New Delhi: Large corporate hospital chains that benefit from government incentives, including 100 percent foreign direct investment (FDI), should use a part of the revenue they earn from international and wealthy patients to subsidise treatment for poor Indians, a Parliamentary standing committee has recommended, arguing that the country’s private healthcare boom must also improve access for those unable to afford advanced care.
In a report on ‘Affordability and Accessibility of Healthcare Facilities in Public and Private Sector’ tabled in the Rajya Sabha Friday, the Department-related Parliamentary Standing Committee on Health and Family Welfare said India’s emergence as a global destination for medical tourism has significantly boosted the revenues of large private hospital chains, but the benefits have not adequately reached economically weaker patients.
Industry estimates peg the country’s medical tourism market at USD 8.7 billion in 2025, with projections suggesting it could grow to USD 16.2 billion by 2030.
Medical tourism in India is driven by relatively affordable treatment, a large pool of specialist doctors and internationally accredited hospitals.
The committee noted that many of these hospitals have expanded with the help of government concessions, including liberal FDI policies and other incentives, and said such support should come with greater public responsibility. It recommended a structured cross-subsidisation mechanism under which hospitals earning substantial revenues from international and high-net-worth patients would be required to provide subsidised tertiary care to poor Indian patients.
“The advanced medical infrastructure developed through public support must simultaneously serve the domestic population equitably,” the panel observed.
It also recommended that large corporate hospitals be required to reserve a defined share of beds under the Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) at regulated package rates.
AB-PMJAY, the Centre’s flagship health insurance scheme, provides cashless hospitalisation cover of up to Rs 5 lakh per family per year for secondary and tertiary care to eligible poor and vulnerable families.
Treatment in private hospitals costs 8 times more
The recommendations come against the backdrop of persistently high out-of-pocket spending on healthcare in India.
Citing data from the 80th round of the National Sample Survey (January-December 2025), the committee said treatment in private hospitals costs nearly eight times as much as in government facilities on average.
According to the report, average cost of hospitalisation was Rs 6,631 in government hospitals compared with Rs 50,508 in private hospitals.
“Treatment in private hospitals is often five to ten times costlier than in government facilities, with childbirth and serious illnesses like cancer, heart disease, and kidney failure reflecting the sharpest divides,” the committee noted.
The report also highlighted wide regional disparities. Average private hospitalisation costs exceed Rs 55,000 in Telangana and Rs 52,000 in Tamil Nadu, compared with around Rs 22,000 in Odisha and less than Rs 8,000 in Ladakh.
Inadequate financial protection
The committee noted that private health insurance coverage remains well below the global average and that out-of-pocket expenditure, after declining during the Covid-19 pandemic, rose again to 43.4 percent of total health expenditure in 2022-23.
To address this, it urged the government to bring out-of-pocket expenditure below 30 percent through higher public spending and wider insurance coverage.
It also proposed a voluntary health insurance product costing between Rs 4,000 and Rs 6,000 a year for the “missing middle”—more than 40 crore Indians who are not poor enough to qualify for government health insurance but cannot afford private cover.
33% gap in utilisation of funds under AB-PMJAY
The report also flagged a reported 33 percent gap in utilisation of funds under AB-PMJAY and recommended bringing at least four lakh additional private hospital beds into the scheme by simplifying empanelment procedures and ensuring timely reimbursement of claims.
Besides, noting that government health expenditure remains at 1.43 percent of GDP, well below the National Health Policy 2017 target of 2.5 percent, the panel recommended a time-bound roadmap for increasing public spending, with annual progress reports submitted to Parliament.
(Edited by Viny Mishra)
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