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The Indian healthcare system has greatly improved recently. Governments now emphasize timely, affordable, and quality healthcare for all citizens through insurance. Over the past 25 years, India transitioned from reliance on government-funded hospitals to a more comprehensive approach.
Health Insurance and Assurance
A survey by the Ministry of Health and Family Welfare shows that insurance penetration in India is improving, with 41% of households having at least one member covered under health insurance. The government launched the Ayushman Bharat PM-JAY scheme on 23rd September 2018, offering ₹500,000 per family each year to 12 crore BPL families. This scheme provides cashless hospital facilities. On 11th September 2024, it was extended to senior citizens aged 70 and above. States like West Bengal and Rajasthan also have their own health assurance schemes, Swasthya Sathi and Bhamashah Swasthya Bima Yojana (BSBY), respectively.
While the majority of individuals benefited from government-sponsored insurance schemes, approximately 2% were covered by healthcare insurance provided by their employers. According to the National Family Health Survey 2019-21, in urban areas, 46.9% of individuals relied on the public health sector, while 51.8% depended on private hospitals and clinics. In rural areas, 46.4% of individuals relied on the private health sector.
Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY)
The PM-JAY scheme has been recognized as a transformative initiative in the Indian healthcare sector. Since its inception, it has swiftly included senior citizens (over 70 years old), as well as poor and marginalized sections of society under health insurance coverage. These groups have faced significant hardships due to the burden of medical expenses. As of April 1st, 2024, more than 404 million PM-JAY cards have been issued. Additionally, there have been nearly 86 million authorized hospital admissions, and 17,434 hospitals across 27 states and 6 Union territories have been empanelled.
Health Insurance Landscape in India
The health insurance industry is categorized into three main types: 1) Government-sponsored, 2) Group, and 3) Individual. Government-sponsored schemes account for 45%, group insurance also covers 45%, and individual insurance represents 10% of the insured population. The market share is distributed among Public Sector General Insurance companies (38%), Private Sector General Insurance companies (32%), and Stand-alone Health Insurance companies (30%).
In FY23-24, medical insurance contributed 40.29% to the non-life insurance business. The health insurance segment grew by 19.50% compared to FY22-23. Health and General insurance companies had underwritten a total health insurance premium of ₹1,07,681 crore during FY23-24, which was 20.32% higher than the previous year. Premium shares among Group, Individual, and Government businesses were 51.68%, 38.55%, and 9.77%, respectively.
The total health insurance premium collection has increased by more than double over a period of four years, from FY19-20 to FY23-24. According to the IRDAI report for FY23-24, health insurance covered 572.87 million lives.
Healthcare System in India
The healthcare system has experienced changes with the introduction of private healthcare providers. Household income has increased during this period. Personal and family insurance coverage has also grown in India, and many people now consider medical insurance necessary. The preference for private hospitals over government-run hospitals has risen over the last few decades.
The Union budget for FY25-26 has allocated ₹99,859 crore, which is an 11% increase compared to the actual estimates for FY24-25. The budget also extended the Ayushman Bharat scheme to gig workers. Additionally, the allocation for Ayushman Bharat Pradhan Mantri Jan Arogya Yojna (AB PM-JAY) has been increased by 21% to ₹9,406 crore over the Revised Estimate for FY24-25.
Healthcare system in India through numbers
In 2020, India had a physician density of 7.265 doctors per 10,000 people, which represents a slight improvement from the figure reported in 2018 but remains significantly lower than the density observed in 1991. In contrast, China had a physician density of 23.873 per 10,000 people, and most Asian countries have surpassed India in this regard. Western countries typically exhibit densities exceeding 30 doctors per 10,000 people.
Including AYUSH practitioners, the overall density appears somewhat better. As of November 2024, India had 13,86,145 allopathic doctors. The country also boasted 780 medical colleges and offered 1,18,137 MBBS seats.
India’s healthcare delivery system was estimated at ₹6.3 trillion as of FY23-24. This is projected to grow at a rate of 9%-11% to touch ₹8.6 trillion by the end of FY26-27.
Key numbers of India through tables and charts
Health expenditure in India has progressively increased over the years. In 2005, the health spending per capita was $27; by 2022, this figure had risen to $80. Notably, India’s per capita health expenditure in 2022 is comparable to China’s per capita health spending in 2005. This trend suggests a proportional relationship between increasing per capita income and rising per capita health expenditure.
Additionally, out-of-pocket expenses have significantly decreased from 73.1% in 2005 to 46.0% in 2022. During the same period, Government domestic health expenditure as a share of total health spending has doubled, growing from 20.1% to 39.1%.
The following chart illustrates that health expenditure has not increased at the same rate as GDP growth since 2000.
The “Sources of Health Expenditure” chart shows that government transfers have steadily increased, reducing out-of-pocket spending. Voluntary prepayment (personal medical insurance) has also grown in the past decade.
Key numbers of China through tables and charts
China’s GDP per capita is nearly 5 times higher than India’s, and its health spending per capita is 8 times higher.
China’s health spending as a GDP percentage has increased since 2005.
According to the WHO numbers, the number of hospital beds per 10,000 population in India was 16 in 2021 but the same in China was 50 in 2020.
Medical Tourism: the big revenue churner
India is also a top global player in terms of medical tourism. Medical Tourism Index 2020-21 placed India at the 10th position. Medical tourism is poised to grow at a rate of 14-15% as the visa regulations were eased in the Union Budget 2025-26. Industry reports estimated that in 2025 the medical tourism market in India is valued at $8.71 billion. This market is expected to almost double to reach $16.21 billion by 2030. Medical tourism is increasing again after the COVID setback.
Currently, South Asian countries account for most medical tourists in India.
Residents of the United States can opt to receive medical treatment in India at a significantly lower cost than in the United States. For example, an angioplasty procedure that costs $57,000 in the United States can be performed in India for around $3,300.
Conclusion
The healthcare system in India has undergone considerable improvement and growth over the last two decades. The healthcare infrastructure faced significant challenges, making it difficult to access quality and timely healthcare in the country. The involvement of private healthcare service providers has altered the healthcare landscape. Although basic indicators such as the number of beds and physicians per 10,000 population remain lower compared to China and Western countries, efforts are being made towards improving the availability of quality healthcare. The number of medical seats in India has increased, and the reach of health insurance has expanded. Additionally, government-sponsored schemes have achieved broader coverage.
References
- Union Budget 2025-26 Analysis, PRS Legislative Analysis
- Portal of Ayushman Bharay Pradhan Mantri Jan Arogya Yojana
- Annual Reports of Insurance Regulatory and Development Authority of India (IRDAI)
- National Family Health Survey, (NFHS – 5), 2019–21, India Report
- Indian Insurance Market, https://policyholder.gov.in/indian-insurance-market
- World Health Organization, Data, https://data.who.int/indicators/i/CCCEBB2/217795A
- World health statistics 2024: monitoring health for the SDGs, sustainable development goals, https://www.who.int/en/publications/i/item/9789240094703
- World Bank databank, https://data.worldbank.org/indicator/SH.MED.PHYS.ZS
- India’s medical tourism poised for expansion with relaxed visa rules, Business Standard
- Medical Tourism Index (MTI), Overall MTI Ranking
- Apollo December 2024 Investor Presentation, Apollo Hospitals Investor Relations
- Swasthya Sathi, https://swasthyasathi.gov.in/
- Bhamashah Swasthya Bima Yojana, portal of Department of Medical, Health & Family Welfare, Govt. of Rajasthan
- Top Health Insurance Statistics Of 2025, Forbes India, September 2024
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