India’s 40-crore ‘missing middle’ caught between weak public healthcare and costly private care
2-minute summary
A Parliamentary Standing Committee report has highlighted a critical gap in India's healthcare system, affecting the 'missing middle'—approximately 40 crore people (over a quarter of the population). This segment is too affluent to qualify for government-subsidized schemes like Ayushman Bharat (PM-JAY) but lacks the financial security to afford commercial private healthcare. Since the private sector delivers over 60% of inpatient and 70% of outpatient care, this group faces severe financial vulnerability. This vulnerability is compounded by low public health spending (currently 1.43% of GDP, well below the 2.5% target of the National Health Policy 2017) and high out-of-pocket expenses, particularly on medicines, which constitute nearly 30% of current health expenditure. The committee recommends stronger public healthcare infrastructure, nationwide implementation of the Clinical Establishments Act, and strict price transparency regulations.
Why it's in the news
The Parliamentary Standing Committee on Health and Family Welfare presented its report, 'Affordability and Accessibility of Healthcare Facilities in Public and Private Sector', highlighting the severe lack of financial protection for India's 40-crore 'missing middle' population.
Background and context
The concept of the 'missing middle' in Indian healthcare was prominently brought to light by NITI Aayog in its 2021 report titled 'Health Insurance for India's Missing Middle'. India's healthcare system features a stark tripartite division: the bottom 40% of the population is covered by the government's flagship PM-JAY scheme; the top 10-20% is covered by social health insurance or commercial private insurance; leaving the remaining 30-40% (the missing middle) completely exposed to health-related financial shocks. This group primarily consists of informal sector workers, self-employed individuals, and agricultural households. Despite various policy targets, India's public health expenditure has historically remained low, forcing citizens to rely heavily on private healthcare providers, leading to high out-of-pocket expenditures (OOPE) that push millions into poverty annually.
Constitutional provisions
- Article 21 — The Supreme Court of India has repeatedly interpreted the 'Right to Life' under Article 21 to include the right to health and affordable medical treatment.
- Article 47 — A Directive Principle of State Policy (DPSP) that directs the State to regard the raising of the level of nutrition, standard of living, and the improvement of public health as among its primary duties.
Committees and reports
- Parliamentary Standing Committee on Health and Family Welfare: Affordability and Accessibility of Healthcare Facilities in Public and Private Sector — Flagged the vulnerability of the 40-crore missing middle, low public health spending, and recommended nationwide implementation of the Clinical Establishments Act.
- NITI Aayog: Health Insurance for India's Missing Middle — First comprehensive official report outlining the lack of financial protection for 30% of the population and proposing low-cost insurance solutions.
- National Health Policy (NHP) — Set the target of increasing government health expenditure to 2.5% of GDP by 2025.
Government schemes
- Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (PM-JAY) — Provides cashless secondary and tertiary healthcare coverage of up to ₹5 lakh per family per year to the bottom 40% of India's population.
- Ayushman Bharat Digital Mission (ABDM) — Aims to develop the digital backbone to support integrated digital health infrastructure, improving healthcare accessibility and transparency.
International organisations
- World Health Organization (WHO) — Advocates for Universal Health Coverage (UHC) and monitors global out-of-pocket expenditure trends to prevent health-induced impoverishment.
Previous UPSC questions on this theme
- Mains GS-2 2018 — Appropriate local community-level healthcare intervention is a prerequisite to achieve 'Health for All' in India. Explain.
Mains practice: India's 'missing middle' represents a significant structural gap in the realization of Universal Health Coverage. Analyze the challenges faced by this segment and suggest policy measures to address them.
The 'missing middle' refers to approximately 40 crore Indians who lack any financial health protection. They are ineligible for government-subsidized schemes like PM-JAY (which target the bottom 40%) but cannot afford commercial private insurance, leaving them highly vulnerable to health-induced financial shocks.
**Key Challenges Faced by the Missing Middle:**
• **Dominance of Private Healthcare:** Over 60% of inpatient and 70% of outpatient care is delivered by the private sector, exposing this group to unregulated, high-cost treatments.
• **Low Public Health Spending:** Public health expenditure stands at 1.43% of GDP, far below the National Health Policy 2017 target of 2.5%. This limits the quality and capacity of free public healthcare alternatives.
• **High Out-of-Pocket Expenditure (OOPE):** Outpatient costs, diagnostics, and medicines (which account for nearly 30% of health expenditure) are not covered by basic insurance, leading to a slow, continuous erosion of household income.
• **Inadequacy of Private Insurance:** Commercial insurance policies feature high premiums, complex exclusions, and co-payments that are financially unviable for informal sector workers.
**Policy Measures Required:**
• **Enforce Regulatory Frameworks:** Ensure nationwide implementation of the Clinical Establishments Act to mandate price transparency and quality standards in private facilities.
• **Develop Tailored Insurance Products:** Introduce low-cost, standardized voluntary health insurance schemes designed specifically for the informal sector, leveraging digital public infrastructure.
• **Strengthen Primary Healthcare:** Increase public spending to 2.5% of GDP and expand the network of health and wellness centres to reduce outpatient and diagnostic costs.
• **Regulate Pharmaceutical Margins:** Address excessive trade margins on medicines and audit retail pharmacy practices to curb unnecessary expenditures.
**Conclusion:**
Achieving Universal Health Coverage in India is impossible without protecting the missing middle. Transitioning from fragmented insurance models to a well-regulated, adequately funded public-private healthcare ecosystem is imperative for sustainable development.
Prelims practice questions
Q1. With reference to the National Health Policy (NHP) 2017, consider the following statements: 1. It targets increasing government health expenditure to 2.5% of the GDP. 2. It proposes to increase state sector health spending to more than 8% of their respective budgets. Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: C. Both statements are correct. The National Health Policy 2017 targets increasing government health expenditure to 2.5% of GDP and highlights the need to raise state health spending to more than 8% of their budget.
Q2. The term 'Missing Middle' in the context of Indian social sector planning refers to:
- The population segment that is ineligible for government-subsidized health insurance but cannot afford private commercial insurance.
- Middle-income farmers excluded from the PM-KISAN cash transfer scheme.
- Micro and small enterprises that are too large for micro-finance but too small for formal bank credit.
- Students who drop out of the formal education system between primary and secondary levels.
Answer: A. The 'missing middle' refers to the self-employed, informal sector workers, or agricultural workers (about 40 crore people) who are not covered by government health subsidies (like PM-JAY) and cannot afford private commercial health insurance.
Q3. Consider the following statements regarding healthcare delivery in India as highlighted by recent parliamentary reports: 1. Over 60% of inpatient care and 70% of outpatient care is delivered by the private sector. 2. Medicines account for nearly 30% of India's current health expenditure. Which of the statements given above is/are correct?
- 1 only
- 2 only
- Both 1 and 2
- Neither 1 nor 2
Answer: C. Both statements are correct. The Parliamentary Standing Committee report highlights that the private sector dominates healthcare delivery (over 60% inpatient and 70% outpatient care) and that medicines account for nearly 30% of current health expenditure, driving high out-of-pocket costs.
Revision flashcards
- What is the target for government health expenditure as a percentage of GDP under the National Health Policy 2017? 2.5% of GDP (the current expenditure stands at approximately 1.43%).
- What approximate population size constitutes India's healthcare 'missing middle'? About 40 crore people (over a quarter of India's population).
- Which sector dominates outpatient healthcare delivery in India, and by what percentage? The private sector, which delivers approximately 70% of outpatient care.
- What percentage of current health expenditure in India is spent on medicines? Nearly 30%, according to the Parliamentary Standing Committee on Health and Family Welfare.
- Which central legislative act is recommended for nationwide implementation to regulate private healthcare facilities? The Clinical Establishments (Registration and Regulation) Act, 2010.