India Spends Too Little on Health, But It Also Spends Wrong: The Case for Primary Care

India's public expenditure on health has hovered around one and a half to two percent of GDP for most of the past two decades, low by international comparison and far short of the National Health Policy's own long-stated target of two and a half to three percent. This shortfall is widely cited, and rightly so, but the more consequential problem may not be the aggregate number but where that money, such as it is, actually goes. A health system can be underfunded and still misallocate the funds it has, and India's does both.

The National Health Mission, launched originally as the National Rural Health Mission in 2005, was meant to correct exactly this by strengthening the country's primary health infrastructure, sub-centres, primary health centres and community health centres, particularly in rural and underserved areas. Two decades on, staffing vacancies for doctors and specialists at these facilities remain high across most states according to the Rural Health Statistics published annually by the health ministry, diagnostic capability at the primary level is frequently limited to the most basic tests, and drug availability is inconsistent enough that patients routinely purchase medicines out of pocket even at facilities where treatment is nominally free.

The insurance turn

Against this backdrop, the 2018 launch of Ayushman Bharat's Pradhan Mantri Jan Arogya Yojana, offering hospitalisation cover of up to five lakh rupees a year to roughly forty percent of India's population identified as economically vulnerable, represented a significant political and administrative achievement, extending a safety net to households who previously faced medical bankruptcy from a single serious illness. Independent evaluations, including studies published in health economics journals, have found the scheme has measurably reduced catastrophic health expenditure among enrolled households for the specific hospitalisation events it covers, and its scale, hundreds of millions of beneficiaries, makes it among the largest publicly funded health insurance programmes anywhere in the world.

But insurance against hospitalisation costs, however valuable, addresses the financial consequence of illness rather than its prevention or early management. A scheme that pays for a coronary bypass does nothing to prevent the hypertension and diabetes that made the bypass necessary, conditions that a functioning primary care system, with regular screening, counselling and affordable medication, is far better positioned to catch and manage before they escalate into expensive tertiary interventions. India's burden of non-communicable disease, now the leading cause of death nationally according to Global Burden of Disease estimates, is precisely the category of illness where primary and preventive care yields the highest returns relative to hospital-based treatment, yet it is hospital-based treatment that has received the most visible and best-funded policy attention.

Why hospitals are politically easier than clinics

There is an obvious political economy explanation for this imbalance. A hospitalisation insurance scheme produces a tangible, attributable benefit, a family that would have been bankrupted by a heart attack instead receives free treatment, a story that can be told at a rally and verified through claims data. Strengthening a primary health centre's staffing and diagnostic capacity produces a diffuse, slow-accumulating benefit, fewer people developing severe illness in the first place, that is far harder to campaign on and even harder to measure within an election cycle. Health ministers and finance ministers, like their counterparts everywhere, respond to incentives, and insurance schemes photograph better than filled staff vacancies.

This is not to dismiss the genuine value of Ayushman Bharat, which deserves credit as a serious attempt to tackle catastrophic health spending, one of the most regressive burdens facing poor Indian households, since a single hospitalisation has historically pushed an estimated tens of millions of Indians below the poverty line each year according to National Sample Survey-based research. The scheme's critics sometimes understate this achievement in their eagerness to make the case for primary care. The honest position is that India needs both, and that the two are not substitutes: robust primary care reduces the demand for the very hospitalisations the insurance scheme finances, while the insurance scheme provides a backstop for the serious illness that even good primary care cannot always prevent.

What Health and Wellness Centres were meant to do

Ayushman Bharat itself, in its original conception, included a second and less publicised component: the upgrading of primary health sub-centres into Health and Wellness Centres offering an expanded range of services including screening for common non-communicable diseases, maternal and child health services, and basic mental health support, all closer to where people live. Progress on this component has been real but uneven, with several states reporting the conversion of tens of thousands of facilities, yet independent assessments including those by health policy think tanks have found that many converted centres still lack adequate staffing, particularly of the mid-level health providers the scheme was designed around, and that diagnostic and drug supply chains feeding these centres remain inconsistent.

The gap between the ambition of the Health and Wellness Centre model and its uneven execution illustrates a recurring pattern in Indian public health policy, where a genuinely well-designed programme is announced with adequate conceptual clarity but then underfunded relative to its stated scope, leaving implementation to labour against resource constraints the original design did not anticipate.

Redirecting the next tranche of spending

If India is serious about improving health outcomes rather than merely reducing catastrophic financial risk, the marginal rupee of new public health spending, and there will need to be many more such rupees if the country is to approach even its own modest spending target, should be weighted toward primary care: filling vacant positions at primary health centres with meaningful pay and rural service incentives, ensuring reliable supply chains for essential diagnostics and medicines at the sub-centre level, and building out community health worker networks, an area where the ASHA programme has shown real promise but remains underpaid and undervalued relative to the workload asked of it.

None of this diminishes the case for continuing and even expanding hospitalisation insurance; catastrophic illness will never be eliminated by prevention alone, and financial protection against it remains a legitimate and humane policy goal. But a health system that spends disproportionately on treating advanced disease while starving the infrastructure that could have caught that disease early is not merely inefficient, it is a choice, repeated budget after budget, to accept preventable suffering as the price of political visibility. Correcting that imbalance will require the less glamorous work of building institutions rather than announcing schemes, and it is overdue.