India’s healthcare system, which is unique because of its high accessibility and affordability, driven largely by neighbourhood clinics and small to medium hospitals, is under serious threat because of chronic under-investment in public health by the government, insurance-driven price controls and unregulated foreign investment in health sector, according to the Indian Medical Association (IMA).
In the document, “IMA’s blueprint for a healthier India”, which was recently released as a policy document, IMA points out that the minimum government allocation for health sector alone should be 2.5% of the GDP and that separate provision should be made for the provision of drinking water, sanitation and such social determinants of health
The document is a summation of the concerns IMA has regarding the nation’s health sector, as well as policies that the organisation thinks that the nation should embrace for an equitable and accessible healthcare system, says V.R. Asokan, former national president of IMA. The document is being circulated by IMA amongst the Members of Parliament.
India’s overall health spending (public and private) is currently estimated to be 3.8% of its GDP, much lower than the average health spending by low-and-middle income nations, which is 5.2% .
Sustained underfunding of public sector facilities and the rapid growth of the private sector has contributed to rising out of pocket (OOP) costs on health care for households. Of this, a significant share, almost two-thirds of OOP expenses, are for purchasing Outpatient care, especially medicines.
Because households bear the burden of the high OOP health expenses in India, more than 55 million people are impoverished each year on account of expenses for ill health, says IMA.
In 2024, the government (Union and States) expenditure on health was ₹4.95 lakh crore, while the private health expenditure was ₹9.3 lakh crore, of which OOP expenditure was ₹8 lakh crore, while health insurance provided for Rs. 1.32 lakh crore.
In order to achieve the goals of Viksit Bharat 2047, allocation to the health sector should go up to at least 5% of the GDP by 2030, the document says.
Unregulated inflows
IMA points out that FDI has brought capital and technology into Indian healthcare, but unregulated inflows could undermine medical autonomy and alter the character of the Indian health system. It says that unregulated FDI and cross holdings across hospitals, diagnostics, insurance, pharma sector and medical equipment could lead to a situation where business interests could begin to influence clinical decisions, commercial exploitation of patients happen, pushing up healthcare costs.
Apart from tighter government controls over FDI and strengthening domestic capital mobilisation, IMA urges the Union government to set up a National Healthcare Fund, akin to other government funds for specific purposes, so that it could support healthcare entrepreneurs and enable hospital expansion. This would ensure that Indians retain strategic ownership and governance of the healthcare ecosystem and that clinical decision making will always remain with doctors, independent of commercial influence.
IMA also seeks to distinguish between Universal Health Care, which is all about equitable access to quality health care for all and Universal Health Coverage, which ensures that everyone has financial protection against healthcare costs.
It holds that the Government should be primarily responsible for guaranteeing universal health care. IMA advocates a tax-based system of health financing. The public sector should be the primary provider, supplemented by strategic purchase from private hospitals. Intermediaries such as insurance companies and TPAs should not control healthcare delivery, it says.
IMA warns that insurance-led models risk pushing India toward the US healthcare model of high cost, inequity, and exclusion.
It assesses AB-PMJAY to be a scheme which was well-intentioned, but which has serious flaws. Inadequate funding and unscientific package rates have made the scheme totally unviable for small and medium private hospitals, which are being forced to deliver services at sub-par costs.
IMA suggests that government hospitals should be funded directly by the Government and PMJAY should be exclusively used for strategic purchase from private sector with pricing of services based on a scientific system, It points out that the current allocation for PMJAY – ₹9,406 crore – is grossly inadequate
Published – December 18, 2025 07:15 pm IST
