While the drop in out-of-pocket expenditure is welcome, India’s health accounting still has gaps in covering marginalised populations and their financial distress
The latest National Health Accounts (NHA) Estimates for India, 2022–23, made headlines because of the reported decline to 43.2% in out-of-pocket expenditure (OOPE) as a share of total health spending. When families spend less from their pockets during illness, it may denote better financial protection. But to understand what has really changed, one must further ask a basic question: how does India count health expenditure in the first place?
The Ledger Idea: Following the Money
It is important to map the flow of funds across health systems. By following the System of Health Accounts (SHA) 2011, India can compare its health spending with other countries. SHA looks at health spending through three basic questions: who finances care, who provides care, and what care is consumed.
For example, if ₹1 lakh is paid to a private hospital for its service, it is important to question where that money is from. If a government insurance scheme pays ₹80,000 and the patient pays ₹20,000, it is protection. If paid in full by the patient, it is household OOPE. This pattern of money flow must be accounted separately. The NHA aims to address this, and it is the ledger of India’s money spent for and in health.
Key Terms You Should Know
Total Health Expenditure includes both current and capital spending. Current Health Expenditure refers to health goods and services used in a particular year: consultations, hospitalisations, medicines, diagnostics, immunisations, public health programmes and administration. Capital expenditure is investment for the future: buildings, equipment, colleges, training and research.
OOPE is the riskiest form of health financing, where the money is directly paid by the households at the point-of-care. Catastrophic expenditure refers to health spending exceeding a defined share of a household’s income, consumption, or capacity to pay.
Many Data Streams
The NHA is not a survey, but a compilation exercise of various expenditure statements and data from the Union government’s statements, States’ health department accounts, and expenditures of other departments, National Health Mission’s financial monitoring reports, ESIC, PMJAY, IRDAI, National Sample Survey (NSS) data, Household Consumption Expenditure Survey data, GDP estimates, PMCARES audit reports, CSR portal data, AYUSH survey data, District Mineral Fund data, IQVIA pharmaceutical sales data, enterprise surveys, donor databases, population projections, government health insurance schemes, anonymized insurance claims and data from local bodies.
This diversity is both its strength, as it tracks the flow of money from all sources, and weakness, because not all sources are complete, timely, or aggregated.
The NSS Link: What Gets Counted, What Doesn’t
The most important source for private spending is the National Sample Survey (NSS). For NHA 2022–23, the main source for household OOPE remains the 75th round of NSS (with adjustments). The method is statistically sound for national-level estimations.
However, NSS covers the usual household populations, but does not fully capture people outside stable household arrangements such as convicted prisoners, residents in institutions including orphanages or rescue homes and floating populations. A worker sleeping at a construction site, a homeless person near a railway station, or a tribal hamlet of 150 people may not appear in sampling frame. This matters because ‘invisible’ populations are often the most vulnerable.
What Lies Outside NHA?
A food security scheme or sanitation programme may remain outside the scope of NHA, even if it improves health. Safe water, sanitation, nutrition, housing, clean air and education may prevent disease and shape health even before hospitals. Yet, these are not counted in NHA.
India’s informal care economy, such as payments to unregistered practitioners, local healers and borrowed medicines also remain weakly visible in official data. AYUSH and other traditional, complementary, alternative medicines are included to the extent they are captured through surveys and records. But informal practices remain a difficult accounting frontier.
Missing Granularity
India lacks a routine annual, all-State and district-level health accounting system. Districts differ widely in public healthcare utilisation, private sector dependence, treatment costs, and insurance coverage. National averages may hide a local crisis.
The NHA is scientifically grounded, internationally comparable and increasingly refined. But the NHA must be viewed as an estimate, not as a perfect ledger. The uncertainty inherent in measuring a vast and complex health system is not a flaw; it is simply the reality of the situation.
The Next Steps
India should now invest in better health accounting. The household survey samples should be expanded to reduce uncertainty in estimates and must be focused towards marginalised populations, smaller States, tribal areas and migrants. State governments must therefore pick up the State Health Accounts agenda more actively and eventually push towards district-level health expenditure tracking. Private sector, informal care, dental care, rehabilitation, long-term care and philanthropic spending need sharper capture.
Reduced OOPE is welcome. But the deeper achievement will come about when every health rupee in India can be traced clearly: who paid it, who managed it, who received it, and whether it protected the patient or pushed the family into debt.
