Indians rely on credit, not insurance, to stay alive: Entrepreneur drops truth bomb

In India, credit — not insurance — is increasingly the fallback for millions facing medical bills, as out-of-pocket spending continues to dominate healthcare financing.

“Credit, not insurance, is the real lifeline of healthcare in India,” entrepreneur and investor Rajesh Sawhney posted on X, summing up a reality where financial survival often hinges on access to loans, not coverage.

Out-of-pocket expenditure accounted for 39.4% to 52% of all healthcare spending in India in 2021–22, placing the country among the highest globally. 

Earlier estimates reached as high as 62.6%. Despite employer-provided plans and government schemes, only 37–41% of Indians have any form of health insurance—and most of that doesn’t cover everyday needs like outpatient care, diagnostics, or medication.

A striking 53% of households paid for their last hospitalisation out-of-pocket, while just 19% used any type of insurance. For the rest, debt picks up the slack.

Borrowing from friends, family, and moneylenders remains common. But new fintech products such as Buy Now, Pay Later (BNPL) healthcare plans and salary-linked credit lines—sometimes offering up to seven times a person’s income—are rapidly gaining ground.

Government data shows 16% of households resort to “distressed sources” like loans or selling assets to manage hospital expenses. The human cost is enormous: about 10 crore Indians, or 7% of the population, fall into poverty every year due to medical bills.

Public schemes like Ayushman Bharat offer hospitalisation coverage to 10.7 crore families but exclude major cost drivers like outpatient care. Coverage is especially spotty among women and in lower-income states.

In the end, insurance often comes too little, too late—leaving credit as the last resort for most Indians navigating a health crisis.