Health spending drives over a hundred million people into poverty each year, and the impact of health spending on poverty is particularly large in low-resource countries. Evidence from 14 low and middle-income Asian countries suggests that poorer countries rely substantially on direct payments and that health investment has a high poverty impact. High healthcare spending contributes to disparities in healthcare utilization across geographies and socioeconomic categories.
According to the State of Inequality in India Report 2022, the Indian healthcare system is heavily commercialized, with Out of Pocket Expenditure (OOPE) as the primary source of funding. Because OOPE does not give any financial security, such households are compelled to pay a hefty price for healthcare. In India, healthcare spending drives a substantial number of households into poverty because they lack sufficient spending power due to poor income or, in some cases, no fixed source of income.
One of the key factors that contribute to a person’s descent into poverty is medical expenses. As of 2020 the report on State of Inequality in India 2022, demonstrates that out-of-pocket health costs account for 13% of India’s Monthly Per Capita Expenditure (MPCE). While this is a significant improvement over the 54.78% in 2019, it still falls short of the 7.8 percent objective, highlighting the gaps in universal health coverage. In India, health inequity arises from a lack of infrastructure and economic disempowerment of a big population that is most in need of healthcare mechanisms. While the infrastructural, access and technology gaps between rural and urban areas have narrowed, economic scarcity has an impact on consumption patterns, making healthcare an extravagance.
Healthcare must also be economical to be accessible. According to the NSS survey, 2020 in rural areas, the average expense, excluding childbirth, is roughly Rs 4,290 in a government hospital and more than Rs 27,000 in private hospitals. In urban areas, a government hospital costs roughly Rs 4400, whereas private hospitals cost around Rs 38,000. This is greater than the combined income of many rural and urban Indian households. It grows more severe with specific illnesses; for example, the average cost per hospitalization for cancer treatment is roughly Rs 61,216. In private institutions, the cost of the same condition rises to around Rs 93,000. In a public facility, the average out-of-pocket expenditure per delivery was Rs 2916 (rural and urban combined). In metropolitan regions, spending is higher, with the average being around Rs 3385. In rural areas, however, it is Rs 2770.
One of the reasons why OOPE remains high is the low coverage of funding schemes. In India, outrageously high medical expenditures are one of the key reasons why families fall into poverty or lose a large portion of their savings and other assets. While the OOPE has decreased to 13% of MPCE, many households still find it too expensive to select Medicare over other household expenses. Health imbalances are also being exacerbated by previous trends of lower investment in the health sector and insufficient financial protection for unfavourable health outcomes. Alongside this, the high OOPE in India reduces non-food consumption and increases the incidence of untreated morbidity, particularly among rural, impoverished, female-headed, and elderly households.
In India, one of the most terrible life shocks that cause a spiral into poverty is catastrophic health conditions. Furthermore, in the private sector, relatively poor health coverage and more expensive health services result in large out-of-pocket expenses, forcing people to delve into their life savings at times. The state of India’s health system must be transformed to make healthcare more socioeconomically equitable, accessible, and affordable. The Covid-19 pandemic has highlighted the significance of a strong healthcare infrastructure that promotes health equity in the country over the last two years. The purpose of health equity is to recognize health as a fundamental human right and to believe that everyone, regardless of financial or cultural circumstances, may live a healthy life. Though the State of Inequality in India Report depicts that there has been a slight rise in health expenditure from 4.5% to 6.6%, however, OOPE should not account for more than 7.3 percent of total health spending.
A major purpose of welfare states is to provide affordable healthcare and safeguard households from Catastrophic Health Spending (CHS) which in turn is indicative of the Sustainable Development Goals (SDGs). The Indian Constitution, when it was drawn up, guaranteed a welfare state. Present-day policymakers should keep that principle in mind when they frame policies in healthcare. Structural reform to make the health sector more equal relies on everyday behavioural changes in which people have the power to prioritize their health and are not pushed by socioeconomic constraints to neglect their physical and mental wellbeing.
[Photo by Mohamed Hassan]
The views and opinions expressed in this article are those of the author.
Shatarupa Dey is a Ph.D. student at the Department of Political Science, University of Utah.