The National Statistics Office data shows a big increase in health insurance and financing scheme coverage in the country between 2017-18 and 2025.Representational image. (Pixabay)The churn in India’s health spending burdenOut-of-pocket health spending in India has fallen from two-thirds to around 40% One of the most critical measures of health care’s financial burden on households is the share of out-of-pocket (OOP) spending in total health expenditure (THE) in an economy. India used to do badly on this front until recently. However, the last decade has seen a remarkable improvement on this front with OOP’s share in THE falling from 64% to 43% between 2013-14 and 2022-23.Which has led to a big improvement in India’s international OOP share rank International comparisons for OOP from the World Bank are available only for current health spending or spending that doesn’t create long-term assets such as purchase of equipment, construction of buildings, medical education. India’s OOP share in current health spending has decreased from 72% in 2000 (10th highest among 184 countries) to 44% in 2023 (47th highest among 192 countries). To be sure, OOP share in India’s total and current health spending are similar because around 90% of India’s health spending is current health spending according to the 2022-23 NHA report. India’s international ranking however may not be similar on both metrics if there is a big difference between countries’ current health spending share in total spending.A large part of fall in OOP burden can be explained by rising insurance coverage An examination of long-term trends in the National Health Account (NHA) data explains what has led to the fall in OOP share in THE: an increase in government and private health insurance share of health spending. Almost half of the fall in OOP share between 2013-14 and 2022-23 can be explained by rise in share of two heads: private health insurance spending and social security spending.Private health insurance spending share has almost caught up with its government counterpart Private health insurance’s share in THE was just 3.4% in 2013-14, almost half of the 6% for social security spending’s share. The difference had narrowed down to 9.3%-7% for social security and private health insurance shares by 2019-20, the latest pre-pandemic period. By 2022-23, the respective numbers were 9.9% and 9.2%.This is in keeping with wider evidence of growing health financing coverage in the country National Statistics Office (NSO) data shows a big increase in health insurance and financing scheme coverage in the country between just 2017-18 (July-June calendar) and 2025 (calendar year). The share of rural and urban population which had some kind of coverage increased to 3.4 and 2.3 times the 2017-18 level in this period. The rural and urban breakup also shows that the growth in coverage in rural areas is driven relatively more by government sponsored schemes than the growth in urban areas. While almost all the coverage in rural areas is made up of government sponsored schemes that is not the case in urban areas. Intuitively this makes sense as big-ticket government insurance programmes are targeted at the poor.ConclusionSo, more Indians are buying health insurance. This has led to a fall in their share of overall health spending burden. So far, so good. Or is it? Not all is well with growing footprint of private health insurance in India. This is what the second part of the series will discuss.Emergency health spending can push even relatively well-off households towards financial ruin. This is why health insurance is often described as one of the most important financial planning products. India and Indians have taken up to health insurance in a big way in the recent past. This is a welcome move. But recently released official statistics on healthcare spending raise a possible red flag vis-à-vis private health insurance coverage’s role in health care spending. This two-part series will examine this issue in detail. The first part will examine how rising insurance coverage has reduced health spending burden on Indians. The second part will examine higher costs in private insurance covered patients.Roshan Kishore is the Data and Political Economy Editor at Hindustan Times. His weekly column for HT Premium Terms of Trade appears every Friday.Number TheoryUnlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away! -Login Now!See Less