Government's Efforts Lead to Significant Decline in Out-of-Pocket Health Expenditure

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Steady increase in healthcare budget and targeted initiatives drive improvement in affordable healthcare.

In a major step towards enhancing accessible and affordable healthcare, the Government has successfully reduced Out-of-Pocket Expenditure (OOPE) as a percentage of Total Health Expenditure (THE) over the past five years. According to the latest National Health Accounts Estimates (2021-22), OOPE has dropped to 39.4% from 48.8% recorded in 2017-18, indicating a steady downward trend.

Rising Investments in Healthcare Infrastructure The government has prioritized healthcare funding, with the budget allocation for the Department of Health & Family Welfare (DoHFW) increasing by 85%, from Rs. 47,353 crore in 2017-18 to Rs. 87,657 crore in 2024-25. Additionally, the 15th Finance Commission has provided a substantial Rs. 70,051 crore in health grants through local governments, boosting grassroots-level healthcare infrastructure and accessibility.

Ayushman Arogya Mandirs: Expanding Primary Healthcare A significant highlight of the government’s strategy is the establishment of 1,75,418 Ayushman Arogya Mandirs (AAMs) across rural and urban areas. These centers, operational as of December 10, 2024, have transformed existing Sub-Health Centres (SHCs) and Primary Health Centres (PHCs) into hubs of comprehensive primary healthcare. AAMs offer an expanded range of services, including preventive, promotive, curative, palliative, and rehabilitative care, delivered universally and free of cost.

Flagship Programs for Affordable Healthcare The government has launched and strengthened mission-mode initiatives under the Ayushman Bharat umbrella:

Pradhan Mantri Ayushman Bharat Health Infrastructure Mission (PM-ABHIM): Launched with an outlay of Rs. 64,180 crore, PM-ABHIM aims to bolster primary, secondary, and tertiary healthcare systems while strengthening national institutions for disease detection and cure.
Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY): The scheme provides health coverage of Rs. 5 lakh per family annually for secondary and tertiary care hospitalization, benefiting approximately 55 crore individuals from 12.37 crore families. Recently, the scheme was expanded to include all senior citizens aged 70 years and above, regardless of income level.

Reducing OOPE with Free Drugs and Diagnostics To address the cost burden on patients, initiatives like the National Free Drugs Service and Free Diagnostic Service have been implemented. These programs ensure the availability of essential medicines and diagnostic facilities at public health facilities, significantly reducing OOPE for millions.

Further, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) provides quality generic medicines at affordable prices, while AMRIT Pharmacy stores have been established in select hospitals to make essential treatments and implants accessible.

A Positive Impact on Healthcare Affordability The decline in OOPE reflects the impact of these sustained efforts, which have enhanced both healthcare infrastructure and financial protection for citizens. The Ministry of Health and Family Welfare has also urged states to prioritize health sector funding, recommending an annual increase of at least 10% in their health budgets.

The government’s targeted investments and initiatives mark significant progress toward achieving universal health coverage and reducing the financial burden on citizens. With improved access to affordable healthcare services, especially for underserved populations, India continues to move closer to its goal of providing equitable and quality healthcare for all.

State-wise Out-of-Pocket Expenditure (OOPE) as a percentage of State Total Health Expenditure

S.No	State	Out of Pocket Expenditure % of State Total Health Expenditure
		2019-20	2020-21	2021-22
1	Assam	34.9	33.2	27.6
2	Andhra Pradesh	63.6	58.8	52.0
3	Bihar	54.3	50.2	41.3
4	Chhattisgarh	36.7	33.9	29.2
5	Gujarat	40.8	40.0	35.0
6	Haryana	45.5	42.2	37.5
7	Jammu and Kashmir	46.6	31.8	25.9
8	Jharkhand	64.7	61.8	47.5
9	Karnataka	31.8	30.3	25.4
10	Kerala	67.9	65.7	59.1
11	Madhya Pradesh	53.0	53.0	43.3
12	Maharashtra	44.1	42.4	38.1
13	Odisha	53.4	44.6	37.1
14	Punjab	64.7	62.3	57.2
15	Rajasthan	47.4	42.8	37.1
16	Tamil Nadu	44.2	36.9	34.6
17	Uttar Pradesh	71.8	70.2	63.7
18	Uttarakhand	35.8	33.4	26.9
19	West Bengal	67.1	65.1	58.3
20	Telangana	41.6	39.8	37.6
21	Himachal Pradesh	46.0	45.0	39.6