Despite recording the second-highest per capita government health expenditure in India at ₹4,338 in 2021-22, residents of Kerala shoulder an outsized burden of healthcare costs.
Published Dec 10, 2024 | 7:00 AM ⚊ Updated Dec 11, 2024 | 1:33 PM
Healthcare spending in South India.
India’s healthcare landscape presents a stark dichotomy, where significant government spending coexists with substantial out-of-pocket expenses borne by households.
The latest National Health Accounts (NHA) report for 2021-22 reveals that India’s Total Health Expenditure (THE) stood at ₹9.04 lakh crore, of which 48% was funded by the government.
Despite this, households contributed ₹3.56 lakh crore—or 39.4% of THE—directly from their pockets. This out-of-pocket expenditure (OOPE) reflects the share of healthcare costs borne by individuals at the point of care. The costs include hospital fees, diagnostic tests, and medicines, and underscores persistent gaps in accessibility and affordability.
OOPE continues to define India’s healthcare system, disproportionately affecting families with limited financial resources. On average, Indians spent ₹2,600 per person out of pocket for healthcare in 2021-22. For many, this translates to financial hardship, often leading to catastrophic health expenditures or debt.
Health expenditure.
The burden is starkly visible in states like Kerala, where OOPE accounts for over half of the total health spending at ₹7,889 per person annually, reflecting a heavy reliance on private healthcare. Conversely, Tamil Nadu demonstrates how robust public health infrastructure can mitigate these costs, reducing OOPE to just ₹2,280 per capita—one of the lowest in the country.
Regional disparities further highlight the uneven nature of healthcare financing in India. For example, Kerala, despite its leadership in per capita government health expenditure at ₹4,338, still has the highest OOPE of ₹7,889 due to extensive private healthcare utilization.
Whereas Bihar, with the third largest population in the country, has the lowest per capita OOPE, ₹984.
South Indian states, known for some of the best healthcare systems in the country, present diverse approaches to healthcare expenditure and its impact on households. Kerala, with the highest per capita government health expenditure, paradoxically records the country’s highest out-of-pocket expenditure (OOPE), reflecting its heavy reliance on private healthcare.
Tamil Nadu, by contrast, has effectively minimised OOPE, making healthcare more accessible and affordable.
Telangana strikes a balance, with moderate government spending and manageable OOPE, supported by initiatives like Aarogyasri. Karnataka seems to have taken a middle ground, with relatively low OOPE and a mix of public and private contributions.
Meanwhile, Andhra Pradesh highlights a high household burden despite significant government investment, underlining the challenges of reducing reliance on private healthcare.
Kerala, long lauded for its healthcare achievements, presents a paradox. Despite recording the second-highest per capita government health expenditure in India at ₹4,338 in 2021-22, its citizens shoulder an outsized burden of healthcare costs.
NHA shows that OOPE in Kerala constituted 59.1% of the state’s total THE amounting to ₹28,400 crores—an average of ₹7,889 per person, and government spending accounted for ₹15,618 crores (32.5%)—an average of ₹4,338 per person.
This makes Kerala the state with the highest per capita OOPE in the country, overshadowing its neighbors like Karnataka, where the per capita OOPE was a modest ₹1,933.
For a family of four in Kerala, this translates to an annual healthcare cost of approximately ₹32,000 from household savings, or around ₹2,666 per month —a figure that far exceeds the financial strain seen in other states.
It should be noted that the state is also spending around ₹17,352 annually for a family of four, or ₹1,446 per month for a family.
While the government invests heavily in healthcare infrastructure and services, the reliance on private healthcare facilities, which are significantly costlier than public alternatives, remains pervasive.
Since 2013-14, there has been a consistent trend of increased government spending failing to proportionally reduce OOPE. OOPE as a share of THE rose from 65.7% in 2020-21 to 59.1% in 2021-22—a slight improvement but still a glaring issue.
The state spends 5.2% of its gross state domestic product (GSDP) on healthcare, the highest in the region. However, this spending does not translate into reduced household costs.
By contrast, Tamil Nadu, with a lower GSDP health spending ratio of 2.5%, has effectively minimised OOPE through robust public healthcare programs and infrastructure.
In Karnataka, the average per capita OOPE for healthcare in 2021-22 was ₹1,933 annually. For a four-member family, this would amount to approximately ₹7,732 per year or ₹644 per month.
This means that a typical family in Karnataka spends around ₹7,732 annually from their pocket on healthcare, covering doctor visits, medicines, diagnostic tests, and hospitalizations not fully covered by government schemes.
Meanwhile, the government spends ₹3,259 per person annually to support healthcare services in Karnataka. For the same family of four members, it spends ₹13,036 per year, or ₹1,086 per month on a family.
In 2021-22, Karnataka’s THE amounted to ₹50,956 crores, accounting for 2.6% of its GSDP. Of this, ₹21,837 crores (42.9%) came from government spending, with the remaining ₹19,672 crores (38.6%) borne by households as OOPE.
On average, every individual in Karnataka spent ₹1,933 out of pocket for healthcare—a manageable amount compared to states like Kerala, where the per capita OOPE was ₹7,889.
Imagine Karnataka’s healthcare system as a family with an annual income of ₹1 lakh, symbolising the state’s total health expenditure. This family relies on two main sources to cover healthcare costs.
Tamil Nadu stands out as a leader in reducing OOPE in India, thanks to its robust public healthcare infrastructure and effective government programs.
In 2021-22, Tamil Nadu’s THE was ₹50,779 crore, equivalent to 2.5% of its gross state domestic product GSDP. Of this, the government contributed ₹26,257 crore, accounting for 51.7% of THE.
The remaining ₹17,554 crore (34.6%) were borne by households as OOPE, significantly lower than Kerala’s 59.1% OOPE share.
On a per capita basis, Tamil Nadu’s OOPE was ₹2,280 annually—far below Kerala’s ₹7,889.
For a typical four-member family, this translates to an annual OOPE of ₹9,120 or approximately ₹760 per month, making Tamil Nadu one of the most affordable states in India for healthcare.
Tamil Nadu spends ₹3,410 per person annually on healthcare through government initiatives. For a family of four, this translates to ₹13,640 per year or approximately ₹1,136 per month.
Telangana, one of India’s youngest states, has made notable strides in establishing a balanced healthcare system that integrates public and private sectors.
While government spending on healthcare is substantial, households still bear a considerable share of the costs. The state’s healthcare profile reflects progress in some areas while highlighting the challenges of reducing financial burdens on its citizens.
On a per capita basis, Telangana’s OOPE was ₹2,449 annually—higher than Tamil Nadu but significantly lower than Kerala. For a four-member family, this translates to ₹9,796 annually or approximately ₹816 per month.
Telangana spends ₹3,007 per person annually on healthcare through government initiatives. For a family of four, this translates to ₹12,028 annually or approximately ₹1,002 per month.
In 2021-22, Telangana’s THE was ₹24,753 crores, constituting 2.2% of its gross state domestic product GSDP. Of this, government health expenditure (GHE) accounted for ₹11,427 crores (46.2% of THE), demonstrating the government’s strong involvement.
The remaining ₹9,305 crore (37.6%) came from households as out-of-pocket expenditure (OOPE), while private entities and external donors contributed the rest.
Andhra Pradesh’s healthcare landscape highlights a dual reality: While the government invests significantly in healthcare, households still bear a substantial financial burden.
The state’s OOPE remains one of the highest among the southern states, emphasizing the need for more comprehensive public healthcare interventions.
In 2021-22, Andhra Pradesh’s THE was ₹39,067 crores, constituting 3.4% of the state’s gross state domestic product GSDP. Of this, government health expenditure (GHE) accounted for ₹16,582 crores 42.4% of THE. However, households bore ₹20,320 crores (52% of THE) as OOPE, with per capita OOPE standing at ₹3,834 annually.
For a four-member family, this translates to ₹15,336 per year or approximately ₹1,278 per month.
The state government spends ₹3,129 per person annually on healthcare. For a four-member family, this translates to ₹12,516 annually or ₹1,043 per month.
In 2021-22, India’s healthcare system reflected significant OOPE and government involvement. On average, each Indian spent approximately ₹2,600 annually out of their pocket for healthcare, amounting to ₹10,400 per family of four (or ₹866 per month).
The government, on the other hand, contributed ₹3,300 per person towards healthcare, totaling ₹13,200 for a family of four, or ₹1,100 per month. Government spending accounted for 48% of total health expenditure (THE), while households bore 39.4% of the costs through OOPE.
India’s total health expenditure (THE) was approximately 3.83% of the country’s GDP.
(Edited by Majnu Babu).
