Indians Spend More Out-of-Pocket on Healthcare

India’s outpatient department (OPD) spending reached $37.7 billion in FY24, yet insurance penetration for OPD remains below 0.1%. OPD insurance typically covers expenses during outpatient visits, including doctor

consultations, diagnostics, pharmacy bills, and preventive check-ups.

Despite rising out-of-pocket costs, adoption of OPD coverage remains limited.

According to Dr Suman Katragadda, CEO of Heaps.ai, the low penetration stems from a misunderstanding of what 'prevention' in insurance truly means.

He explained that most current OPD products focus on diagnostics or health check-ups, but effective prevention requires continuous care, structured follow-ups, and interventions based on clinical needs. Without this, patients either

underuse care, worsening conditions, or overuse benefits, leading to inefficiencies and skepticism among both customers and insurers.

Sarita Joshi, Head of Health and Life Insurance at Probus, said India’s insurance system has historically prioritised hospitalisation over OPD visits.

She noted that OPD care involves frequent, small-value expenses, which are difficult to standardise between urban and rural areas.

Policyholders often view doctor visits and medicines as routine expenses rather than insurable

costs, while tedious claims processes and limited cashless networks further discourage adoption.

Chris George, Co-Founder and CEO of QubeHealth-Pay, added that administrative complexities, non-standardised clinic billing, and the perception that OPD costs are manageable have further limited uptake, despite the significant aggregate out-of-pocket burden.

Making OPD insurance more relevant

Experts suggest that OPD insurance could become more appealing if structured as part of a broader care journey rather than a

transactional payout.

According to Katragadda, plans should be personalised, factoring in disease severity, lifestyle, and risk factors, with clear follow-ups and timely medication adjustments.

Digital nudges and care coaches can help patients adhere to treatment plans.

Joshi emphasised that flexible, targeted plans could improve relevance. She suggested packages for chronic disease management, preventive health check-ups, and teleconsultations. Bundling OPD coverage with hospitalisation insurance and forming partnerships

with hospitals, diagnostics labs, and online pharmacies can reduce out-of-pocket expenses.

George added that integrating prepaid care packages, subscription-based health plans, digital health tools, and collaborations with healthcare-payment companies can lower claim costs and improve perceived value.

Tiered plans balancing frequent, low-cost claims with preventive care benefits can also align premiums with customer expectations.

Policy restrictions and adoption challenges

Several restrictions in

OPD policies, such as waiting periods, limited networks, and low coverage caps, also hinder adoption. Katragadda said these limitations make the products less practical.

Joshi highlighted that for many families, affordability and convenience are critical, noting that annual OPD expenses of ₹15,000-20,000 often outweigh the perceived benefits of restrictive policies.

George added that waiting periods and narrow provider networks discourage use, particularly outside metro areas, while low caps make premiums appear

disproportionate to benefits.

Future outlook

According to Katragadda, standalone OPD insurance rarely works because claims processing, coding, and hospital partnerships remain immature.

Integrating OPD with inpatient coverage, supported by digital platforms and automated claims processing, could make the model viable. While OPD insurance is still in early development, it could become an important complementary product, particularly for urban families.

Experts believe bundled OPD products tied to

wellness, preventive screenings, and pharmacy benefits could transform OPD insurance from a niche offering into a mainstream solution within the next five years.

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