Underfunding, insurance pressure and unregulated FDI putting India's healthcare at risk, warns IMA

IMA pointed out that government spending on health is far below what is needed. India’s total health spending stands at about 3.8% of GDP, compared to an average of 5.2% in other low- and middle-income countries. The association has demanded that government health spending alone should be increased to at least 2.5% of GDP, with separate budgets for drinking water, sanitation and other social factors that directly impact health outcomes.

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With public hospitals remaining underfunded, patients are forced to rely heavily on private healthcare, leading to high out-of-pocket expenses. Nearly two-thirds of this spending goes towards outpatient treatment, mainly medicines. IMA said this financial burden pushes over 55 million Indians into poverty every year due to health-related expenses.

In 2024, total government health expenditure stood at Rs 4.95 lakh crore, while private spending reached Rs 9.3 lakh crore. Of this, out-of-pocket spending alone was Rs 8 lakh crore, with health insurance covering just Rs 1.32 lakh crore. To meet the goals of Viksit Bharat 2047, IMA told The Hindu that health spending must rise to at least 5% of GDP by 2030.

The association also cautioned against unregulated foreign direct investment (FDI) in healthcare. While FDI has brought in capital and technology, IMA warned that unchecked investments and cross-holdings across hospitals, diagnostics, insurance, pharma and medical equipment could allow business interests to influence clinical decisions and push up treatment costs.

IMA has called for stricter regulation of FDI and the creation of a National Healthcare Fund to support Indian healthcare entrepreneurs and hospital expansion. This, it said, would ensure that ownership and decision-making remain with Indian doctors and healthcare professionals, free from commercial pressure.

The doctors’ body also stressed the difference between Universal Health Care and Universal Health Coverage. While coverage focuses on financial protection, universal health care is about equitable access to quality treatment. IMA said the government must take primary responsibility for ensuring universal health care through a tax-based system, with public hospitals as the main providers.

Warning against insurance-led healthcare models, IMA said such systems could push India towards a US-style model marked by high costs and inequality. It described the Ayushman Bharat–PMJAY scheme as well-intentioned but flawed, citing poor funding and unscientific package rates that make it unviable for small and medium hospitals.

IMA suggested that government hospitals should receive direct funding, while PMJAY should be used only to purchase services from private hospitals at scientifically determined rates. It also pointed out that the current PMJAY allocation of Rs 9,406 crore is grossly inadequate.

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