An investigation into out of pocket health expenditure in India

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Chadha, Mrinal
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University College Cork
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This study critically analyses out of pocket health expenditure (OOPHE) in India, and provides policy suggestions that can enhance the Indian healthcare sector. Using nationally representative household data (2011-12) collected by the National Sample Survey Organization, three research areas have been examined: incidence and determinants of Catastrophic Health Expenditure (CHE) and medical poverty in India, coping strategies of Indian households to deal with OOPHE, and measurement and explanation of socioeconomic inequality in CHE The first empirical chapter provides the incidence and determinants of CHE and medical poverty in India. Using the WHO methodology, out of the total proportion of Indian households who incurred OOPHE either on inpatient or outpatient services, 6.05% are incurring CHE, and 4.3% of the households have fallen below the poverty line after incurring OOPHE. Using a logistic regression, lack of education in household head, increase in elderly members, fewer members in a household are identified to be significant risk factors for incurring CHE and falling into medical poverty. The second empirical chapter provides the results of coping strategies of Indian households to deal with OOPHE. Using a bootstrapped semi-parametric instrumental variable Engel curve model, Indian households, both rural and urban are found to protect food expenses and decrease spending on education, clothing, bedding and footwear expenses to cope with OOPHE. Rural Indians also increase travel expenses to cope with OOPHE. Engel’s law, a negative association between food expenditure and total expenditure, is valid in the case of all-India, rural India as well as urban India. The third empirical chapter illustrates the measurement and explanation of socioeconomic inequality in CHE in India. Rank-dependent concentration curve and concentration indices have been estimated. The concentration curve shows that CHE is more concentrated among the rich in India. Keeping in consideration the impact of measurement scale of the variable, the standard concentration index as well as the normalised and corrected concentration indices for bounded variables have been estimated. All the concentration indices indicate that CHE is concentrated amongst the rich in India. The concentration index has also been decomposed, and economic status, household size, household head’s level of education, living in the rural sector, and having a regular salaried member in a household are contributing to the majority of socioeconomic inequality in CHE. Investment in education, reduction in gender inequality, increasing job security in India may reduce the incidence of CHE and medical poverty. Increasing the tax on intoxicants as well as tax on luxury clothing, bedding and footwear; durable goods; luxury services could be used to finance healthcare in India. Health infrastructure in rural areas need to be enhanced as rural Indians increase travel expenses to cope with OOPHE. Moreover, controlling the growth of the private sector with better infrastructure in public healthcare facilities may play a big role in reducing the inequality in CHE in India.
Impoverishment , Decomposition , Out of pocket health expenditure , Catastrophic health expenditure , Medical poverty , Coping strategies , Engel curves , Semi-parametric , Socioeconomic inequalities , Health inequality , Concentration curve , Concentration index
Chadha, M. 2017. An investigation into out of pocket health expenditure in India. PhD Thesis, University College Cork.
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