With the Union Budget 2026-27 on the horizon, fresh academic research has amplified demands for a substantial boost in public healthcare expenditure. The study underscores how economic and social transformations are driving medical costs upward and exacerbating disparities in access to treatment.
Decades of Data Reveal Healthcare Spending Drivers
The research, titled Impact of Determinants of Healthcare Expenditure in India: The ARDL Bounds Testing Approach, was published in the International Journal of Advanced Research in December. It scrutinizes national data covering over three decades, from 1991 to 2023, as reported by PTI. The analysis delves into the factors influencing healthcare expenditure, encompassing both overall per-capita spending and household out-of-pocket payments.
Key Findings on Health Expenditure Determinants
The study identifies that per capita income, secondary education enrolment, urbanisation, inflation, life expectancy, and per capita health spending exert a significant long-term impact on both total healthcare expenditure and household out-of-pocket payments. Notably, it reveals that life expectancy and education correlate with lower per capita total health expenditure, whereas inflation, income growth, and urbanisation exhibit a negative relationship with per capita out-of-pocket spending.
Structural Challenges in India's Healthcare Financing
These findings illuminate the dual nature of India's health financing system, pointing to an urgent need for policy interventions that bolster public funding to alleviate financial pressure on households. The research highlights a structural issue within India's healthcare financing model: limited public investment paired with a heavy reliance on private, out-of-pocket payments. This imbalance, the study contends, particularly endangers rural households and economically weaker sections, exposing them to high medical costs, treatment delays, and financial hardship.
"Without stronger public financing, the burden of illness continues to fall most heavily on those least able to afford it," the paper asserts.
Industry Leaders Advocate for Policy Reforms
Industry experts argue that this evidence reinforces the case for policy reform. Amit Mookim, Board Director and CEO of Immuneel Therapeutics, remarked, "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."
He emphasized the necessity for GST rationalisation on manufacturing inputs, import-duty relief, insurance coverage for one-time curative therapies like CAR-T, and regulatory clarity aligned with global standards.
Mayank Singhal, Vice Chairperson and Managing Director of PI Industries, added that the budget could accelerate India's transition into a global innovation hub through enhanced R&D support, AI-driven research platforms, and incentives for integrated drug discovery. He also stressed the importance of predictable fiscal and regulatory policies to boost competitiveness in innovative drug development.
