Are the Poor Paying for the Healthcare of the Rich in India?

By Satpal Singh Johar

Abstract

This article exposes the structural injustice embedded in India’s healthcare financing, where the poor not only struggle to access basic medical services but also inadvertently subsidize the care of the affluent. Through a blend of case studies, empirical data, and policy critique, it reveals how government-sponsored insurance schemes, rising out-of-pocket expenditure, and profit-driven private healthcare systems deepen inequality. The narrative follows Govind, a working-class citizen whose insurance fails him in crisis, while Goswami, a wealthy executive, enjoys seamless care—paid for in part by the very premiums Govind contributes. The piece argues that India’s healthcare crisis is not one of resources but of political will and systemic design. It calls for the abolition of ineffective insurance models and a radical reorientation toward universal, publicly funded healthcare that prioritizes equity, transparency, and human dignity.

One-Line Teaser

Govind pays. Goswami heals. Healthcare in India isn’t broken—it’s working exactly as designed.

Same crisis. Two citizens. One system. Two outcomes

Are the poor paying for the health care of the rich in India?

Introduction

Healthcare is often equated with hospitalization and insurance coverage, but in reality, it encompasses much more—prevention, diagnosis, treatment, and recovery. While governments and insurance companies aggressively market health coverage as a solution, the actual state of healthcare in India tells a different story. The poor are trapped in a broken system where their contributions indirectly fund better healthcare for the rich, while they themselves struggle to access basic medical services.

We must try to understand the basic facts about health care. Health care of a nation cannot be limited to only hospitalization, as is being propagated by the governments or by marketing—I must say aggressive marketing by insurance companies and by other beneficiaries involved in the whole gamut.

The Broken Healthcare System

India’s healthcare infrastructure is in crisis, especially for economically weaker sections. Government hospitals, the primary choice for lower-income groups, suffer from staff shortages, inadequate facilities, and long waiting periods. Private hospitals, on the other hand, offer excellent care but at exorbitant costs, making them unaffordable for most.

The government launches insurance schemes with much fanfare, but they offer inadequate coverage and rarely meet actual medical expenses. Insurance providers thrive, hospitals profit, and the government takes credit, but for ordinary citizens, the struggle continues.

We would like to emphasize that healthcare covers prevention, diagnosis, treatment, amelioration, or cure of disease, illness, injury, and other physical and mental impairments in people. This involves day-to-day requirements. OPD services, testing, treatment, and hospitalization if required. Health care is not only covering people by insurance policies that do not provide adequate coverage from sickness to recovery.

In fact, the state (whether state or central) is just trying to get political mileage by releasing shoddy schemes that provide no service but only make insurance companies and other stakeholders richer.

Health care insurances are not about health care but just money-garnering exercises.

We will study further in the following pages.

The health care services being provided to the citizens are under great strain, and the poor are bearing the brunt of this terrible strain. In fact, healthcare is in a total mess, as the economically weaker sections or even low-income groups of society always prefer the government healthcare services for day-to-day requirements or in case of medical emergencies. Unfortunately, the conditions of government health care are in shambles, as it is either not available or in appalling conditions, and services have been deteriorating day-by-day due to a lack of proper doctors, poor management, low-quality services, and a lack of advanced medical facilities. The private sector medical facilities are exorbitantly costly and are not affordable for these poor people. 

A Tale of Two Patients: Govind vs. Goswami

The stark contrast between the experiences of two individuals highlights the inequities within the system.

Govind, a working-class citizen, spends nearly ₹8 lakh on his wife’s treatment despite being insured. His policy covers only ₹1 lakh, forcing him into debt and financial distress. His family faces continued uncertainty as even routine medical expenses drain his limited earnings.

Goswami, a wealthy corporate leader, has premium insurance coverage worth ₹30 lakh. His family receives top-tier medical care without financial strain. The total cost of his wife’s treatment—₹9 lakh—is easily absorbed by his insurance, leaving him worry-free.

A case study for a poor or middle-class family of five members.

One fine morning, Govind, who lives in a big city like Delhi and is head of a poor or middle-class family with five members, finds that his wife is unwell with a fever. He is worried, as taking her to a doctor will cost money. He gives her some known medicines, but the fever persists. He takes her to a nearby doctor. The doctor’s fee ranges from 500 to 1200. He somehow pays and takes the prescription to a chemist who asks for Rs 1000 as the cost of medicines. The doctor has recommended some tests costing around three thousand rupees.  He gets the tests conducted at a nearby pathology and presents reports to the doctor. The doctor goes through test results and recommends more medicines. He arranges that also, but the patient does not get relief and, after administering medicines for a fortnight, goes to the doctor again and pays fees again.

The doctor is clueless and recommends hospitalization for specialist care. He has already spent about 20 K and lost four days of work. Govind considers his options.

1. Government Hospital: No or minor charges but poor service. Long waiting period. Limited pathology and other testing.
2. Private Specialist Consultant: Expensive. All tests are to be conducted in private laboratories. Problem again in case of medical emergency.
3. Quack: He can go to a quack. He knows quack can do nothing except help his wife to say goodbye.
4. Alternate medical care like Ayurveda or homeopathy: His friends suggest many such doctors. He consults a few for some days.

Fever persists, and his wife is suffering with pains and other symptoms. The whole family is worried.

• Insurance Cover: He remembers that he has one government-sponsored insurance for which he has paid the premium, and the government also has paid part of it. He is glad that he has that insurance. He searches his cards and takes her to a hospital to get her admitted for treatment.
• Insurance Cover in Hospital: He has been going through casualty or OPD. They are ready to do it, and the doctor goes through his insurance coverage and is referred to a specialist. They recommend many tests, which his wife has undergone already, but the hospital does not recognize that. They recommend a CT scan or MRI. After paying a huge amount for testing, it is advised that she needs surgery. The hospital advises going for a seven-day package, which includes most of the hospitalization expenses. Cost of package: seven lakhs plus. They mention that time is short and the operation should be performed at the earliest.

 He gets the shock of his life when he is advised that his insurance cover is only for Rs 1 lakh and the estimated cost of testing, operation, and hospitalization will be around seven lakhs. This insurance coverage will be only enough for one or, at most, two days. They advise him to arrange at least ten lakhs, as the treatment will involve post-hospitalization expenses, and some eventual extra requirements may come up during surgery.

Govind is in a fix now, totally flabbergasted. He decides to sell or mortgage his only asset, a small piece of land.   He sells his assets of that small piece of land in his village and borrows money at high interest. He is able to muster about eight lakhs and gets his wife admitted.

• Every day in the evening he is presented a bill of several thousand rupees. The hospital takes good care, and the wife is saved or may pass away during all this mess. It can be either way. That is immaterial for this case. The fact is that he is in debt, and with four other members of the family to be taken care of, his useless IC is of no value.

Let us take another case. Goswami is the CMD of the company owned by him.

He is also head of a family of five. His wife reports sick. He is not worried, calls his family doctor, or takes her to a local doctor, pays fees, gets medicines, and gets all tests done. No worries. After all initial tests are done, the local doctors refer her to the hospital.

Goswami is not bothered and takes her to the best hospital. She is fully covered for 30 lakhs. The cost of pre- and post-hospitalization, including OPD, etc., works out to be 9 lakhs. Hospitalization is 7 L, all paid by the insurance company. Wife comes home well looked after. All other members are insured for similar amounts. No doubt Goswami has paid a hefty amount as a premium, but it is far less than the actual benefits enjoyed by him and his family. Whereas Govind has paid all the premiums but could not avail any benefits as expenses amounted to much more than the ones permitted by the premiums. Thus, the amount of premium paid by him was being utilized for the treatment of Goswami and his family.

This is the saddest story taking place in the country. Premiums paid by the poor for the health care expected are much more than the services they get, whereas the amounts paid by the rich as premiums are far, far less than the health care services they get. It is a case of total impropriety happening against the unprivileged class. It is not only unethical but also a great injustice. The state must intervene immediately and abolish health care insurance without delay and stop this malpractice.

The above is a very rough sketch of health care for the poor and lower middle, and Govind faces much more misery if health problems of other family members are to be mitigated, as his elderly parents or other family members may need some medical care or attention.

 I have only brought out one case out of a family of five. Other members may also need some major or minor medical treatment, for which they will need to go to a doctor or hospital. This is happening day in and day out. The stakeholders keep on talking at the top of their voices that they are doing their best. OPD treatment from doctors and hospitals can itself cost a fortune.

What is the state doing? Yes! The state is taking good credit for providing a worthless cover for the poor, which provides healthcare of no use to anyone. Hospitals are not even ready to admit patients with coverage below five lakhs. Hospitals have to take care of rich patients who have large coverage or can afford to pay.

What are the state-run and private insurance companies doing? They are very happily running to the banks to garner premiums from the very ignorant state and from poor customers who are running from pillar to post. They get their money from people or the state or companies (corporate) who want to show it as part of CTC and get absolved from responsibilities.

What is IRDA doing? Regulating or pimping? Have they ever published facts and figures? Never! Do they know what is happening in health care in India? If they know, they must advise that the condition is deteriorating every day and stop being only middlemen.

What are institutions like AIIMS doing? Silent

What are elected lawmakers doing? Silent and counting their perks?

What are doctors in hospitals doing?  All silent and meeting MRs to update their knowledge and count commission? Doctors in government organizations are poorly paid and overworked. Most of them are a disgruntled lot in government-run hospitals and are becoming victims of people’s ire. But silent.

What is Niti Aayog doing? Making graphs and PPT presentations and complementing each other but never telling the facts and giving solid and truthful advice to the state. We have never come across any worthwhile policy statement from them or advice to the state for taking care of healthy people.

There are many other stakeholders who need to reply but are quiet because most of them or all are beneficiaries in one way or another, as the system is non-existent or in shambles. 

There is one other most important stakeholder, and that is the people, and they are most affected and suffer.

What are people doing? Suffering, suffering, and suffering. People are running from pillar to post carrying their sick on cycles, in laps, or on shoulders, and begging for help.

Health care by medical insurance is a big fraud on people. The poor and middle class can hardly avail themselves of the benefits. They are only paying hefty premiums.

The most glaring data available for study

In 2020, India’s health insurance market was projected to grow by 10%, reaching a value of INR 576 billion. The demand surged due to increased awareness following the COVID-19 pandemic.

By 2025, the market size is estimated to be INR 1.01 trillion, with expectations to reach INR 1.67 trillion by 2030, growing at a CAGR of 10.6%. This growth is driven by rising healthcare costs, government initiatives, and increasing insurance penetration.

In India, health insurance premiums vary based on the type of coverage and the entity paying for it:

• Individuals: Premiums depend on the policy type, coverage, and insurer. Retail health insurance premiums have been rising, making quality healthcare less accessible. Reports indicate that 48.21% of patients pay medical expenses out of pocket.
• Central Government: The government funds schemes like Ayushman Bharat, covering Rs. 5 lakh per family per year, with the premium shared between the central (60%) and state (40%) governments.

State Governments: Various state-sponsored schemes exist, such as Mukhyamantri Amrutum Yojana in Gujarat and Dr. YSR Aarogyasri Health Care Trust in Andhra Pradesh, offering subsidized or fully funded health insurance.

India’s total healthcare expenditure in 2021-22 was ₹9.04 lakh crore, accounting for 3.83% of GDP. This includes spending by the government, the private sector, and households.

• Government Health Expenditure (GHE): ₹4.34 lakh crore, with 42% from the central government and 58% from state governments.
• Out-of-Pocket Expenditure (OOPE): ₹3.56 lakh crore, making up 39.4% of total health spending, showing the financial burden on households.
• Private Health Insurance: ₹66,975 crore, covering 7.4% of total healthcare costs.
• Hospital Stays: ₹38 of every ₹100 spent goes toward hospital stays, while medicines account for ₹16.

Adding everything together:

• Government Health Expenditure: ₹4.34 lakh crore
• Out-of-Pocket Expenditure: ₹3.56 lakh crore
• Private Health Insurance: ₹66,975 crore

This totals ₹8.96 lakh crore—very close to the ₹9.04 lakh crore official figure, considering additional spending on smaller healthcare sectors and administration costs.

The above figures clearly depict the terrifying state of affairs in this sector.

India’s healthcare spending has evolved significantly over the years:

• 2000-2010: Healthcare expenditure was relatively low, hovering around 2-2.5% of GDP. Public health infrastructure was underdeveloped, and private healthcare dominated.
• 2010-2020: Spending increased gradually, reaching 3.0-3.5% of GDP. Government initiatives like Ayushman Bharat and increased insurance penetration contributed to growth.
• 2020-2025: Healthcare spending surged due to the COVID-19 pandemic, reaching 3.83% of GDP in 2021-22. The government allocated ₹90,958 crore for healthcare in the 2024-25 budget, reflecting a 12.96% increase over the previous year.
• Future Trends: India aims to increase public health spending to 2.5% of GDP by 2025, but challenges like high out-of-pocket expenses (47% of total medical costs) and gaps in insurance coverage persist.

Globally, healthcare spending varies significantly across countries:

• United States: Spends 17.8% of GDP on healthcare, the highest globally.
• European Nations: Countries like Germany (11.8%), France (11.9%), and UK (10.2%) allocate substantial portions of GDP to healthcare.
• India: Healthcare spending is 3.31% of GDP, lower than many developed nations.
• China: Spends 5.37% of GDP, reflecting its growing healthcare sector.
• Low-Income Countries: Many African nations spend less than 5% of GDP on healthcare.

It is worth informing all the august readers that the insurance market in India was about Rs 400 billion in 2020 and is likely to be Rs TWO trillion by 2030. Staggering amount! It’s shocking that so much is being paid to insurance companies, but people are running from pillar to post even to get basic treatment for viral fever. Add to this the amount being spent on testing and medicines by ordinary persons through OPD or self-medication or through quacks. The total amount will be much more than India’s total budget. But all are silent. With this much money, we can provide TOTAL HEALTH CARE TO INDIA, PAKISTAN, BANGLADESH, SRI LANKA, MYANMAR, and much more. The biggest question is where this huge amount of money is going without providing any succour to the people of India just because the state has washed its hands by saying it is not the government’s responsibility.

Surprisingly, the state, be it the central government or the state governments or the public sector or private entities, is ready to pay hefty premiums but not ready to organize health care. The general health of the nation is wanting for 100 percent health care for the masses, be they rich, poor, or middle class. Total healthcare spending by way of OPD expenses, medicines, testing, etc., is another more than 100 billion every year. We are spending 600 billion USD in one form or another, but results are almost nil.

The Harsh Reality

This imbalance points to a troubling truth: premiums paid by the poor subsidize the health benefits of the rich. The poor pay high insurance costs but receive insufficient returns, while the wealthy enjoy substantial benefits that far exceed their premiums.

Where Is the Money Going?

India’s insurance industry is booming, yet millions struggle for basic healthcare.

• The health insurance market was valued at ₹400 billion ($5 billion) in 2020 and is projected to reach ₹2 trillion ($25 billion) by 2030.
• Despite this massive financial flow, hospitals reject patients with low coverage, forcing them into debt while insurance companies profit.

IRDAI’s Role: Regulation or Silence?

The Insurance Regulatory and Development Authority of India (IRDAI) is responsible for overseeing health insurance policies, yet it has failed to address the suffering of the poor.

• IRDAI inspections have flagged delays in claim settlements, high deductions, and insurers failing to offer adequate coverage.
• While IRDAI has introduced cashless healthcare reforms, they primarily benefit insured individuals with high coverage, leaving the poor struggling for basic treatment.

What Needs to Change?

• IRDAI must enforce transparency—publishing reports on how insurance funds are used and who benefits.
• Government must redirect funds—instead of paying hefty premiums, invest directly in public healthcare infrastructure.
• Hospitals must be held accountable—no patient should be denied treatment due to low insurance coverage.

India must abolish ineffective healthcare insurance schemes and prioritize direct healthcare investment. Instead of funneling public funds into insurance premiums, the government should

• Strengthen public hospitals by improving facilities, staffing, and availability of essential medicines.
• Establish a transparent healthcare system that prioritizes treatment over profits.
• Ensure universal healthcare access, removing financial barriers for the poor.

Conclusion

The fact remains that it is the poor and underprivileged who are paying for the healthcare and medical requirements of the rich even though there is no shortage of funds.

Healthcare in India is not failing due to lack of resources—it is failing due to mismanagement and profiteering. The system must shift focus from insurance-based models to direct healthcare investment, ensuring equitable medical access for all citizens, regardless of financial status. Until then, millions like Govind will continue to suffer while healthcare remains a privilege reserved for the wealthy.

Should insurance be the gateway to basic care—or should health be guaranteed without conditions?

Satpal Singh Johar

Satpalsingh1944@yahoo.com

esspess@gmail.com 

 #HealthcareInjustice #IndiaHealthCrisis 

#PublicHealthNow #InsuranceInequity

References

1. Hindustan Times, “The Burden of Health Care on India’s Poorest”
2. The Swaddle, “India’s Rich Outlive the Poor by 7.5 Years”
3. BMC Public Health, “Do Poor People in Poorer States Pay More for Healthcare?”
4. National Health Accounts Report 2021–22, MoHFW
5. IRDAI Annual Report 2022–23
6. Oxfam India, “Inequality Kills: India Supplement”
7. PIB, “India’s Health Insurance Market to Reach ₹2 Trillion by 2030”
8. Drishti IAS, “Optimizing India’s Healthcare System”
9. OECD Health Data (2023)
10. Press Information Bureau, Union Budget 2024–25
11. The Wire, “Ayushman Bharat and the Myth of Universal Healthcare”
12. The Hindu, “Only 4% of Indians Covered by Adequate Health Insurance”
13. Scroll.in, “Why India’s Healthcare Remains Hostage to Private Interests”