The Cost and Feasibility of Universal Free Healthcare in India

Recent discussions regarding the potential for a nation like India to provide 100% free healthcare have brought to light a critical question: what is the cost of state-funding healthcare for India's 1.324 billion population?

Understanding the Global Average Cost of Healthcare

To understand the potential cost, it's important to look at what the global health landscape considers to be the average cost of treating an individual. Many government-led health insurance plans in developed countries estimate an average cost of around $50,000 per individual to ensure one year of quality life. However, a more recent Stanford study suggests that the true figure might be much higher, around $129,000. This study argues that the current insurance and health financing models may be underestimating the true cost of healthcare.

Recent Stanford study found that it will take $129,000 worth of treatment to guarantee 1 year of quality life to an individual.

Calculating the Indian Healthcare Bill

Let's calculate the total healthcare bill for India using these figures. Assuming that the average individual requires one major procedure in their lifetime, the total cost of treatment for an individual in the US is pegged at $129,000. Adjusting this for Purchasing Power Parity (PPP), the figure for India comes down to $38,700. Given India's population, the total cost for healthcare in India would be $51.239 trillion.

To fully fund healthcare in India, the government would need to account for $51.239 trillion, more than 22 times India’s GDP as of 2016.

Although this is the total healthcare bill if the entire country required high-end critical healthcare at once, it is unlikely to happen. Assuming 3% of the population might require their full healthcare cost in any given year, the yearly cost of care would be $1.5 trillion, which is 62% of India's GDP in 2016.

Insights from the Indian Context

The Ministry of Health and Family Welfare in India reports that healthcare expenditure was 4.1% of the country's GDP in 2016, which means that the gap between current healthcare spending and a fully state-sponsored system is around $1408 billion, or 62% of India's GDP.

These figures highlight that fully state-funding healthcare for India is not a realistic solution in the near term. However, these costs are not insurmountable. They are, in fact, an investment in the health and future of the nation. Healthcare is not just about treatment; it is about prevention and wellness, which can save costs in the long run.

Complexity and Potential Solutions

Several factors complicate the issue. For instance, the Pareto Principle (20-80 rule) indicates that 80% of healthcare spending is used to treat 20% of the population. This suggests that many people may not need extensive healthcare services.

Given the current healthcare landscape in India, privatization does not seem to be a viable solution. The healthcare system in India is plagued by numerous inefficiencies, high costs, and poor accessibility. Therefore, there is a need for a state-sponsored healthcare plan that focuses on preventive care and community health.

The Policy Implications

The decision to provide universal free healthcare should not be based solely on the cost. Other factors such as the overall health and well-being of the population, social equity, and the GDP growth impact must be considered. Providing healthcare to all can lead to a healthier population, which in turn can contribute to a more productive workforce and a stronger economy.

Conclusion

The feasibility of providing 100% free healthcare in India is achievable but it requires a significant financial investment. While the current costs seem unrealistic, they can be seen as an investment in the long-term health and prosperity of the nation. The key question remains: are we willing to make healthcare accessible to all 1.324 billion people in India?