Ahead of Budget 2026-27, study calls for higher public health spending as costs rise and access gaps persist

A budget-season warning on health equity

As India prepares for the Union Budget 2026-27, an academic study has renewed calls for a sharper increase in public healthcare expenditure. The central argument is that rapid economic and social change is raising medical costs and widening inequality in access to treatment—leaving households exposed to high out-of-pocket (OOP) payments even when broader economic indicators appear strong.

The study, reported on 26 January 2026, examines long-run determinants of healthcare expenditure using national data across more than three decades (1991 to 2023). It focuses on both total per-capita health spending and household OOP spending, aiming to explain how demographic, economic and social variables shape the healthcare cost burden over time.

What the research flags as key drivers

The research identifies several factors that influence health expenditure in the long term, including per-capita income, education, urbanisation, inflation and life expectancy, along with overall per-capita health spending. While the relationships vary by measure, the broader implication is that healthcare costs and access are not determined by one lever alone; they respond to macroeconomic conditions, social development and the structure of public provisioning.

In policy terms, this matters because India’s healthcare burden is frequently felt most acutely through OOP payments. When public systems are underfunded or unevenly distributed, costs are pushed onto households—often through medicines, diagnostics, hospital fees and travel costs—creating financial stress that can delay care or push families into debt.

Why higher public spending is being emphasised

Advocates of higher public expenditure argue that stronger government financing can improve primary care reach, expand preventive services, and reduce catastrophic spending at the household level. It can also strengthen health infrastructure, address workforce shortages, and reduce regional disparities by supporting facilities in underserved districts.

The study’s call is particularly pointed because it arrives during budget planning, when trade-offs across sectors are negotiated. Health economists often frame public health investment as both a welfare measure and a productivity measure: a healthier population participates more effectively in the economy, and better primary care can reduce expensive late-stage interventions.

What to watch in Budget 2026-27

If the budget responds to this kind of research, signals could include higher allocations for public hospitals and primary health centres, targeted spending to reduce OOP burdens, more support for preventive programmes, and investments in human resources for health. Another key indicator will be whether spending increases are paired with reforms in procurement and service delivery so that additional money translates into measurable improvements in access and quality.

• Timing: reported 26 January 2026, ahead of Union Budget 2026-27.
• Core recommendation: increase public healthcare expenditure.
• Key concern: rising medical costs and inequality in access; household out-of-pocket burden.
• Dataset window analysed: 1991–2023 (as reported).