Spending on everyday health treatments by both rural and urban households can add up to become catastrophic over time, and push people into poverty
Both rural and urban households spend twice as much on out-patient or non-hospitalization healthcare costs as they do on hospitalizations, data from a new National Sample Survey report shows. (See chart 1)
India has one of the highest proportions of out-of-pocket health expenditure, and the expense per hospitalization can be catastrophically high. One case of hospitalization alone can on average cost roughly the same as the average Indian’s consumption expenditure for the year.
However, with the rate of hospitalization in India currently at 2.9% (meaning that around 3 out of every 100 people need hospitalization, excluding childbirth, during a calendar year), these spending shocks are rarer compared to routine ailments. In the case of medical care that doesn’t require hospitalization, the expense recurs frequently. In the 15 days preceding the survey, 8% of people reported having had an ailment. (See charts 2a and 2b)
Medicines contribute the highest share of medical expenditure for out-patient treatment, as well as for in-patient treatment in public hospitals and rural private hospitals. In urban private hospitals, the cost is frequently designated as an overall ‘package component’ which cannot be split into individual components, and this now accounts for the highest share of in-patient expenses in private urban hospitals. The package component typically involves the cost of a set of procedures (including surgical costs) for a specific illness.
Although successive governments have announced schemes for free medicines, there is no national scheme for free medicines yet. (bit.ly/2s5ZrfY). Only guidelines for states to set up their own schemes have been announced.
The high burden of out-patient health expenditure hits the poorest hard. In rural India, the share of out-patient expenses in total medical expenditure has been falling since 2004-05, but it has risen since 2009-10 in urban India. (See chart 3)
While these trends hold true across India, there is wide variation among states in the degree of dependence on private versus public healthcare, and the relative share of non-hospitalization costs in the total basket of expenditure. In general, poorer people report lower levels of ailments and hospitalizations, implying that India’s most marginalized groups are still far from accessing required levels of healthcare, and skewing the numbers downwards.
But despite accessing less healthcare, those in poorest states don’t get cheaper healthcare; treatment costs are higher in many poorer states.
The Centre’s Ayushman Bharat scheme has focused on expanding insurance coverage to help tackle health shocks. Evidence from a study prior to the scheme’s launch led by Shamika Ravi, director of research at Brookings India, showed the availability of public health insurance has not had a significant impact on out-of-pocket expenditure (brook.gs/351ViIw). However, it has significantly raised probability of people seeking hospital care, says Ravi, a former member of the PM’s Economic Advisory Council, and who has advised the government on healthcare. But even for hospitalizations, the Ayushman Bharat scheme is not all-encompassing. For one, the insurance element is means-tested (applicable only to poor). This is not the case in some states such as Delhi, where any resident who can’t get a procedure done within 30 days at a government hospital can get cashless treatment for over 1,100 procedures at an empanelled private hospital with no insurance intermediary.
And then, there is the heavy burden of illness that does not require hospitalization. In Delhi, this has been the much more public face of its health reforms. “For treatment that does not require hospitalization, we have set up over 300 mohalla clinics where 212 lab tests, diagnostics and drugs are all provided free of cost,” says Jasmine Shah, vice-chairperson of the Delhi Dialogue and Development Commission, a think-tank that helps the Delhi government frame policies.
For Ayushman Bharat, the scheme has received the most attention, but “the second component of it (much slower and low profile, and arguably more challenging to implement) is the creation of 150,000 health and wellness centres across the country,” says Ravi. The Union health ministry claims that 17 million people received free diagnostics and medicines in these centres over the last year.(bit.ly/2DWvNwi).
This is four times as many people who claimed benefits under the insurance portion.
The national conversation on health spending in the last year has largely focused on insurance against catastrophic illness.
But it appears that less discussed small illnesses are adding up to catastrophic costs for most Indians, and this needs urgent attention.
(Courtesy Live mint)