High medical costs pushed 38 million Indians into poverty: Research paper

By Rajiv Shah
A recent paper, published in a top London-based research journal, BMP Open, has said that the out of pocket (OOP) expenditure on healthcare in general and medicines in particular, over the last two decades, has gone up from 4.49% to 6.77% in India, leading to “financial catastrophe” of 18% of the country’s households.
Calling it a “significant increase since 1993–1994”, the paper, “Quantifying the financial burden of households’ out-of-pocket payments on medicines in India”, by Sakthivel Selvaraj, Habib Hasan Farooqui and Anup Karan, says that, as against this, the proportion of OOP expenditure on food and non-food items has remained more or less stagnant.
The paper further says that OOP on medical expenditure was particularly “catastrophic” for the poorer 10% of the population, pushing 3.09% or 38 million persons, into poverty. “Among the leading cause of diseases that caused significant OOP payments are cancers, injuries, cardiovascular diseases, genitourinary conditions and mental disorders”, the report adds.
At the same time, the paper says, "The number of households facing catastrophe" on account of medical expenditure "is approximately 46 millions", of which 29 million households incurred catastrophe on account of OOP payments on medicines alone."

Of the 18% of Indian households that “appear to suffer financial catastrophe” as a result of OOP spending, the paper underlines, of this, “medicines’ OOP expenditure alone contributed an estimated 11%.”

The paper further states, “Recent evidence from the National Health Accounts for India points out that during 2013–2014, an estimated INR1331 per capita was spent on medicines, while households alone contributed INR1200 per capita, accounting for 90% of all medicines expenditure in the country.”
On the other hand, the paper says, evidence about government expenditure on medicines in India shows that, on an average, government spent about 10% of health expenditure on medicines. However, the national average masks significant under-spending on medicines by several state governments, “with many reportedly spending less than 5% of their health budgets.
Pointing out that the supply of free drugs in government health system in the outpatient care setting has “declined sharply” from about 18% to 5%, the paper says, “Drugs prescribed during hospitalisation for free also declined significantly from one-third.”
Basing on secondary data of the nationwide Consumer Expenditure Surveys for the years 1993–1994, 2004–2005 and 2011–2012, carried out by the Government of India’s National Sample Survey Organization (NSSO), and NSSO’s “Health and Morbidity Survey”, 2014, the paper says, “Over three-fourth of all healthcare payments are paid out of pocket (OOP) at the point of service delivery while medicines purchase.”
According to the paper, “Over 80% of populations are reportedly spending OOP while seeking treatment”, adding, two decades earlier, the “proportion of population reporting any OOP payments” was “about 60%”. It adds, “In respect to medicines spending, approximately every OOP spending is associated with expenditure on medicines.”
“If we were to net out food expenditure from total household consumption spending, which are considered a necessity, the share of health spending remained stagnant but as high as 11%–12% during the period under consideration”, the report notes.