Catastrophic Health Expenditure and Poor in India: Health

Catastrophic Health Expenditure and Poor in India: Health Insurance is the Answer?
T V Sekher
Introduction
The financial burden due to health care expenditure is a major issue facing India. The health care cost is increasing both for out-patient and in-patient care. Between 1986 and 2004, the average real expenditure per hospital admission increased three times in government and private hospitals in rural and urban areas (Shiva Kumar et al, 2011).Additionally, with the changing pattern of diseases mainly from communicable to non-communicable diseases (Mahal et al, 2010 ) and the increasing proportion of the older people, India requires but does not have an adequate social security system in place to tackle these issues. Health insurance is one of the possible solutions but there are issues such as levels of coverage by health insurance in rural and urban areas and who can afford to pay for health insurance.
Objectives of this paper:
i) To estimate the health care share of household budget for different socio-economic groups. ii) To find out the coping mechanism of the households to meet the health care costs. iii) To examine the impoverishment effects of catastrophic health expenditure on households. iv) To examine the health insurance scenario in India and the role of health insurance in meeting the economic burden arising out of health care payments.
Data and Methods:
We used the household data collected in WHO sponsored Study on Global AGEing and Adult Health (SAGE-India) undertaken by IIPS during 2007-08. This is a nationally representative sample survey covering 9,626 households (completed interviews) from six states of India Assam, Karnataka, Maharashtra, Rajasthan, Uttar Pradesh and West Bengal. These six states in a way represent the geographical, economic, demographic variations in India. A sample size of 10,000 households at national level was targeted and the number was allocated to the six states according to their population size. The national level estimates were computed by pooling the data of all six states. SAGE used two-stage sampling in rural areas and three-stage sampling in urban areas. The primary sampling units (PSUs) in rural areas were villages ,while in urban areas the PSUs were city wards. From each city ward, two census enumeration blocks (CEBs) were selected. The last level of selection was households. The households selected were distributed among rural and urban areas in proportion to their share of the state's population. The survey comprises of 2,494 (26.9%) of urban and 7,132 (73.2%) of rural households. The module gives weekly, monthly and yearly household consumption expenditure including food, non-food and health payments. For the purpose of analysis, all household expenditures have been converted
1

into monthly consumption expenditure. Each household has been enquired about the coping strategy adopted to meet the unforeseen health payments. In this paper, we have considered the monthly consumption expenditure as a direct measure of economic well being of households.
Findings: The out-of-pocket (OOP) health expenditure and different dimensions of health expenditure across groups of sample households are presented in Table 1. Mean household expenditure was Rs. 6,671, out of which Rs. 852 was being incurred as OOP expenditure on health, which amounts to an average of 10% of the total household expenditure and 22% of the nonsubsistence spending. Almost 24% of the households spend either equal to or more than their capacity to pay (non-subsistence spending) on health care services, consequently they have to forego their basic subsistence consumption. Almost one-third (31%) of the total households are living below the poverty line. According to this survey, 35% among the poor households incurred catastrophic health expenditure.
Impoverishment effect of catastrophic health expenditure is 8% among uninsured households with Rs. 823 monthly OOP health payments while it is only 1% for households with at least one member insured with monthly OOP health expenditure of Rs. 1240. Share of OOP health payments to the non-subsistence spending was 22% for the uninsured households and only 12% for the insured households with three and more insured members. According to this survey, only 21% of urban households were living below the poverty line compared to 34% in rural areas. Impoverishment effect due to catastrophic health payments is 8% in rural areas and 5% in urban areas. Economic status of the households measured in terms of wealth quintiles shows a positive association with the OOP health payments and negative association with the catastrophic health payments. Only 13% of households belonging to the highest wealth quintile incurred catastrophic health expenditure compared to 33 % of households from the lowest wealth quintile.
Health care payments are pushing many Indian households into poverty year after year. It was found that one-third of the poor households incurred catastrophic health expenditure. Impoverishment effect of catastrophic health payments is eight percent among uninsured households while it is only one percent for households with at least one insured member. Twenty six percent of sample households borrowed from family/friends and others and eight percent sold their assets to meet health care expenses (Table 2). Rural households are more likely to experience catastrophic health spending than their urban counterparts. Only six percent of Indian households are having health insurance policy with considerable rural- urban differentials. More importantly, only one percent among the poorest households has health coverage, indicating that most health insurance policies existing today can be affordable to economically better-off sections. Some community health insurance schemes targeting poor families in different states are showing encouraging trends. The governmental agencies need to play a more active role in facilitating and ensuring health insurance coverage for people, particularly the poor.
2

Table 1: Household consumption expenditure, poor households, health care payments and its effects by household

characteristics, India, 2007

Mean household monthly consumption expenditure (Rupees)

Percent poor

Impoverishment due to OOP health payments

Percent incurring catastrophic
health expenditure

Mean OOP monthly health payments (Rupees)

Mean OOP health
payment as proportion to household expenditure

Mean OOP health payment as proportion of household’s non-subsistence
expenditure

Age of the household head

18-35

5,103

38.9

8.5

25.4

671

9.0

23.6

36-50

5,989

30.4

6.5

20.4

758

8.9

18.9

51-65

7,387

27.8

7.0

25.3

932

9.9

22.2

66+

7,787

29.8

8.2

27.4

1,059

10.7

24.4

Education of main income

earner of the household

Illiterate

4,533

44.6

10.0

32.0

626

10.9

26.8

Less than primary and

primary school completed

5,157

36.5

8.4

23.6

673

9.6

21.3

Secondary school completed

6,504

27.6

7.2

23.6

974

10.6

21.4

High school completed

8,213

19.6

4.8

19.3

1,019

10.0

18.7

College and above 12,739

7.9

1.7

13.0

1,350

9.3

14.4

Fifty plus members

No 50+ member

5,595

21.3

7.2

33.2

715

9.1

19.8

One 50+ member

5,924

24.3

6.7

34.0

693

10.0

21.9

Two 50+ members

8,346

26.8

7.7

25.5

1,148

11.6

23.4

Three or more 50+ members 11,663

19.3

8.0

16.8

1,306

10.5

19.6

Catastrophic health

expenditure

No

6,968

29.7

1.9

--

369

4.4

9.7

Yes

5,724

34.6

24.1

--

2,370

28.6

59.7

Place of residence

Urban

8,447

21.3

4.5

16.5

894

8.6

16.7

Rural

6,020

34.4

8.2

26.5

829

10.8

23.3

Health insurance of

household members

No insurance

6,349

32.3

7.5

24.5

823

10.2

22.0

1 person insured 10,380

7.6

0.9

14.8

1,240

10.3

16.1

2 persons insured 11,424

12.6

6.4

17.4

983

10.0

16.6

3 or more persons insured 13,484

6.4

1.5

10.6

1,301

7.9

12.4

Household size

Single Member

2,810

51.4

4.6

28.3

147

8.6

22.0

2-5 Members

5,460

30.6

6.5

21.3

633

9.4

19.8

6-10 Members

7,054

32.0

7.9

26.9

914

11.0

23.7

11+ Members 12,080

21.5

9.0

23.6

2,011

11.0

21.8

Wealth quintiles

Poorest

2,817

61.8

10.4

33.4

417

10.4

27.6

Poor

4,340

39.4

8.8

27.4

585

10.5

24.0

Middle

6,833

23.3

8.2

23.5

687

10.1

21.1

Rich

7,141

14.4

6.3

18.9

1,131

10.2

18.6

Richest 13,536

4.2

1.6

13.1

1,497

9.6

14.7

India (Pooled)

6,671

30.8

7.2

23.9

852

10.2

21.6

source: IIPS (2011). Study on global AGEing and adult health (SAGE-India)

3

Table 2: Sources of health care financing by household characteristics, India, 2007

Current Savings Insurance Selling of Borrow from Borrow from Other

Income

household assets family/friends others

sources

Age of the household head

18-35 73.9

25.7

0.7

6.5

36-50 75.0

23.0

1.5

7.1

51-65 73.2

28.1

1.4

8.8

66+ 71.9

28.2

1.7

8.7

Education of main income

earner of the household

Illiterate 67.7

23.7

0.6

9.2

Less than primary and 72.5

23.6

1.2

8.1

primary school completed

Secondary school completed 75.1

26.2

1.1

7.6

High school completed 76.2

28.4

1.3

8.7

College and above 86.0

29.4

3.9

4.8

Fifty plus members

No 50+ member 72.2

24.3

1.5

7.2

One 50+ member 74.2

24.2

0.9

7.1

Two 50+ members 74.3

28.4

1.7

9.3

Three or more 50+ members 74.1

37.8

2.9

8.6

Catastrophic health

expenditure

No 77.0

23.6

1.4

6.2

Yes 65.4

31.5

1.4

11.8

25.6

5.1

8.3

18.9

6.6

9.2

18.6

6.3

9.7

17.4

5.5

12.1

25.4

5.5

12.1

19.0

6.8

10.5

17.5

6.0

9.5

17.6

5.0

8.1

10.5

7.8

7.0

21.5

5.9

9.0

18.5

5.1

9.8

19.2

7.5

10.5

16.8

6.7

10.5

13.7

5.7

9.3

33.7

7.2

11.0

Place of residence

Urban 85.3

20.8

2.2

5.7

17.6

5.6

6.3

Rural 69.3

27.8

1.1

8.6

20.3

6.3

11.0

Health insurance of

household members

No insurance 72.9

25.6

0.6

7.7

19.8

5.7

9.5

1 person insured 83.1

29.5

10.4

8.0

17.4

9.5

13.5

2 persons insured 76.0

35.0

10.1

16.3

22.4

12.9

16.4

3 or more persons insured 85.5

28.6

14.3

6.0

13.8

12.7

10.4

Household size

Single Member 56.9

16.2

1.1

1.3

32.7

3.8

14.1

2-5 Members 73.7

23.4

1.5

7.6

19.2

5.7

10.0

6-10 Members 73.8

27.3

1.3

7.9

19.8

6.3

9.4

11+ Members 74.8

34.8

1.3

9.8

18.6

7.9

9.5

Wealth quintiles

Poorest 69.2

20.9

0.2

8.7

25.0

3.4

9.0

Poor 70.3

26.3

0.3

6.2

22.7

4.8

10.0

Middle 70.2

23.7

1.3

9.5

20.8

7.6

10.9

Rich 75.0

24.9

2.6

10.0

19.8

7.9

11.9

Richest 82.5

33.4

2.8

5.7

9.5

7.8

7.5

India (Pooled)

73.6

25.9

1.4

7.8

19.6

6.1

9.8

Note: Row sum will not be equal to 100, because some households may be financing health care costs from more than one sources.

source: IIPS (2011). Study on global AGEing and adult health (SAGE-India)

4