Healthcare Sector Sets Expectations for Union Budget 2026-27
India is gearing up for the Union Budget 2026-27. Stakeholders from various sectors are now focusing their attention on potential measures. These measures aim to strengthen economic resilience and improve citizen welfare in the coming year.
In the healthcare and insurance space, expectations are particularly high. Industry leaders want a sustained commitment to making quality healthcare accessible and affordable for all Indians.
Current Government Initiatives Receive Praise
We must acknowledge the proactive policy measures the government has already implemented. These steps support the health insurance sector and make coverage more affordable for people.
A major development occurred with the passing of the Sabka Bima Sabki Raksha Bill in 2025. This amendment to insurance laws now allows 100% foreign direct investment in the insurance sector.
This year, the government took another significant step. It removed the 18% GST previously levied on insurance premiums. This initiative directly reduces the cost burden on policyholders. Health and life insurance products become more affordable, especially for underserved communities across India.
Medical Inflation Emerges as Primary Challenge
Medical inflation stands as the most pressing concern today. Industry reports project it around 11.5% to 14% for 2025-2026. This rate significantly outpaces general inflation and ranks among Asia's highest.
Customers unfortunately bear the brunt of this inflation. Rising hospital bills, cutting-edge treatments, specialized medicines, and a heavier load of illnesses all drive up out-of-pocket expenses. Too many Indians find themselves without the care they desperately need.
Call for Increased Public Healthcare Spending
Given this challenging backdrop, we request the government to take specific steps in the upcoming Union Budget. Increasing public healthcare spending should be a top priority.
Currently, public health expenditure in India remains below global benchmarks. It even falls short of the National Health Policy target of 2.5% of GDP by 2025.
Enhancing the budgetary outlay for public health would deliver multiple benefits. It would strengthen primary care networks across the country. It would expand preventive services available to citizens. Most importantly, it would relieve significant financial stress on families.
Increased funding would also support the expansion of community health infrastructure in underserved areas. These areas are critical in bridging existing healthcare inequities that plague our nation.
Prevention Becomes the Need of the Hour
While increased public spending is absolutely imperative, complementary policy measures can accelerate progress. A shift toward preventive healthcare represents a proven strategy for reducing overall healthcare expenditure.
Evidence from India and globally demonstrates that prevention fundamentally alters healthcare economics. For instance, primary prevention programs in cardiovascular disease management saved 3.6 million disability-adjusted life-years annually. The incremental cost-effectiveness ratio was $469 per DALY averted compared to having no coverage.
The impact on hospitalization rates is equally significant. Individuals with Outpatient Department coverage show a 5% to 10% reduction in hospitalizations compared to those without such coverage. In practical terms, this means preventing the need for expensive hospital visits and prolonged inpatient stays.
Recommendations for Enhanced Tax Benefits
To harness this prevention dividend and encourage wider OPD coverage adoption, we recommend a specific budget measure. The government should introduce separate and enhanced tax benefits specifically for OPD services and preventive health screenings.
Currently, preventive health check-ups receive a modest tax deduction of ₹5,000 annually under Section 80D. This limit does not reflect the true value of prevention in reducing long-term healthcare costs for the nation.
Aging Population Adds Urgency
Demographic trends add further urgency to these recommendations. According to a recent KPMG report, India will account for 16% of the global population aged 60 and older by 2050.
The United Nations Population Fund predicts India's elderly population will double by 2050. It will actually overtake the number of children in the country.
As people live longer, the risk of chronic illnesses naturally increases. This reality makes preventive healthcare even more critical for national wellbeing. Regular health check-ups, early detection, and timely care can help seniors stay healthier longer. They can avoid serious medical complications later in life.
Policy measures that actively support preventive healthcare are therefore essential today.
Strategic Moment for Health-Led Growth
Looking forward, the Union Budget 2026-27 provides a strategic moment. It can reinforce a health-led growth framework that aligns with India's long-term vision. The vision of 'Insurance for All by 2047' requires concrete steps now.
The right combination of increased public investment, pro-insurance reforms, and a focused preventive approach can accelerate progress. It moves us toward universal health protection and financial security for all Indians.
As the budget announcement approaches, we look forward to constructive reforms. These reforms should foster greater affordability, inclusivity, and resilience in India's healthcare and insurance landscape.
