India’s health financing needs to count the cost of ordinary visits

A health-financing policy can protect families from a large hospital bill and still leave them paying substantial amounts over repeated ordinary visits. India’s National Health Accounts put out-of-pocket spending at 39.4 per cent of total health expenditure in 2021–22, down from 64.2 per cent in 2013–14. That is an important change in who finances health spending. It does not measure the share of households protected against high costs or identify which treatment they can afford to obtain. The next question is what primary care can do to reduce recurring payments and the cost of reaching a usable service. Health ministry’s National Health Accounts release · PRS analysis of the 2026–27 health grants

The denominator tells only part of the story

The share of spending paid out of pocket can fall because household payments fall, because government or other spending rises, or through a combination. It is also calculated across people who face different health needs and access. PRS reports out-of-pocket spending at 45 per cent of current health expenditure in 2021–22, a measure that excludes capital expenditure and therefore has a different denominator from the 39.4 per cent figure. Neither ratio shows whether the same people are being treated or whether a household forgoes care when it cannot pay. Health ministry’s National Health Accounts release · PRS analysis of the 2026–27 health grants

The difference matters when comparing reforms. Expanding hospital cover can reduce the risk of a rare, expensive event. Providing reliable medicines and diagnostics in primary care can reduce a smaller cost incurred repeatedly. Assume a household faces six outpatient visits in a year, each costing ₹350 for medicines, ₹250 for tests and ₹150 for transport. That totals ₹4,500 before time away from work. If an accessible public facility covers the medicine and test costs on four of those visits, the assumed saving is ₹2,400 even if transport stays the same. These are illustrative amounts, not national averages or promised benefits.

Free on paper can still be expensive to use

A household may need another trip if a facility is closed, a medicine is unavailable or the relevant worker is absent. The cost can include wages forgone, childcare and transport as well as the eventual payment. When people cannot predict whether a visit will succeed, they may choose a more expensive private option or delay the visit. Assessing financial protection therefore requires measuring the availability and reliability of services. The Indian Public Health Standards provide a benchmark for facilities. The value of meeting a standard has to be checked against what people can actually obtain. Health ministry’s parliamentary reply on public health standards · PRS analysis of the 2026–27 health grants

There is also an equity effect. A salaried worker with paid leave may bear less of a financial penalty for a repeat visit than a person paid by the day. A household far from a diagnostic centre may spend more getting to the test than buying it. Looking only at the formal fee would miss those costs. Compare the total cost per resolved episode across locations and income groups, including people who report a need and never make a visit. Otherwise falling spending can be mistaken for financial protection when some people have simply stopped seeking care.

The case for focusing first on catastrophic bills

The strongest argument for prioritising hospital protection is that a single serious admission can exceed years of ordinary visit costs and force a family to borrow or sell assets. Pooling that risk can have a large welfare benefit. The case for strengthening primary care sits alongside it. Reliable first contact and access to routine services address a different part of household spending, and can help people reach further treatment when they need it. A budget decision should show how the marginal rupee changes spending, access or outcomes in each setting. A single financing share cannot settle the allocation. Health ministry’s National Health Accounts release · PRS analysis of the 2026–27 health grants

For the provider, staffing and supply chains are recurring obligations. An allocation for a building or new equipment cannot ensure a test is available six months later. A performance comparison should distinguish spending on assets from funds to operate them, and show whether they are used at the planned level. A facility that serves more patients reliably may cost more in the budget while saving households repeated private payments and time. Those effects belong in the same evaluation, with the impact on quality and unmet need reported explicitly. Health ministry’s parliamentary reply on public health standards · PRS analysis of the 2026–27 health grants

A financing decision can also change where patients are treated. If a first-contact provider cannot supply a basic service, patients may travel to a higher-level hospital or use another provider. That raises costs for the household and can draw staff time away from patients who need specialist care. An evaluation should follow the patient across facilities so that a low cost at one site does not simply reappear as a bill or waiting time elsewhere. A completed referral and a resolved episode are stronger outcomes than a facility visit in isolation. Health ministry’s parliamentary reply on public health standards

There is a reason to report the distribution of payments as well as their mean. A reduction in ordinary costs for many families can leave a smaller group still facing serious hardship, while a policy protecting the largest admissions may do little for widespread smaller costs. A budget can legitimately pursue both objectives. It needs evidence on who receives the protection and who continues to pay, particularly in areas with few alternatives. PRS analysis of the 2026–27 health grants

A more informative financial protection test

Track what patients pay for medicines, tests and travel, how many visits are needed, what care was forgone and whether access differs by household income or location. Connect those observations to facility operating hours and supplies. Compare changes for similar populations where service improvements arrive at different times, allowing for changes in local costs and demand. An improvement is convincing if households with a comparable need can get the service more predictably while paying less out of pocket. That evidence would show what a lower national spending share means in everyday care. Health ministry’s National Health Accounts release · PRS analysis of the 2026–27 health grants · Health ministry’s parliamentary reply on public health standards