Universal Health Coverage in India Needs Rebalancing, Not Reinvention
Targeted shifts in spending, payment design, and governance could unlock faster gains without fiscal shock
A background note can be accessed here: India Improves Universal Health Coverage but Faces Persistent Out-Of-Pocket Burden
Dr. Rashmi Gupta: Managing Director, Felix Hospitals
SDG 3: Good Health and Well-Being
Ministry of Health and Family Welfare
India’s universal health coverage (UHC) service-coverage index has remained stuck at 55/100 since 2021, with slow improvement in essential health services. What structural barriers within India’s primary-care and public-health systems explain this plateau, and what feasible near-term interventions could help accelerate coverage gains?
India’s UHC service-coverage index remaining at 55/100 since 2021 reflects structural weaknesses in the organisation and prioritisation of primary care rather than a lack of schemes. Public spending continues to be skewed toward secondary and tertiary care – with nearly 65 percent of health expenditure directed toward these levels – leaving less than 35 percent for primary care, prevention, and early detection. This limits the system’s ability to deliver essential services at scale. Persistent workforce shortages further constrain reach, with 20–30 percent vacancies in key cadres such as Auxiliary Nurse Midwives (ANM) and rural medical officers. Fragmented service delivery and weak referral systems also undermine continuity of care, especially for chronic conditions.
Despite these constraints, near-term acceleration is feasible. Evidence from Ayushman Bharat–Health and Wellness Centres (HWCs) shows that states achieving over 80 percent functional HWC coverage saw 8–10 percent increases in service utilisation within two years. Expanding task-shifting to frontline workers, strengthening referral linkages through the Ayushman Bharat Digital Mission, and prioritising high-burden services – particularly non-communicable disease screening, which currently reaches only about 40 percent of eligible adults – could yield rapid improvements. Even a modest reallocation of an additional 1 percent of GDP toward primary care, in line with WHO recommendations, could generate disproportionate coverage gains within a three- to five-year horizon.
Despite major government schemes, a high proportion of Indian households continues to face catastrophic or impoverishing health expenditure. Given current gaps in outpatient coverage, drug affordability, and provider payment systems, what targeted reforms could most effectively reduce financial hardship without creating unsustainable fiscal pressure?
India’s challenge in financial protection lies not in the absence of insurance schemes but in their current design focus. Out-of-pocket expenditure still accounts for roughly 47 percent of total health spending – far above the global average of 18 percent – and pushes an estimated 55–60 million people into poverty each year. The dominant drivers are outpatient care and medicines, which together account for over 60 percent of out-of-pocket expenditure (OOPE), yet remain largely outside the scope of schemes like PM-JAY that focus on hospitalisation.
Targeted reforms can significantly reduce financial hardship without requiring large fiscal expansion. State-level evidence from Tamil Nadu and Rajasthan shows that universal free essential drug programmes can lower OOPE by 15–25 percent. Introducing standardised, bundled provider payments for high-volume outpatient services – such as diabetes and hypertension management – can curb unnecessary diagnostics and irrational prescribing while improving continuity of care. Expanding the reach of Jan Aushadhi, which currently meets only about 10–12 percent of total drug demand, would further improve affordability. Together, these measures could reduce catastrophic health expenditure from around 17 percent of households to below 10 percent, bringing India closer to SDG-aligned financial protection goals without destabilising public finances.
WHO data show widening disparities in both service coverage and financial protection across Indian states. What governance mechanisms, financing incentives, or accountability frameworks are needed to narrow these gaps and ensure that UHC progress is broad-based rather than concentrated in a few better-performing states?
WHO data reveal that UHC progress in India is increasingly uneven, with leading states outperforming lagging ones by 20–25 points on composite indicators. These disparities reflect differences in governance capacity and financing effectiveness rather than policy intent alone. Per capita public health spending ranges from ₹1,000–1,200 in weaker states to over ₹3,000 in stronger performers, while fund utilisation and programme execution remain inconsistent across districts.
Reducing these gaps requires shifting from uniform allocations to more outcome-oriented governance. Performance-linked fiscal transfers—where a share of central health funding is tied to measurable improvements in service coverage and financial protection—could realign incentives for lagging states. Strengthening district-level accountability through public dashboards tracking service delivery, fund utilisation, and patient outcomes would improve transparency and enable corrective action. Evidence from NITI Aayog’s Health Index shows that states exposed to competitive benchmarking improved key indicators about 1.5–2 times faster than those outside such frameworks. Combining conditional financing with technical handholding and real-time monitoring can ensure that UHC progress becomes broad-based rather than concentrated in a limited group of better-governed states.
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