For every Rs. 100 spent by an Indian, around Rs. 63 would be spent on healthcare bills. This meant, on average, almost three-quarters of out-of-pocket healthcare expenditure.
For a significant percentage of the population, this meant that moving out of poverty was a road almost always blocked by large healthcare bills. This number, 62.6%, had defined the scale of India’s healthcare crisis for decades.
That was the percentage of every rupee spent on health that came directly from a patient’s own pocket in 2014-15, not from insurance or the state. It was from families, often borrowing to pay for surgery, a cancer drug, or prolonged hospital care.
With Prime Minister Modi at the helm, that number has fallen to 39% in 2025-26. This outcome is due to the cumulative effect of three policy instruments: Ayushman Bharat, the Jan Aushadhi Kendras, and the September 2025 GST reform, working towards lowering healthcare expenses and providing quality, affordable, and accessible healthcare for all.
Insurance That Moves with the Patient
Ayushman Bharat PM-JAY, the world’s largest universal health insurance scheme, launched in 2018, extended Rs. 5 lakh per year of free hospitalisation covering over 12 crores poor and vulnerable families that form the bottom 40% of the population.
As of May 2026, over 44 crore cards have been created, with 10.75 crore hospital admissions authorised, and the total treatment value stands at over Rs. 1.5 lakh crore.
These are not just big-scale. The effect of this flagship programme is far-reaching for citizens. A 2025 study published in the ACR Journal found that AB-PMJAY has a measurable impact in reducing financial costs for cardholders, confirming consistent reductions in medical debt and deferred treatment.
To cover the elderly population of Bharat, the scheme expanded further in 2024, when all citizens aged 70 and above, regardless of income, were brought under Ayushman Vay Vandana.
By April 2026, over 1.2 crore senior citizens had enrolled, with 10.33 lakh hospital admissions authorised under the new coverage.
This was studied by India’s Economic Survey 2024-25, which explicitly attributed the decline in out-of-pocket expenditure to the scheme’s expanding role in social security and primary health coverage. For older households, this has become a more dependable shield against the health costs.
The Pharmacy Shift
Hospital insurance solves only part of the problem. The regular cost of medicines is often what keeps families under pressure for months or years, yet it remains a burden that no insurance policy can fully absorb.
That is where Jan Aushadhi has made a visible difference. The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PM-BJP), operating over 19,000 Jan Aushadhi Kendras across the country, is recording a daily footfall of nearly 12 lakh patients and offering more than 2,000 generic medicines at 50–90% below branded prices. Cumulatively, citizens have saved over Rs. 40,000 crores on medicine purchases through these kendras.
These numbers reflect not just successful functioning but also the demand and impact on citizens. A comprehensive meta-analysis published in the Indian Journal of Public Health reported that the scheme has produced measurable reductions in household medicine expenditure and improved medication adherence, with a greater effect observed among low-income and rural beneficiaries.
Another research paper in IJRAR further noted that integrating Jan Aushadhi Kendras with Ayushman Bharat creates a compounding benefit where patients who receive cashless hospitalisation under PMJAY can access post-discharge medicines at Jan Aushadhi rates, reducing the often-overlooked cost of recovery that insurance does not always cover.
No Taxing the Sick
In addition, the September 2025 GST rationalisation was the third structural modification.
Under this, the GST Council removed the 18% tax on all health and life insurance premiums as a direct relief for every family paying private insurance. And on drugs and medicines, the cut was from 12% to 5%, with 36 life-saving drugs brought to a nil rate. This became a means for Indians to reach quality medications and helped expand insurance coverage for all.
In other terms, this means the state is no longer taxing the act of protecting health in the same way it once did. According to EY’s sector analysis on the GST reform, mentioned that it would “substantially lower patient costs and improve access to vital treatments,” while reinforcing India’s position as an equitable pharmaceutical market.
This is the converging effect of PM-BJP and GST reform, thereby maintaining the cost-free nature of public health access across the foundational levels.
What the savings mean
Through the triangulation of insurance coverage, subsidised medicines, and tax relief under the Modi Government, Indian citizens saved Rs. 1.25 lakh crore on health expenditure (2024-25). That is what makes this shift meaningful.
Ayushman Bharat, Jan Aushadhi, and the 2025 GST reform under PM Modi collectively represent a decade of deliberate architecture that has significantly reduced out-of-pocket expenditure.
None of these policies is a silver bullet in isolation. Together, they have formed a security net that prevents healthcare costs from sinking any further onto citizens and provides “Affordable Healthcare for All” with less debt and more room to recover with dignity.
