How India’s Insurance System Fails Those Battling Addiction

In my initial days as a psychiatry resident, I asked my professor, “Why do we keep treating patients who drink, when they keep going back to it?” He replied, “Because they keep coming back. They come back because they want to stop. They always want to stop”. That stayed with me. At some level, every patient with addiction is trying to stop. The system, however, often does very little to help them.

A growing problem we still underestimate

Substance use in India is not a marginal issue. The 2019 national survey estimated that nearly 16 crore Indians consume alcohol, with significant numbers using cannabis, opioids and sedatives.

The consequences are not limited to individuals. Patients struggle with physical illness, psychiatric comorbidity, and impaired functioning. Families carry both financial and emotional burden in the form of lost income, treatment costs, stigma, and chronic stress. 

At a societal level, the costs are visible in reduced productivity and increased healthcare utilisation. While the challenges associated with addiction are being recognised, the cost of getting better is often overlooked.

When recovery costs more than the addiction

Commonly prescribed anti-craving medications like naltrexone cost between Rs 30-100 per tablet. Patients are required to take this medication for at least a few weeks. If we compare that with access to alcohol in many parts of India, illicit liquor can cost as little as Rs 20- 60 for 100 ml, sometimes even less. Even legally sold alcohol is often comparable in price per use. Thus, it can be cheaper to continue drinking than to stay abstinent. 

And medication is just one part of treatment. Effective deaddiction requires detoxification, repeated consultations, counselling, relapse prevention, and long-term follow-up. Most of this happens in outpatient settings. 

Residential centres can cost Rs 5,000-10,000 per day, and even routine outpatient care can accumulate into several thousand rupees a month.

Why can’t they just stop?

Addiction has a very strong neurobiological basis. Simply explained, even while fasting, one would salivate at the sight of food. It is how the body understands that cue. Similarly, for those who struggle with addiction, these cues become deeply wired into reward and motivation pathways, making it extremely difficult to simply “switch off” the behaviour, even when there is a clear desire to stop.

At the same time, more than half of healthcare spending in India is out-of-pocket.. So patients and families pay directly, or stop treatment. This creates a difficult situation. A patient who wants to stop is faced with a system where recovery is financially harder than relapse. And layered on top of this is stigma. Addiction is still widely seen as a moral failing. Patients are not only expected to recover, they are expected to pay for that recovery themselves.

Insurance exists, but not where it matters

Schemes like Ayushman Bharat (PM-JAY) provide up to Rs 5 lakh per family for hospital-based care. The Mental Healthcare Act (MHCA) 2017 mandated that mental illnesses be treated on par with physical illnesses in insurance policies. But there is a structural gap.

Most insurance in India is designed around inpatient care-hospital admissions, procedures, bed charges. But addiction treatment is largely outpatient and long-term. It involves behavioural change, not a single admission. Simply put, it doesn’t fit neatly into a discharge summary. As a result, counselling, follow-ups, and rehabilitation are rarely covered, anti-craving medications are often out-of-pocket and coverage, if present, is limited to short-term detoxification. Additionally, regulatory frameworks still allow exclusions. The IRDAI Master Circular on standardisation of health insurance products permits insurers to exclude “treatment for alcoholism, drug or substance abuse”, effectively bypassing parity.

In practice, this means addiction sits in a grey zone where it is technically an illness, but functionally uninsured.

How addiction is perceived

While there are economic and logistical gaps, a significant part of the problem is purely conceptual. Addiction is still not consistently treated as an illness. Scientifically, addiction is a chronic brain disorder, involving changes in reward, motivation and self-control circuits. It behaves like other chronic illnesses which are relapsing and require long-term management. 

Yet, in policy and practice, addiction is often perceived differently. There is an implicit assumption that patients struggling with addiction are responsible for their illness in a way that patients with diabetes or hypertension are not. This shifts responsibility onto the patient. And it leaves them to fend for themselves.

When treatment is expensive and poorly supported, patients are often forced into choices that undermine recovery. Some drop out of treatment entirely. Others take medications irregularly. In opioid dependence, there are well-documented instances of buprenorphine diversion, where medication intended for treatment enters informal markets. These are system-level outcomes of under-supported care.

The way forward

If addiction is to be treated like any other chronic condition, the way we finance its care needs to change. At a basic level, this means closing the gap between policy and practice. The Mental Healthcare Act (MHCA) 2017 mandates parity, but addiction treatment remains inconsistently covered. As long as exclusions persist, patients will continue to bear the cost of long-term medication, counselling, and rehabilitation.

Coverage also needs to move beyond hospital-based care. Anti-craving medications, structured outpatient counselling, and follow-up should be part of standard benefits. Much of this care can be delivered outside specialist settings through trained community workers or peer-support groups and can be meaningfully included within reimbursement frameworks.

There is also value in shifting toward bundled, community-based models of care. Evidence suggests that combining screening, brief intervention, medication, and follow-up improves outcomes while remaining cost-effective. Rather than funding isolated episodes, systems could support continuity of care. 

India already has many of the necessary components - health and wellness centres and District Mental Health Programme (DMHP) teams – but they remain loosely connected to insurance. A more integrated, cashless pathway for de-addiction care could reduce fragmentation and improve access.

For instance, Mexico has integrated early intervention into primary care, while Brazil’s community-based centres manage most crises without hospitalisation. These models highlight the value of continuity and community-based care.

Addiction is difficult to treat, but the system can bring about significant changes. At present, much of the burden rests with the patient. Recognising addiction as a medical condition is the first step. Ensuring that its care is supported, like other chronic illnesses, comes next. The goal is to get the patient well and help them stay well. 

Dr. Jeel Vasa is a Psychiatrist from AIIMS Nagpur.

Dr. Richa Shete is an MD in Community Medicine and founder of Make A Conversation Foundation, with experience across rural, tribal, and urban mental health care.

Dr. Madhurima Vuddemary is an MBBS doctor with a special interest in public health. All three are associated with the Association for Socially Applicable Research (ASAR).

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