Can a bigger budget shrink the bill at the bedside? Public health financing as a route to lower out-of-pocket spending in India

Out-of-pocket payments still finance approximately two-fifths of India’s health spending and push an estimated 55 million people into poverty each year. However, the past decade tells a more hopeful story: as the government’s share of total health expenditure rose from 28.6 to 48%, the out-of-pocket share fell from 64.2 to 39.4%. This Perspective argues that the most dependable lever India holds against household health costs is its own budget, and that the country’s own experience, rather than theory, makes the case. It sets out why public financing lowers out-of-pocket spending through free provision, pooled prepayment, and the state’s power as a price-setting purchaser, and why government health expenditure, at approximately 1.9% of gross domestic product, falls short of the 2.5% target India set for itself. The article identifies the largest and most neglected burden in outpatient care and medicines, which absorb approximately two-thirds of out-of-pocket spending yet lie outside the flagship hospitalization scheme, and points to a proven domestic remedy in Tamil Nadu’s pooled free-medicines model. Reaching 2.5% of GDP is necessary but not sufficient; how the money is spent, and how cleanly it is purchased, determines how much reaches families.