Ahead of Budget, study calls for higher public health spending

Ahead of the Union Budget 2026–27, a new Indian research study has added fresh empirical weight to long-standing demands for higher public healthcare spending, warning that socio-economic factors are increasingly driving medical costs and deepening inequality in access to care.

The study, Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach, published in the International Journal of Advanced Research, analyses national data from 1991 to 2023 to assess what shapes healthcare expenditure in India — both total per-capita spending and household out-of-pocket payments.

The authors find that income growth, urbanisation, education levels, inflation and life expectancy all have statistically significant long-term effects on healthcare spending.

The research shows that rising incomes and rapid urbanisation are closely linked to higher healthcare consumption, while education and longevity also influence spending patterns, particularly private out-of-pocket expenses. The findings suggest that the development trajectory is structurally pushing healthcare costs upward, thereby disproportionately impacting families dependent on private care.

“In India, government health expenditure has historically remained around 3 to 4 per cent of GDP far below global norms and the 5 per cent benchmark for developing countries. Therefore, households bear around 60 to 70 per cent of total health costs out of pocket, one of the highest out-of-pocket shares globally. This heavy reliance on households’ private spending causes households to financial risk and worsens inequalities in access to care. Empirical studies on Indian states indicate that greater public health spending can improve outcomes like infant mortality and life expectancy although these results depend on spending efficiency and equity in distribution,” the study said.

The study suggested that policymakers should not only focus on how much expenditure is done on health, but on how effectively it is allocated. It recommended allocating resources toward cost-effective interventions such as maternal, child health services, vaccination programmes and community-based care is likely to generate better outcomes and a more equitable health system.

Amit Mookim, Board Director and CEO, Immuneel Therapeutics, said, “As India advances its ambition to become a global hub for next-generation biotherapies, the Union Budget 2026–27 can play a defining role in improving access, affordability and innovation in cell and gene therapy. Broader rationalisation of GST on manufacturing inputs, targeted import-duty relief, insurance frameworks for one-time curative therapies like CAR-T, innovative financing models and a predictable regulatory pathway aligned with international standards will be critical to expanding patient access and ensuring sustainable innovation.”