Union Budget 2026 does little to reduce out-of-pocket expenses, medical inflation: experts

India's healthcare sector faces a formidable challenge: balancing accessibility with affordability, particularly in the context of rising medical inflation and high out-of-pocket expenditures. The Union Budget 2026, like its predecessors, was keenly watched for its approach to these issues. While the budget did include a welcome measure – the exemption of 17 cancer medicines from basic customs duty – experts have critically pointed out that such steps often fail to translate into tangible relief for the common citizen, primarily due to a lack of effective mechanisms to ensure companies pass on these benefits. **Background Context: India's Healthcare Landscape** India's healthcare system is characterized by a significant public-private divide, with the private sector accounting for a large share of healthcare provision. This reliance on private players, coupled with inadequate public health spending (historically around 1-1.5% of GDP, though increasing), leads to one of the highest out-of-pocket (OOP) expenditures globally. According to the National Health Accounts (NHA) 2019-20, OOP expenditure constituted 48.2% of the total health expenditure. This financial burden pushes millions into poverty annually, especially when dealing with critical illnesses like cancer, which require expensive, long-term treatments. Medical inflation, which often outpaces general inflation, exacerbates this problem, making healthcare increasingly unaffordable for a vast segment of the population. **What Happened: The Union Budget 2026's Provision and Expert Critique** The Union Budget 2026 proposed to exempt 17 specific cancer medicines from basic customs duty. This move was intended to reduce the cost of these life-saving drugs, many of which are imported, thereby making them more accessible to patients. However, healthcare experts and economists were quick to highlight a critical flaw: past experiences with similar duty exemptions or reductions have often shown that pharmaceutical companies and importers do not consistently pass on the cost benefits to the end-consumer. Instead, these savings are frequently absorbed into their profit margins, leaving the patient to bear the same, or only marginally reduced, high costs. Consequently, the budget's overall impact on mitigating medical inflation and significantly reducing out-of-pocket expenses was deemed minimal by these experts. **Key Stakeholders Involved** Several key players are central to this issue. The **Government of India**, particularly the Ministry of Finance (responsible for the Union Budget) and the Ministry of Health & Family Welfare (policy formulation), plays a crucial role in setting the fiscal and regulatory framework. **Pharmaceutical companies and importers** are direct beneficiaries of customs duty exemptions and are responsible for the final pricing of medicines. Their pricing strategies significantly influence consumer costs. **Healthcare experts and economists** act as critical evaluators, analyzing policy effectiveness and advocating for reforms. Most importantly, **patients and their families** are the ultimate stakeholders, directly bearing the financial brunt of high medical costs and the direct impact (or lack thereof) of such policy measures. **Healthcare providers** (hospitals, doctors) also contribute to the overall cost structure through their charges for services and diagnostics. **Why This Matters for India** This issue holds profound significance for India. Economically, high OOP expenditure leads to household impoverishment and reduced productive capacity. It also impacts the overall economic growth by diverting funds from other essential sectors. Socially, it creates immense inequity, where access to life-saving treatment becomes contingent on one's economic status, undermining the principle of universal healthcare. Politically, the government's ability to address healthcare affordability is a key indicator of its commitment to public welfare and social justice. The failure of such measures to translate into real benefits erodes public trust and highlights the need for more robust regulatory oversight. **Historical Context and Policy Evolution** The challenge of drug pricing and affordability is not new. India has a history of attempting to regulate drug prices, notably through the **Drugs (Prices Control) Order (DPCO)**, first introduced in 1970 and revised multiple times, most recently in 2013. The **National Pharmaceutical Pricing Authority (NPPA)** was established in 1997 to implement and enforce the DPCO, ensuring availability and affordability of essential medicines. Despite these efforts, a significant portion of medicines remains outside direct price control, and even for controlled drugs, various factors contribute to high costs. Past customs duty exemptions, such as those for certain HIV/AIDS drugs, have also faced similar criticisms regarding the non-transfer of benefits to consumers, indicating a systemic issue in the pricing ecosystem. **Constitutional Mandate and Related Policies** The Indian Constitution, through its **Directive Principles of State Policy (DPSP)**, lays down the fundamental duties of the State towards its citizens. **Article 38** mandates the State to secure a social order for the promotion of the welfare of the people, aiming to minimize inequalities. More specifically, **Article 47** places a duty on the State to raise the level of nutrition and the standard of living and to improve public health. These articles provide the constitutional bedrock for government intervention in healthcare. The **National Health Policy (NHP) 2017** explicitly aims to achieve universal health coverage and substantially reduce out-of-pocket expenditure, targeting a reduction to 25% by 2025. Schemes like **Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY)** also aim to provide financial protection against catastrophic health expenditures. **Future Implications** The critique of the Union Budget 2026 underscores the need for a multi-pronged approach to healthcare affordability. Future policies must consider not just supply-side incentives like customs duty exemptions, but also robust regulatory mechanisms to ensure these benefits reach the consumer. This could involve stricter price controls, greater transparency in drug pricing, and strengthening the NPPA's enforcement capabilities. Furthermore, increasing public health expenditure as a percentage of GDP, investing in domestic pharmaceutical manufacturing (aligned with 'Make in India' and 'Atmanirbhar Bharat') to reduce import reliance, and expanding the scope and effectiveness of public health insurance schemes like PMJAY are crucial. Without these complementary measures, piecemeal exemptions risk being ineffective in the long run, leaving millions vulnerable to the escalating costs of critical medical care.