Intervene quickly: Urban India’s boom could end in misery if healthcare goes from bad to worse

PRICE’s analysis of its ICE 360 data (2023), combined with findings of the latest National Family Health Survey (NFHS), reveals an urban health ecosystem that is increasingly fragile.

Instead of the steady progress expected from rising incomes and better connectivity, the evidence points to inconsistent insurance coverage, rising out-of-pocket expenditure and uneven service utilization patterns shaped by gaps in institutional trust and service reliability.

This fragmentation reflects deeper structural imbalances. Urban growth has outpaced the evolution of health financing and public provisioning. As a result, the capacity to pool risk, assure quality and ensure equitable access varies sharply across cities. Large metropolitan regions, intermediate cities and fast-growing urban clusters face different forms of vulnerability, yet all share a mismatch between health risks and system preparedness.

Basic indicators highlight the magnitude of the problem. Only 11% of households reported paying a health-insurance premium, even though 34% experienced hospitalization and 68% sought doctor consultations or diagnostics. High utilization paired with minimal financial protection reveals a system in which households must absorb most of the cost of illness. Indian demand for healthcare has risen but the mechanisms for reducing financial exposure have not kept pace.

Differences across cities reinforce this uneven landscape. Metropolitan regions recorded some of the lowest effective coverage rates of around 31% despite hosting the largest and most sophisticated private healthcare infrastructure.

Smaller and moderately sized cities achieved somewhat higher coverage of around 41% largely because state insurance schemes are more actively implemented there.

However, this coverage does not necessarily translate into stronger protection. These cities spend a higher share of income on health, roughly 5-7%, compared with about 4% in metropolitan areas, even though their absolute spending is much lower. Lower incomes, weaker public provisioning and higher disease burdens contribute to a cycle of vulnerability that insurance enrolment alone cannot break.

The disparity is even more striking when viewed at the level of individual cities. Some mid-sized cities have built relatively effective risk pooling systems. Udaipur at 84%, Jodhpur at 81%, Cuttack at 80%, Srinagar at 75% and Kozhikode at 65% illustrate how administrative consistency and well-designed state programmes can expand coverage.

Their performance shows that financial protection is not determined by income alone, but by governance capacity and enrolment effectiveness. By contrast, metropolitan centres such as Delhi, Mumbai and Kolkata at 23-25% rely heavily on private healthcare without ensuring protective coverage for a majority of households. Scale has not translated into institutional strength.

Patterns of care-seeking further reveal the fragmented character of our urban health systems. Cities with functional public networks, such as Kozhikode, Udaipur, Cuttack and Bilaspur, report high reliance on public facilities with utilization levels between 74% and 82%. In these cities, dependable primary care and stable staffing encourage trust.

Yet many others, including Patna, Jalandhar, Bareilly and Nanded, show overwhelming dependence on private providers with 70% to 85% of households using private facilities despite low insurance coverage. The retreat of public systems in these locations has amplified the financial risk faced by already vulnerable families.

Household reasons for avoiding public healthcare expose systemic weaknesses. Long waiting times remain the most significant deterrent, reported by 52% nationally and reaching especially high levels in cities such as Delhi at 69% and Kolkata at 71%. Spatial gaps in public facilities form another major barrier. More than 40% of households in cities such as Agra, Firozabad, Saharanpur and Dhanbad report no accessible public facility nearby.

Quality concerns are equally critical. Dissatisfaction is especially pronounced in cities such as Hyderabad at 61%, Patna at 64% and Dhanbad at 76%, where poor service experience aligns with greater reliance on the private sector.

A central thread of these findings is institutional trust. Among uninsured households, 25% cite distrust in claim settlement as the primary reason for not purchasing insurance. This scepticism reflects lived encounters with unclear procedures, slow responses and weak grievance redressal mechanisms. Without stronger accountability and transparent processes, insurance expansion risks remaining more symbolic than meaningful.

Taken together, these findings suggest that India’s urban health trajectory will depend less on economic growth and more on how cities align public provisioning, financing mechanisms and institutional reforms. Health infrastructure must be treated as core urban infrastructure, not an afterthought.

As cities expand outward and upward, planning decisions around land use, transport connectivity and zoning need to integrate healthcare access as a design principle rather than a compensatory measure.

Policymakers must strengthen state insurance schemes, which remain the most effective tools for protecting low and middle-income households. However, extending coverage without improving quality will not build trust or raise utilization.

Public systems must prioritise staffing stability, predictable hours and quality assurance to reverse the drift towards private-sector dependence. At the same time, private providers must recognize their role in shaping the broader health ecosystem. Greater transparency in billing, clearer care pathways and attention to affordability will be essential for reducing financial shocks to households.

Insurers will need to adopt city-specific risk models, particularly in urban areas characterized by informality and fluctuating income patterns. Products designed for stable salaried employment do not reflect the lived realities of many urban households. Financial protection must evolve to match the shifting contours of urban work, mobility and vulnerability.

Ultimately, the health of India’s cities is not merely a technical concern. It is an institutional challenge that will shape patterns of inequality, social mobility and economic resilience.

If India’s urban century is to deliver shared prosperity, the country must strengthen health systems with urgency and in line with a clear vision. The evidence is clear. Urban growth without robust financial protection, dependable public provisioning and trusted institutions will deepen vulnerability rather than reduce it.

To change course, India must build health systems that match the scale and complexity of its urban future.

The author is managing director and chief executive officer of People Research on India’s Consumer Economy.