India's wider Insurance coverage isn't buying affordable care | Analysis

India has spent the last decade narrowing one of healthcare's most stubborn gaps. Out-of-pocket spending, once the single biggest driver of medical poverty, has fallen from 62.6 per cent of total health expenditure in 2014-15 to 39.4 per cent in 2021-22, according to National Health Accounts estimates released by the Union Health Ministry. Government health spending has grown correspondingly, more than tripling in per capita terms over the same period.
By the numbers, that is real progress. But for a growing number of patients, insurance in hand does not mean an affordable bill in the end, and industry voices argue the reason lies less in how much of India is insured than in what that insurance actually covers.

The coverage illusion

India now counts roughly 58 crore insured citizens, per the latest IRDAI Annual Report. But the composition of that number matters more than its size. Only about 6 crore hold individually purchased retail policies; the remainder are covered through government schemes or employer-sponsored group insurance, which typically ends the moment a person changes jobs. Insurance penetration, premiums as a share of GDP, has actually slipped, from 4 per cent in FY23 to 3.7 per cent in FY24, roughly half the global average of 7 per cent. Health insurers processed 3.26 crore claims last year with an 8 per cent repudiation rate, IRDAI data show.

Where the gap bites

He points to the moment of decision as the real pressure point. "A patient may need treatment, but may not have the liquidity to pay a large amount upfront. Even when part of the cost is insured, the remaining out-of-pocket amount can lead to delayed treatment," Gupta said. "Affordable healthcare therefore needs a broader financial support system. This includes flexible payment options, faster eligibility decisions and protection products designed around specific treatment risks."

Financing as the missing layer

That diagnosis has spawned a small but fast-growing category of Indian fintechs offering point-of-care medical financing, converting a large upfront bill into an EMI a patient can manage in real time, at the clinic, rather than through a separate loan application later. CarePay, founded in 2023, is among a handful of players, alongside firms such as SaveIN, operating in this space, partnering with clinics across categories including fertility, dental and dermatology, and working with bank and non-bank lending partners to underwrite the credit.
"That is the gap CarePay was built to address. By embedding financing at the point of care, we help turn a large upfront bill into a payment plan patients can manage," Gupta said. "Insurance remains vital for major medical risks, but much of India's elective and specialised care is still paid for out of pocket. Closing that access gap requires more than coverage, it requires simple, transparent financing available at the moment a patient makes the treatment decision."
It is worth noting this is an industry participant's account of a gap his own company is built to profit from, a point that does not invalidate the underlying data, but is relevant context for readers.

The global read

India's experience carries weight beyond its own borders. As emerging economies race to expand insurance-based universal health coverage, the model favoured by most international UHC frameworks, India's trajectory suggests that expanding the insured population alone will not close the affordability gap for an entire tier of care. Elective and specialised treatment, often dismissed as discretionary, increasingly sits at the centre of what patients actually want covered and cannot get covered.
Whether the fix is broader mandated benefits, regulatory reform of exclusion lists, or private financing layers filling the space insurance leaves behind remains an open policy question, one India's regulators, and other UHC-building nations watching its progress, have yet to resolve.