The past, present, and future of health economics in India : Journal of Family Medicine and Primary Care

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The past, present, and future of health economics in India

Singh, Nihaal1,; Shukla, Rushikesh1; Acharya, Sourya1; Shukla, Samarth2

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Journal of Family Medicine and Primary Care 11(12):p 7513-7516, December 2022. | DOI: 10.4103/jfmpc.jfmpc_2266_21
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Health Economics is an amalgamation of two very distinct schools of thought. One is heavily reliant on trying to describe what health means to an individual and what factors influence health, both at the individual and at the community level. The other ties healthcare to its monetary statistics and tries to point out how tweaking certain modalities can influence the final cost that the individual seeking healthcare services has to bear. We will talk about both these lines of investigation in the sections that follow.

Health economists since times immemorial have faced an important dilemma. The dilemma being that health economics is remarkably distinct from its parent branch, which is Classical Economics. This situation arises due to the often constant involvement of third-party players like insurance companies and hospital financing infrastructure. This, combined with issues such as the vagueness of involved metrics, viz-a-viz. QALY (Quality Adjusted Life Years), which are very commonly used to measure healthcare statistics makes it increasingly difficult to trust the computations that are churned out when the numbers are run.

Factors such as the presence of third-party insurers, external intervention, barriers to entry, inevitability of uncertain outcomes, and heavy government involvement make it extremely difficult to consider healthcare in the same domain as other goods and services. Thus, a very distinct perspective is required to evaluate healthcare from the economic lens.

It is important to note that healthcare is conceptually very distinct from other goods that are dealt with in Classical Economics. This is due to the fact that healthcare can be incredibly subjective in terms of success. And this subjective viewpoint can vary from individual to individual and community to community. To avoid making erroneous calculations and coming to conclusions that are based on a standardized metric, we must ensure that healthcare data are collected and processed with due context always analyzed with respect to the individual or community in question.

Health economics in the Indian context

There have been several factors that have caused a massive growth of the healthcare sector in India. Some of these are increase in population, increased life-expectancy, affordable private healthcare, more spare income, and Government’s emphasis on improving healthcare.

This growth means that Indian Healthcare is now valued at over a massive $40 billion. And out of this more that 80% of spending is in private sector and by means of money-at-hand. India thus, has various growth opportunities along with challenges that India has to tackle on its way to success. Medical tourism has become one of the most popular destinations in India, with a $2 billion business. Many super-specialty hospitals, highly qualified medical staff, telemedicine, and government incentives all help to boost health tourism in the country. The huge population, diverse genetic pool, and wide range of disorders make it ideal for clinical trials and personalized medicine research.[1]

By 2030, India will become the most populated nation on this planet, and approximately 200 million Indians would be at minimum 60-years-old. The expanding ageing demographic, on the other hand, is putting a huge strain on the healthcare infrastructure. With the growth in infectious and behavioral illnesses, urbanization has put a strain on national infrastructure.

A few of the major issues is that healthcare in India is primarily paid for out of cash; over 3/4th of hospitals and almost half of hospital beds are privately owned. The lower classes cannot pay private health insurance since it is mostly private.[1]

Our healthcare expenditure is insufficient; overall healthcare spending accounts for only 4.1 percent of gross domestic product (GDP), the lowest among the Brazil, Russia, India, China and South Africa (BRICS) countries. In India, there is a difference in the providing of resources and infrastructure among various socio-economic regions. In comparison to the WHO’s assessment of the global averages of 3,960 beds/million people, India has roughly 860 beds/million inhabitants.

Conditions that most severely burden Health Economics in India


A place like in India where you have less to eat and more glucose in one’s body creates an irony that by itself remains unsolved. Thousands of cases of explosively high numbers of patients with uncontrolled diabetes are handled and often lead to the worst prognosis. The number of patients suffering from diabetes in India, mainly type 2, is rising each day. It also raises the cases of ophthalmic issues and requirement of dialysis machines. As dreadful this disease is, the more dreadful its outcome on economics is. It holds a major chunk of India’s economy to deliver dialysis machines to every Primary Health Centre and government aided hospitals. Even after adjusting for GDP per capita, our regression study found that direct diabetes expenses are closely and positively linked with a country’s GDP per capita, and that the United States stands out as having exceptionally high expenditures.[2]

Dialysis is not just expensive for the individual itself but it is a major monetary setback even for the country’s GDP. The cataract and glaucoma caused by the same needs equal monetary help for treatment. Carelessness of the patient and the doctors leading to such preceding health concerns require a stronghold in the money. India has to report every case to the WHO which sets up a margin of how the work needs to proceed. The work to reduce its monetary dependence needs to be started at the level of doctors and government aided hospitals itself. Diabetes being 13th most dangerous cause of death in India, each diabetes case needs to be examined well and its related prognosis needs to be set so that we do not suffer from its allied morbid progression like renal failure in case of diabetes. Renal failure being another burden for Indian economics. The dependence of patients on dialysis machines needs to be reduced as well. The next step that needs to be taken is at the state level and to improve prevention methodologies.


Ischemic heart disease being the sixth most common form of disability-related death in India and hypertension being the most important etiology of it. The prevalence of hypertension in the Indian subcontinent however is due to various factors like poor nutrition due to poverty, low air quality, and the proportion of people who are aware of risk factors like smoking. According to data released in 2017, hypertension, often known as high blood pressure, affects nearly three out of ten Indians and is responsible for 17.5% of all deaths and 9.7% of disability-adjusted life years (DALYS) in the country. DALYS are a unit of measurement that measures the entire disease burden as well as the years lost owing to disability, illness, and premature mortality.[3] Obesity had the largest socioeconomic status gradient, followed by diabetes and hypertension.[4]

The associated treatment is also very expensive. The government of India provides the poor with generic medicine for the same. The ischemic heart damage associated with hypertension also bridges a lot of problems along with them. The diagnosis of such heart disease requires a lot of expensive interventions and also the cost of a basic ECG has to be taken into account. Stenting being the most expensive intervention whereas anticoagulant and statin therapy being another one. Even after all of the medicine provided by the doctors and the government at dirt cheap costs, the prognosis of such illness is not always good. The increase in death in relation to this demands an increase in incineration plants and dumping grounds. Bio-waste management is also required. All of this increases the monetary demand from the government and hence bending the economy more towards the decline.


The burden of tuberculosis (TB) in India outweighs any other factor that droop the monetary use in health economics India. According to a paper published in The Lancet, TB-related fatalities cost India $32 billion per year, or over Rs 2 lakh crore.[5] The extreme poverty commonly linked with TB is one of the most important characteristics of the disease’s burden in India. Despite the availability of free TB diagnosis and treatment services, persons with TB may become impoverished.[6]

For impoverished TB patients, getting nominally free TB testing and treatment facilities can be costly. The Indian government puts innumerable efforts in building vaccines for TB, giving vaccines to people for free, preventing TB by cleanliness, despite all the effort, it goes in vain if people are not educated enough to understand the situation. Cost of BCG vaccination surges high due to the huge population. The reporting of all cases has to be mandatorily done to the WHO and hence, WHO creates a lot of pressure on the country for it to escape such lethal and highly contagious disease. The progression of TB to lung abscess or any pulmonary condition may also be very difficult to treat. The reports of drug-resistant TB have been on rise for a long time in India. No specific treatment modality or regime offers 100% better prognosis to this.

Burden due to overpopulation

The population, though not having an ill effect on the health of an individual, has major concerns when it comes to economics for the country. Feeding the population of the country and looking after its wellbeing and its unfurling illnesses is not a piece of cake and surely requires a handful of money. With each additional member aged 60 years and above, the likelihood of catastrophic health expenditures increases: 33% of households with one 60+ member and 38% of households with 2 or more 60+ members experienced catastrophic health expenditures, compared to only 20% of households with all members under the age of 60 years.[7]

The major burden carried by the population is the spread of infectious diseases like TB, COVID-19. Both of them explained further. Spread of such highly contagious diseases piles up a plethora of patients under latency. With such a skyrocketing population, waste management becomes an undefeatable issue. For that matter, not just India but many other Asian countries suffer from the same issue. Malnutrition also accompanies the population. The protein energy malnutrition burden has also seen a rise in numbers in India. The fact that per square meter of space shared by a set of people is not enough to suffice the entire population. The majority of patients with lung disorders in India are chronic obstructive pulmonary disorders or a vast number of people suffer from exaggerated allergy in India. Most of these illnesses are in dire need of clean air. The pollution in India is indexed at peak. All such factors need special attention from the government and enough funding has to be made to engulf them all. The more the population, the greater will be the monetary support required. Increase in morbidity associated with population-related disease, will lead to rise in the requirement of better end care facilities. More hospice care will hence require more economic grasp from the country. The grasp of which is really loose in a country like India.

How COVID-19 affected health economics in India

The COVID-19 pandemic was a global catastrophe that caused a massive and ugly strain on the healthcare infrastructure. However, during the second wave of the infection, no country was as strained for medical resources, as India.

India’s corporate medical industry has made a considerable contribution, accounting for over 2/3rds of inpatient treatment. Several private hospitals began their preparations in reaction to the COVID-19 outbreak, which included considerable expenditures in infrastructure for treatment, as well as appropriate equipment and increased labor. Furthermore, owing to prolonged treatment times for other diseases and elective procedures, clinics, and laboratories have seen a significant drop in income, as the outbreak is expected to reduce private institutions’ operating profit by nearly half this year.[8]

The medical industry, in collaboration with the federal and local agencies, developed a sophisticated reaction strategy to counter the outbreak, including the establishment of specialized COVID-19 clinics, exclusion facilities, and technology-enabled identification of resources. The Government of India also used software to efficiently control the pandemic, developing a variety of programs at the federal and local strata. The Aarogya Setu smartphone app, which helped with symptomatic detection and tracing of contacts, was commonly deployed across India.[8]

We saw unprecedented number of hospitalizations and deaths following the pandemic and the wave upon wave of rise in infections was not mitigated by loose government regulations. This must be a wake-up call to authorities in the nation to make better policies for future situations that keep in mind the fragile state in which it puts the Healthcare Economy.

What can be done to improve the state of health economics in India

Health technology assessments (HTAs) are an essential tool for determining the economic worth of medical treatments across the world. It is utilized to divide healthcare spending in an effective and equitable manner. There is no centralized medical reimbursement system in India, no payee-willingness levels, no general statement, regulations, or standards for health economics assessment models. Furthermore, healthcare delivery is not consistent.[1]

Nevertheless, HTAs could still be used to navigate general compensation of medical procedures, to advise valuation process for new drugs or drug categories, and to assist healthcare authorities in developing clinical practice framework to ensure uniformity in delivery and scientifically backed treatments for peak effectiveness.

The majority of health economics research in India are partnerships with scholars from other countries. In India, there is a dearth of understanding of the ideas and methodologies for performing pharmaco-economic analyses. In India, there is presence of a few practitioners of healthcare economic analysis working in education and professional institutes, although these are small communities of expertise. On a national basis, we need educational sessions and the exchange of best practices. This will aid in the provision of information as well as a reservoir of qualified academics.[1]

The outcome of an investigation is determined by the data. As a result, the input obtaining process for these studies must be reliable. In India, policies for healthcare evaluation models must be authorized by the administration. There is still a lot of work to be done, even though the maiden pharmaco-economic recommendations have seen development and delivery to consumers.

Thus, delivering upon better data collection and processing, institutions, both private and public can make better and more informed decisions that will make it easier for the healthcare sector, as well as the individual gain benefit out of situations. This is only possible if everyone involved makes a collective effort in the spirit of improving the Health Economy of the nation.


Health Economics is a discipline that has only been vaguely defined and intensely debated. In order to make better decisions that are data-driven and justifiable by number crunching, we must partake in extensive research and planning at both national and international levels. This will enable us to make bold and substantial claim about how to better manage situations that strain the Healthcare Infrastructure and the associated financial institutions.

There are some diseases that affect the individual and the collective more so and in higher frequencies than the others, and it is imperative that we target them and isolate them. Following Pareto’s distribution, 20% of work will solve 80% of our problems. With this spirit, we must move forward by being both optimistic and rational. This will help us tackle the problems posed to us, such as the recent COVID-19 pandemic much more efficiently and economically.

Financial support and sponsorship


Conflicts of interest

There are no conflicts of interest.


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2. Seuring T, Archangelidi O, Suhrcke M. The economic costs of type 2 diabetes:A global systematic review. Pharmacoeconomics 2015;33:811–31.
3. Yadavar S. High blood pressure killed 1.6 mn Indians in 2016, but most are unaware of its dangers. 2021. Available from: [Last accessed on 2021 Nov 13].
4. Corsi DJ, Subramanian SV. Socioeconomic gradients and distribution of diabetes, hypertension, and obesity in India. JAMA Netw Open 2019;2:e190411 doi:10.1001/jamanetworkopen. 2019.0411.
5. Available from: [Last accessed on 2021 Nov 13].
6. Muniyandi M, Thomas BE, Karikalan N, Kannan T, Rajendran K, Saravanan B, et al. Association of tuberculosis with household catastrophic expenditure in South India. JAMA Netw Open 2020;3:e1920973 doi:10.1001/jamanetworkopen. 2019.20973.
7. Lee TJ, Saran I, Rao KD. Ageing in India:Financial hardship from health expenditures. Int J Health Plann Manage 2018;33:414–25.
8. India's healthcare sector transformation in the post-COVID-19 era. KPMG. 2021. Available from: [Last accessed on 2021 Nov 13].

COVID-19; economics; finance; healthcare; India

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