Out-of-pocket health expenses plunge 55 mn Indians into poverty in 2017

Out-of-pocket (OOP) health expenses drove 55 million Indians–more than the population of South Korea, Spain or Kenya–into poverty in 2017, and of these, 38 million (69%) were impoverished by expenditure on medicines alone, according to a new study.

These calculations by the Public Health Foundation of India (PHFI), an advocacy, were released on June 6, 2018, and based on the official Indian standard for poverty line–a monthly expenditure of Rs 816 in rural areas and Rs 1,000 in urban areas–according to a 2013 report of the erstwhile Planning Commission. The PHFI study used secondary data from National Sample Survey reports and other sources for these estimates.

Over 80% of Indians incur OOP–direct payments individuals make to healthcare providers–on healthcare, according to 2011-12 figures cited in the study. It was 60% in 1993-1994. Medicines contributed to more than 67% of OOP healthcare expenditure in 2011-12.

for each Indian's health

In real terms, monthly OOP payments increased by more than 100%–from Rs 26 in 1993-1994 to Rs 54 in 2011-2012.

India spends the least on public health among BRICS nations, IndiaSpend reported on May 18, 2017. It ranked 147 among 184 countries, a notch below Pakistan, in this regard. Insurance-based government initiatives have been largely unsuccessful in easing the burden on citizens, the report added.

The heavy load of spending on medicines can be explained by a study carried out in Chhattisgarh reported by IndiaSpend on June 13, 2018. An analysis of 1,290 prescriptions from 100 public health facilities across 15 districts showed that only 58% prescribed medicines were available at government pharmacies. This left patients with no option but to buy at higher rates from private pharmacies.

demand for generic drugs

The consequence of the inadequate public health system is that India has become the sixth biggest private spender on health among low-middle income nations.

About 68% of the Indian population has limited or no access to essential medicines, according to a World Health Organization report. In addition, over the last two decades, the availability of free medicines in public health facilities declined from 31.2% to 8.9% for inpatient care and from 17.8% to 5.9% for outpatient care, according to a 2011 PHFI study.

Components Of Out-of-Pocket Expenditure, 1993-2012
Financial Burden Indicators	1993–1994	2004-2005	2011-2012
Percentage households reporting OOP payments
Any OOP payments (%)	59.2	64.4	80.5
Medicines OOP payments (%)	57.5	63.6	79
Monthly per capita expenditure (INR at constant 1999–2000 prices*)
Household consumption expenditure	517	619	794
OOP expenditure on health	25.59	36.3	54.3
Medicine OOP expenditure	20.86	26	36.1
Share of health to total household expenditure (%)
Share of total OOP expenditure to total household expenditure (%)	4.84	5.78	6.77
Share of medicine OOP expenditure to total household expenditure (%)	3.93	4.1	4.49
Share of health to non-food household expenditure (%)
Share of total OOP payments to non-food expenditure (%)	12.37	10.82	11.46
Share of medicines OOP payments to non-food expenditure (%)	10	7.68	7.6

Source: Public Health Foundation of India Study 2018

 

Cancer treatment cost highest

The PHFI study also looked at the disease conditions which contributed the most to the financial burden on households.

It found that the treatment of cancers, cardiovascular diseases and injuries–in terms of both outpatient and inpatient care–dominated health expenditures in India. The share of non-communicable diseases–such as cardiovascular problems, diabetes, cancer, mental illness and injuries–in OOP health expenses increased from 31.6% in 1995-1996 to 47.3% in 2004.

The survey results suggested that the most common health condition for seeking outpatient care was fever (22.7%) and for inpatient care was childbirth (27.3%).

In addition, the study estimated that households incurred the highest monthly OOP spending on cancer (Rs 5,121), in the case of both outpatient and in-patient care. This is followed by injuries in outpatient care (Rs 3,045) and cardiovascular events in inpatient care (Rs 2,808).

Two earlier studies–the PLOS study of 2013, and the World Bank study of 2014–too had reported that households incurred significant OOP payment burden in the case of cardiovascular diseases and cancers.

Rise in poverty caused by health expenses in 2011-12

The study calculated the implications of OOP and the part of it spent on medicines for poverty estimates by using three steps:

• Gross headcount: Percentage of population below poverty line
• Net of OOP headcount: Percentage of population below poverty line after netting out OOP payments from household consumption expenditure and
• OOP-induced poverty, which is the difference of the first two–reflecting rise in poverty ratio.

According to these calculations, monthly OOP payments and expenditure on medicines deepened poverty among the poor by Rs 29 and Rs 23, respectively, in 2011-2012. And the percentage of households below the poverty line increased from 4.19% in 1993-1994 to 4.48% in 2011-2012.

This rise in poverty was sharper in 2012 than in 2004-2005 and 1993-1994. The headcount ratio of those impoverished due to OOP payments was 3.97% during 1993–1994; this inched up to 4.30% in 2004-2005 and then went up in 2011-2012 to 4.04%, according to the global measure for poverty line ($1 per day).

There was an increase of more than 50% in every household’s consumption expenditure in real terms over this period–from Rs 517 to Rs 794.

(Salve is an analyst with IndiaSpend.)

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