011–12, out-of-pocket spending on health care as a share of total monthly household spending per
capita was 6.9 percent in rural areas and 5.5 percent in urban areas (MOH, 2014).
Under the National Rural Health Mission, free treatment in public hospitals, as part of the Janani Suraksha
Yojana, 1 was extended to maternity, newborn, and infant care and to control of tuberculosis, malaria, and HIV/
AIDS. For all other services, user fees continue to apply, especially for diagnostics and drugs excluded from
the state’s essential drug list (MOH, 2014).
Safety nets: Safety nets for the poor and other vulnerable groups are provided by a number of governmentfunded
health insurance schemes that have been introduced in recent years. These are intended to improve
access to hospitals and reduce out-of-pocket payments. Some states finance hospital care through health
insurance programs. The RSBY (see above) protects mostly those below the poverty level. 2 Evaluations of such
schemes show improved utilization of hospital services (mainly private), especially among the poorest 20
percent of households (MOH, 2014).
1
Janani Suraksha Yojana (JSY) is a safe motherhood intervention under the National Rural Health Mission with the objective
of reducing maternal and neonatal mortality through the promotion of institutional delivery among poor pregnant women.
2
Defined as monthly per capita consumption expenditure of INR972 (USD55) in rural areas and INR1,407 (USD79.50) in
urban areas. Please note that, throughout this profile, all figures in USD were converted from INR at a rate of INR17.7 per
USD, the purchasing power parity conversion rate for GDP in 2014 reported by OECD (2015) for India. The poverty ratio at
the all-India level is 29.5 percent (Planning Commission, 2014).
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The Commonwealth Fund