The Alarming Truth: Why India's Health Expenditure Data Fails to Capture the People's Burden

India's healthcare landscape presents a troubling paradox: while official government figures suggest a declining burden of out-of-pocket (OOP) health expenditure, the lived reality for millions of Indian households tells a far grimmer story. This stark divergence between data and reality isn't just an academic debate; it represents a profound and often devastating financial strain that pushes countless families into poverty annually.

It's time to confront the uncomfortable truth behind the numbers.

For years, the National Health Accounts (NHA) reports, often cited by policymakers, have painted an optimistic picture. These reports, based on a "production approach" that tracks health spending by facilities and providers, indicate a consistent fall in OOP expenditure as a percentage of total health spending—from a substantial 62.6% in 2014-15 down to 47.1% in 2019-20.

On the surface, this might suggest a healthcare system that's becoming more affordable and accessible to the common citizen, aligning with the government's stated goals.

However, delve deeper into demand-side data—information gathered directly from households about their actual spending—and a dramatically different narrative emerges.

Comprehensive surveys like the National Family Health Survey (NFHS) and various rounds of the National Sample Survey Organisation (NSSO) paint a picture of persistent and, in many cases, escalating financial distress due to healthcare costs. These surveys capture the true direct expenses borne by individuals, from doctor's fees and medicines to diagnostics and hospital stays, often including informal payments missed by supply-side accounting.

The methodological gap is crucial.

The NHA's supply-side approach primarily accounts for the expenditure of health facilities. What it often misses are the myriad informal payments, the costs of over-the-counter drugs, transport to facilities, and the significant indirect costs that collectively form a heavy burden on families. Household surveys, by directly asking individuals about their experiences, are far more adept at capturing this holistic and often hidden financial reality.

The human cost of this discrepancy is immense.

High out-of-pocket expenditure is a notorious driver of impoverishment, pushing millions below the poverty line each year. It leads to what is termed "catastrophic health expenditure," where medical costs consume such a large portion of a household's income that it jeopardizes their ability to meet other basic needs.

The NFHS-5 data starkly illustrates this, revealing that a shocking 48.4% of urban households and 42% of rural households resort to borrowing money or selling assets just to cover their healthcare bills. This isn't just an expense; it's a financial catastrophe.

Further evidence comes from the NSSO's 75th Round, which showed a significant increase in average OOP per hospitalisation episode.

Between 2014 and 2018, this figure surged from Rs 14,935 to Rs 32,733 in urban areas, and a substantial Rs 16,596 in rural areas, demonstrating that the burden is not only persistent but also growing in real terms. Moreover, the problem is not uniform across the nation; some states, such as Uttar Pradesh and Madhya Pradesh, report staggering OOP percentages well over 70% of total health expenditure, indicating severe regional disparities and deeper structural issues.

Globally, the World Health Organisation (WHO) recommends that out-of-pocket expenditure should ideally not exceed 15-20% of total health expenditure to shield citizens from financial ruin.

India's official NHA figure of 47.1% is already dangerously high, but if the more accurate demand-side data were truly reflected, the actual percentage would be significantly higher, placing India far from global best practices for universal health coverage.

The "hard truth" is that despite official narratives, access to affordable healthcare remains a distant dream for many in India.

The continued reliance on potentially misleading NHA data risks creating policies that are detached from the ground realities, failing to address the true financial vulnerabilities of its citizens. For any meaningful progress towards universal health coverage and financial protection, India desperately needs to acknowledge and act upon accurate, comprehensive data that truly reflects the lived experiences of its people.