India’s out-of-pocket health spends drop, but treatment cost burden remains high: Swiss Re study

Swiss Re Institute's report highlights health protection mortality gap in Asia

Despite the share of out-of-pocket (OOP) spends as a percentage of total healthcare expenditure (HCE) falling across most Asian countries since 2014, most citizens feel the burden of medical expenses has become heavier, a Swiss Re Institute survey has found.

Indians’ out-of-pocket expenses constituted over 60 percent of their total healthcare expenses in 2014, which dipped to close to 50 percent in 2017. The current (2024) edition of the survey estimates that the share of out-of-pocket healthcare expenses has shrunk further to around 35 percent.

Yet, the perceived burden of medical expenses has gone up. “Most respondents reported feeling more burdened by medical expenses in 2024 due to lower disposable income growth, rising cost of medical treatments, low uptake of health insurance and insufficient public provision,” the study said.

The perceived stress score – measured by the survey – of Indian respondents rose over 1.2 points, the fastest among other Asian countries including China, Japan, Vietnam, Thailand and Singapore. “…highest change happened in India as low disposable income and inadequate public health insurance may be causing financial stress for the large segment of uninsured households.”

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Health protection gap across Asia widens

According to the study, the barriers to purchasing health insurance have led to the health protection gap (HPG) increasing by 21 percent compared to 2017 figures. In value terms, the health protection gap is pegged at $258 billion in premium equivalent terms in 2024, across the 12 surveyed Asian markets.

Swiss Re Institute defines the health protection gap (HPG) as the share of individual out-of-pocket (OOP) healthcare expenditure (HCE) not covered by insurance or government schemes that causes financial strain to households.

Most of the gap stems from emerging Asia. In absolute terms, China accounts for over half the region’s HPG, largely due to its large population as well as growing household healthcare spending on more modern treatments.

“However, our HPG estimates do not include the non-treatment gap due to affordability and availability issues and likely understate the level of vulnerability in all countries such as India, where many households cannot afford healthcare or it is not even available,” the report noted.

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The barriers to protection

According to Swiss Re, consumers want to buy more insurance but are held back by uncertainty over the wider economic environment. Perceived high-cost/low value for money of insurance and lack of product awareness constitute other barriers to purchase.

“To close protection gaps, insurers can consider a range of solutions such as bundling life and health insurance and preventative care value-added services (which can also contain the high costs of future complications). Finally, severity-based designs can match payouts with consumers’ actual medical and financial needs over their lifetimes more accurately than traditional critical illness insurance,” the report observed.