Audit finds medical costs rose 32 percent in five years as drug prices remained uncontrolled

State spending on healthcare rose sharply over the past five years despite only a modest increase in the number of people using the national health insurance scheme, according to a new performance audit.

The audit shows that while the number of people receiving Aasandha services increased by seven percent between 2019 and 2023, expenditure under the scheme rose by 32 percent during the same period.

From 2019 to 2024, the state spent MVR 35.8 billion on healthcare, an average of MVR 5.97 billion a year. Apart from the cost of running government hospitals, the Aasandha scheme accounted for the largest share of spending, with MVR 16.1 billion spent over six years, averaging MVR 2.68 billion annually.

The audit identifies medicines as the single largest cost driver in Aasandha. An average of MVR 924 million is spent on drugs each year, with costs rising by around seven percent annually. According to the report, the increase is linked to:

• Failure to implement Maximum Retail Price (MRP) rules  

• Lack of price controls  

• Non‑compliance with existing MRP regulations  

• Addition of new medicines to the scheme  

The audit also highlights rising spending on private-sector services. Between 2019 and 2024, MVR 3.1 million was spent on private hospitals and MVR 779.8 million on clinics. Although clinic spending represents a small share of total expenditure, it has been increasing at 18 percent annually. The report notes that no adequate long‑term measures have been taken to contain these costs.

To address the issues, the Audit Office recommends:

•  Full implementation of the Maximum Retail Price (MRP) Rules  

• Enforcing the National Social Health Insurance System Act and its regulations  

• Introducing a co‑payment system for overseas treatment  

• Targeting subsidies to those who genuinely need state support  

• Reforming the medical welfare system  

Authorities have previously acknowledged that the Aasandha and subsidy structure is financially unsustainable. Last year, spending exceeded the MVR 1.8 billion budgeted for Aasandha, reaching MVR 2 billion by December 18. More than MVR 300 million was spent on medical welfare, while subsidies totalled MVR 3.4 billion.

The upcoming budget allocates MVR 8.8 billion to the health sector.