India has long had a commitment towards providing equitable, comprehensive and universally accessible healthcare to its citizens. Efforts in this direction have been longstanding and the 12th Plan has taken it a step forward with several steps being taken to boost the reach and effectiveness of public healthcare in the country. However, challenges continue to remain that needs to be addressed on a priority basis. 
Key Challenges

Lack of Insurance Coverage

: Most often, hospitalization expenses are borne by patients themselves. To put things in perspective, out of the total hospitalization expenses incurred in India annually, 70% of it are spent by way of out-of-pocket basis. Needless to say, the financial stress associated with such eventualities is immense – especially when hospitalization occurs due to an emergency rather than prior planning. Except for the higher strata – perhaps constituting 3 – 4% of the total population – people belonging to middle, higher-middle and lower tiers of the society are impacted the most. 

Price Elasticity

: Healthcare, similar to many other sectors in the country, is not regulated. As a consequence, cost associated with services is not constant and varies significantly based on various factors including location, and other tangible and intangible factors across cities. This is a cause for serious concern in the absence of health cover. Further, the spiraling prices of drugs add to the burden of pre and post hospitalization expenses. 

Public Expenditure on Health

The total expenditure on healthcare in India, including public and private expenditure is comparable to other developing countries at similar levels of per capita income. The total expenditure on healthcare (both public and private put together) is 3.7% of the GDP. However, according to the World Health Statistics 2013, public expenditure on health is very low constituting 28.2% of total health expenditure. According to the Government of India’s 12th Five Year Plan, ”public health expenditure in India was only 1.04% of GDP in 2011–12 as compared to the global average of 5.4%.”

Comprehensive Healthcare:

Insurance cover, even among those who are eligible, is not comprehensive.  Currently, Government-funded insurance schemes cover an estimated population of 181 million through the Employee State Insurance Scheme (ESIS) - 60 million; Central Government Health Scheme (CGHS) - 3 million and Rashtriya Swasthya Bima Yojana (RSBY) - 118 million. While ESIS and CGHS provide for comprehensive healthcare, RSBY provides for only hospitalization cover with a benefit limit of Rs.30,000 per enrolled household per year. In addition, 110 million people in the South Indian states including 70 million in Andhra Pradesh; 35 million in Tamil Nadu and 5 million in Karnataka receive coverage under state government funded health insurance schemes. However, most of these schemes cover only in-patient care. Therefore, while around 291 million people have access to healthcare via various government run/aided schemes, these are not comprehensive. Further, a vast majority of the population has absolutely no cover to stay financially protected from increasing health risks – non-communicable and lifestyle induced diseases being the most prominent. According to the World Bank and National Commission’s report on Macroeconomics, only 5% of Indians are covered by health insurance policies.  
 

High Capital Outlay

 According to a report by PricewaterhouseCoopers in association with industry body NATHEALTH, the Indian healthcare sector will need a total capital investment of Rs.1,62,500 Crore to provide accessible and affordable healthcare during the 12th Plan period. While the efforts in this direction are ongoing, the time needed before the benefits percolate down to the masses can be considerable. 
 
The Indian government continues to play an important role in running several safety net health insurance programmes for the high-risk population. However, a large percentage of the population stands vulnerable either with lack of adequate coverage or no coverage. Given the key challenges enumerated above and the escalating costs of healthcare and medication in the country, planning for a health insurance plan is a prudent financial decision.