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Resource centre on India's rural distress
 
 

Govt insurance may be forcing poor to spend more on hospitalisation -Rema Nagarajan
-The Economic Times

Is publicly funded health insurance pushing poor households to actually spend more on hospitalisation? A study conducted by three public health experts of the Public Health Foundation of India (PHFI) suggests that this could be happening.

The study found that a larger proportion of the poorest households are having to make "catastrophic spending" (defined as more than 10% of household expenditure) on hospitalisation and that the amount spent by these sections on hospitalisation has gone up more in districts where publicly funded health insurance schemes were introduced than in districts with no such schemes.

The study compared 447 districts in which insurance schemes were introduced with 178 districts which had no intervention. Intervention districts included 74 districts from Andhra Pradesh, Karnataka and Tamil Nadu covered under state-based insurance schemes. The study compared health expenditure in 2004-05 and 2011-12 using consumer expenditure data from the National Sample Survey Organisation.

Health insurance schemes like the central Rashtriya Swasthya Bima Yojana (RSBY) and similar ones run by state government were meant to protect households from financial catastrophe and impoverishment after several studies showed that health expenditure was pushing millions of families below the poverty line every year. However, the study found that hospitalisation expenses have increased at a much higher rate (9.2%) compared to outpatient expenses (4.5%) or medicines (4.9%) and the insurance schemes don't seem to have succeeded in bringing down out-of-pocket spending on hospitalisation.

Quite predictably, the NSSO data shows that the rich generally spend more than the poor in all four categories of health expense out-of-pocket expense, i.e people spending from their own resources, hospitalisation or inpatient expenditure, outpatient expenditure and expenditure on medicines. However, for all four categories, the real increase (adjusted for inflation) is much higher among the economically weakest sections. Such a sharp increase in hospitalisation expenses among the poorest sections points to the limited efficacy of the insurance schemes meant to cater mainly to hospitalisation expenses of the poor, pointed out the study.

In keeping with earlier trends, hospitalisation accounts for only about a third of overall health expenses that people bear, the remaining two third being accounted for by outpatient care, especially on medicines. Interestingly, all publicly financed health insurance schemes cover only hospitalisation expenses. And yet, the study found that the increase in the share of hospitalisation expenses in health spend for the poorest sections was as much or even more than for other economic groups in some cases. "This may mean that poorer households are accessing inpatient services due to the insurance programmes with the expectation that their expenses would be covered and end up paying more than ever before," stated the study.

Alarmingly, the study found that the proportion of the poorest households incurring catastrophic spending went up between 2004-05 and 2011-12, from 7.4% to 7.7% while it fell for all other economic sections. It is hospitalisation or inpatient care that has seen a rise in catastrophic spending, while expenditure on outpatient expenditure and drug expenditure has fallen in the same period for all sections.