OUT OF POCKET HEALTH EXPENDITURE IN INDIA: AN ANALYSIS OF BURDEN OF HEALTHCARE COSTS

Abstract

India, which accounts for more than one-sixth of the world’s population, grapples with one of the lowest public health spending (1.15% of GDP), and one of the highest out-of-pocket health expenditure (OOPE) (50.6% of health expenditure) worldwide. Dismally low health insurance coverage coupled with a dominant presence of fee-for-service private health sector forces a large proportion of Indian households to rely on OOPE as a means of financing healthcare. Heavy reliance on OOPE limits access to healthcare services, reduces the consumption of other necessities, and exposes households to impoverishment. Therefore, we have comprehensively examined the financial hardships due to OOPE using a battery of metrics, including catastrophic health expenditure (CHE), impoverishment, distressed financing, and forgone care. We examined the financial hardships at the national, state, and intra-state (rural-urban within each state) levels, across various socio-economic and demographic dimensions, and for various diseases and injuries. The presence of inequalities in the incidence of incurring CHE and distressed financing were examined. Moreover, we gauged the determinants of incurring CHE, falling below the poverty line due to OOPE, and using distressed sources. The financial burden was evaluated separately based on the type of care sought (hospitalization, outpatient care, and hospitalization and/or outpatient care), the type of healthcare facility visited (public or private), and the share of various components (such as cost of medicines, diagnostic tests, and transportation costs) in total health expenditure to identify the key drivers of financial burden. We have used the latest round of the nationally representative sample survey on health, titled, “Household Social Consumption: Health”. For analysis, we have employed descriptive statistics, multivariable logistic regression, two-part model, and concentration index. We observed high financial burden due to OOPE in poorer states/union territories (UTs) (such as Uttar Pradesh, Odisha, Jharkhand, and West Bengal) and in a few relatively well-off states/UTs (such as Kerala, Andhra Pradesh, Maharashtra, and Himachal Pradesh), irrespective vii of the type of care sought. Although OOPE was higher in urban areas, the financial hardships due to OOPE were conspicuously more perturbing in rural areas, with a similar pattern observed across majority of the states/UTs. We observed prominent socio-economic and demographic disadvantages, with individuals belonging to marginalised social groups (scheduled tribes and scheduled castes), those working as casual labourers, those belonging to lower economic quintiles, and those who were not literate or lacked formal education reporting higher incidence of unmet healthcare needs. Additionally, households belonging to lower economic quintiles, residing in rural areas, belonging to scheduled castes, other backward classes and other social groups, headed by members who were not literate or lacked formal education, engaged in other work, having any elder member in household, and any member having non-communicable diseases (NCDs), were exposed to higher financial risk due to OOPE. We also observed presence of inequality in the incidence of incurring CHE and using distressed financing. Moreover, we found that households with any member suffering from cancer, genitourinary disorders, psychiatric and neurological disorders, obstetric conditions, and injuries (particularly intentional self-harm, burns or corrosions, and accidental injuries, road traffic accidents and falls) experienced colossal financial hardships. Notably, outpatient services was more burdensome than hospitalization. Furthermore, it was observed that medicines constituted the largest share of total health expenditure in India. Lastly, the brunt of OOPE was substantially higher when care was sought from private health facilities rather than public ones. The high OOPE and the associated financial hardships underscore the pressing need to increase public health expenditure, strengthen public healthcare facilities, regulate pricing in the private health sector, and ensure availability and affordability of essential medicines and drugs, to augment financial risk protection in India. Substantial inter-, intra-state, and socio-economic disparities highlight the need to devise state-specific policies in tandem with contextual viii differences and concerted efforts to bridge the rural-urban divide. Moreover, it is crucial to address the key barriers to healthcare access, including inadequate infrastructure and shortages and inefficient distribution of qualified health workers, to improve accessibility to healthcare services and reduce non-medical and transportation expenditure related to medical travel. Additionally, health insurance coverage only for hospitalisation is insufficient to safeguard against financial burden, particularly in a scenario where outpatient expenses exert higher financial burden than inpatient expenses and the rising prevalence of NCDs require frequent outpatient visits for effective disease management. Therefore, considering outpatient services under the purview of health insurance coverage is essential. Also, abysmally low health insurance enrolment in India warrants policy measures to increase awareness and uptake of health insurance. Lastly, for long term sustainability, there is a need to place a stronger impetus on health promotion and disease prevention strategies to address the evolving epidemic of NCDs and the corresponding financial burden.