Health or money? Why can’t Indians have both?

Since the pandemic started, there have been news about Indians having to pay bills for COVID-19 treatment anywhere in the range from 1 lakh to 20 lakhs. One can only imagine the strain these bills would have put on the household finances. According to the National Health Accounts 2016-17 report, out-of-pocket expenditure accounted for 58.7% of the total health expenditure, whereas the government accounted for only 32.4% of it. This is a huge gap and its ramifications can be serious as OOP expenditures are known to push Indian households into poverty.

In July 2020, the Ministry of Statistics and Programme Implementation released the detailed version of 75thround of Nation Sample Survey on Household Social Consumption of health services (July 2017 – June 2018). Given the exorbitant bills for COVID-19 treatments and the roll out of Pradhan Mantri Jan Arogya Yojana in 2018, it is a good time to review the findings of the 75th NSSO report on OOP expenditure on health.

It is surprising to see that in spite of the hospitalisation costs being 6-8 times lower in the public hospitals than the private hospitals, people still prefer the latter. From 2014 to 2018, the average medical expenditure for hospitalisation in private sector went up by 26% in rural areas and by 20% in urban areas, yet the share of hospitalised cases was more in private hospitals than the public hospitals. This data could indicate the distrust India’s population has in the public health system. About 37% of the households did not avail government hospital services because they were not satisfied with the quality and 19% who were satisfied with the quality of services complained about the government hospitals being too far or the waiting time being too long.

Out-of-pocket payments are a share of total consumption expenditure being spent on purchase of health care services. Often,s these OOP payments become catastrophic which pushes the households into poverty. Catastrophic health expenditure occurs when OOP health expenditure forms a significant proportion of total household expenditure. According to the report, 79.5% of the rural households and 83.7% of the urban households used their income/savings for their hospitalisation expenses. More number of urban households could indicate the increasing cost of healthcare services in urban areas. Around 13.4% of rural households and 8.5% of urban households borrowed money to finance the same. These methods of expenditure often result into a vicious cycle where the households rely on savings/borrowings to finance the consumption of healthcare services which in turn leads to poverty, which paves the way for even more health problems.

On an average, the rural India spent Rs 15,937 and urban India spent Rs 22,031 as out-of-pocket expenditure per hospitalisation case. These amounts account for 96% and 83% of the average medical expenditure per hospitalisation case. This highlights the level of financial burden Indians have to carry when availing health services. At state level, among Empowered Action Group states and non EAG states, Chattisgarh and Punjab had the highest OOP expenditure respectively. The high level of OOP expenditure in non- EAG states can be explained by the increasing burden of non-communicable diseases which require constant medication and consultations with doctors. The North-Eastern states faced a relatively lower OOP medical expenditure when compared to rest of India.

The NSSO has not released the report for 75th Household Consumer Expenditure Survey yet, due to some discrepancies in data. Without the household consumer expenditure data, it is difficult to assess the level of catastrophic OOP medical expenditure for that period. A study conducted by Pandey et al. states that in 2014, around 25% of Indian households faced catastrophic health expenditure (more than 10% of household expenditure). A report released by WHO in 2019 revealed that the poorer households in India spent disproportionately more on medicines than richer households.

The health insurance coverage in India is very poor. According to the report, 86% of the rural population and 81% of the urban population was not covered by any kind of health insurance. The Pradhan Mantri Jan Arogya Yojana (PM-JAY) was launched in 2018, which is a government financed health insurance scheme. It seeks to cover over 10.74 crore poor and vulnerable families by providing a cover of Rs 5 lakhs per family per year. As per the annual report 2019-20 of Niti Aayog, the PM-JAY scheme currently covers 40% of the population.

With the poorer population covered by the PM-JAY scheme and the rich being able to pay for themselves, it is the middle class who is bound to suffer the most. However, there is a ray of hope, as according to recent news the Government of India is planning to expand the PM-JAY scheme to include the middle class as well. At a time when the burden of NCDs is increasing year by year and the number of COVID-19 cases are not dwindling down anytime soon, protection against catastrophic health expenditure is much needed. However, providing health insurance to everyone will not be enough. The public health system needs to be strengthened wherein all the public health facilities meet the minimum standards as laid out in the Indian Public Health Standards. This will increase the utilisation of these services and subsequently reduce the catastrophic health expenditure and poverty.