New Study Calls For Higher Allocation For Public Health To Lower Household Medical Expenses

Ahead of the Union Budget 2026-27, a new study has added empirical weight to long-standing demands for higher expenditure on public healthcare, 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 in December last year, 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 (OOP) payments.

Using advanced econometric modelling, the authors argue 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 OOP expenses.

The findings suggest that India’s development trajectory itself is structurally pushing healthcare costs upward — disproportionately impacting families dependent on private care.

The study highlights the persistent “dual nature” of India’s health financing system — limited public spending alongside heavy reliance on private OOP expenditure.
This structure, the authors note, entrenches inequality, with rural and lower-income households facing a greater risk of catastrophic medical costs and delayed treatment.

“Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it,” the paper concludes.
Industry leaders say the study reinforces the urgency of structural healthcare and innovation-centric reforms.

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, Mookim said.
Echoing the call for policy support across the life sciences value chain, Mayank Singhal, Vice Chairperson and Managing Director, PI Industries, said the forthcoming Union budget represents an opportunity to accelerate India’s progress towards becoming a global innovation hub.

Innovation-led growth through enhanced R&D (research and development) investments, AI-enabled research platforms, and sustained support for integrated drug discovery should be a key priority, Singhal said.

“Continued backing for domestic manufacturing of APIs and intermediates, including through the PLI framework, will be critical for strengthening supply-chain resilience.

“Fiscal measures such as higher weighted deductions for R&D, a patent box regime, and streamlined regulatory approvals can significantly improve India’s global competitiveness in innovative drug development,” he said, emphasising that a stable, predictable, and innovation-friendly policy environment will be instrumental in positioning India as a preferred destination for end-to-end drug discovery and development.

The study argues that statistical evidence supports higher public investment — particularly in primary care, preventive services, and risk-pooling mechanisms — to reduce household financial stress and improve system resilience.
India’s public health spending remains low compared with peer economies, while OOP payments remain a leading cause of financial distress, especially among the economically weaker sections.

With non-communicable diseases rising and the population ageing, the research strengthens the case for making healthcare and life-sciences innovation a central priority in the upcoming budget.