Health Expenditure and Impoverishment in India

Abstract

This article examines impoverishment effect of the out-of-pocket (OOP) payment for health care on households in India where only 10 per cent of the population is covered by insurance. At the national level, 10.1 per cent of rural households as against 6.2 per cent of urban households have either become poor or poorer as a consequence of OOP for health care. The proportion of rural impoverished households due to OOP health expenditure in the four most underdeveloped states of Orissa, Bihar, Uttar Pradesh and Madhya Pradesh are 11.4, 9.5, 7.9 and 7.3 per cents, respectively. The corresponding proportion of urban impoverished households for these states are 7.2, 7.5, 5.9 and 5.1 per cents, respectively. It is also found that the OOP payment tends to increase significantly with inequality in income distribution and shortage of physicians at the state level. Health system inadequacy measure by population density per physician has escalating effect on impoverishment.