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Resource centre on India's rural distress
 
 

Health expense is a major burden on rural citizenry

The share of total expenditure on medical and healthcare is comparatively higher for an average rural citizen than his/her urban counterpart, reveals the latest available National Sample Survey Report (68th Round) entitled Level and Pattern of Consumer Expenditure 2011-12.
 

Although an average urban Indian spends nearly 84 percent higher than his/her rural counterpart in a month, the share of total outlay on medical expense* is higher in case of the latter (i.e. 6.7 percent) as compared to the former (i.e. 5.5 percent). (Please see below the links as well as table 1). In terms of absolute numbers, however, the NSS report shows that an average urban Indian (Rs. 146/-) spends more on medical expense in a month as compared to an average rural citizen (Rs. 95/-) [calculated by using the MMRP (Modified Mixed Reference Period)** method of measurement].

Table 1: Absolute and percentage break-up of MPCE-MMRP by item group in 2011-12: all-India, rural and urban

Table 1

Source: Level and Pattern of Consumer Expenditure 2011-12

Graph 1 demonstrates that the rural and urban expenditure shares (on medical care) remain very close up to the 7th decile class, after which the rural share rises at an appreciably faster rate to reach 10.2% in the top decile class compared to 6.4% for the urban sector. This means that rural elites spend significantly larger portion of their outlays on health as compared to the urban ones.

Graph 1: Share of MPCE on medical expense (for various deciles) in rural and urban India

Graph 1

Source: Level and Pattern of Consumer Expenditure 2011-12

The NSS 68th Round data on consumption expenditure exhibits that the value of monthly per capita consumer expenditure (in 30 days) on medical (institutional) expense is Rs. 30.81 and medical (non-institutional) expense is Rs. 64.37 in the rural areas. In the urban areas, the same on medical (institutional) expense is Rs. 51.44 and medical (non-institutional) expense is Rs. 94.27***.

The Twelfth Five Year Plan document has noted that lack of extensive and adequately funded public health services compel most people to incur heavy out-of-pocket expenditures on services purchased from the private sector. A large fraction of the out-of-pocket expenditure arises from outpatient care and purchase of medicines, which are mostly not covered by the existing insurance schemes, thus, leading to impoverishment. On top of this, based on a separate calculation, it is found that the month-on-month annual rate of inflation in Consumer Price Index (Base 2010=100) of medical care has been higher in the rural areas (6.9 percent) as compared to urban areas (5.8 percent) during January, 2014 (over January, 2013).

It would be worthwhile to mention here that economists Mita Choudhury and HK Amar Nath from National Institute of Public Finance and Policy (NIPFP) in their paper entitled An Estimate of Public Expenditure on Health in India (2012) estimated that in 2009-10 and 2010-11, public expenditure on health in India was around 1.1 percent of GDP. If expenditure on Water Supply and Sanitation is added to the estimate of 1.1 percent of GDP, the figure of health expenditure rises to 1.5 percent of GDP in 2010-11. Further, with nutrition, the estimate was about 1.7 percent of GDP. The High Level Expert Group on Universal Health Coverage has recommended that Government should increase public expenditure on health from the current level of 1.2 percent of GDP to at least 2.5 per cent by the end of the Twelfth Plan, and to at least 3 percent of GDP by 2022.

Through the National Rural Health Mission (NRHM), which was launched in 2005, it was intended to infuse greater public health funding, claims the Government. As a result, share of public health expenditure in total healthcare expenditure rose from 22 percent in 2005 to 31 percent in 2011. The NRHM helped in reducing the share of out-of-pocket expenditure in total health expenditure from 72% in 2004 to 60% in 2011. Activists argue that despite the promise of Universal Health Coverage, in real terms the allocation to health sector has actually been reduced in the first two years of Twelfth Five Year Plan. However, higher health financing cannot ensure an efficient Universal Health Coverage if one takes into account the case of United States.

Note

*Medical expenses: This includes expenditure on medicine of different types and on medical goods; also, payments made to doctor, nurse, etc., as professional fees and those made to hospital, nursing home, etc. for medical treatment, and expenditure incurred for clinical tests, including X-rays, ECG, pathological tests, etc. Medical expenditure reimbursed by employer or by insurance companies is included. Expenditure on all family planning devices is included, and also expenditure on medical termination of pregnancy. Medical insurance payments are excluded.

**MMRP: This is the measure of MPCE obtained by the Consumption Expenditure Survey when household consumer expenditure on edible oil, egg, fish and meat, vegetables, fruits, spices, beverages, refreshments, processed food, pan, tobacco and intoxicants is recorded for a reference period of "last 7 days", and for all other items, the reference periods used are the same as in case of Mixed Reference Period MPCE (MPCE-MRP). (Using Schedule 1.0 Type 2, MPCE with a mixed reference period where a reference period of 365 days was used for all items of consumer expenditure in Category I, a reference period of 7 days was used for all items of consumer expenditure in Category II and a reference period of 30 days was used for all items of consumer expenditure in Category III).

***Medical (institutional and non-institutional expenditure): The distinction between institutional and non-institutional medical expenses lies in whether the expenses were incurred on medical treatment as an in-patient of a medical institution (institutional), or otherwise (non-institutional). Medical institution here covers private as well as Government institutions such as hospitals and nursing homes.

References:

Level and Pattern of Consumer Expenditure 2011-12, National Sample Survey 68th Round (July 2011-June 2012), released in February, 2014,
http://mospi.nic.in/Mospi_New/upload/nss_rep_555.pdf

Conference on Universal Health Coverage held at Institute of Economic Growth, University of Delhi, 21 March, 2014, https://www.youtube.com/watch?v=BqlrD0cBhBM

Health Financing in India: A tale of political apathy, plunder and catastrophe -Indranil (2013), Vikalp, http://www.vikalp.ind.in/2013/11/health-financing-in-india
-indranil.html

An Estimate of Public Expenditure on Health in India (2012) by Mita Choudhury and HK Amar Nath, National Institute of Public Finance and Policy (NIPFP), May (please click here to download)

Chapter No. 20: Health, Twelfth Five Year Plan (2012-2017), Social Sectors, Volume III, http://planningcommission.nic.in/plans/planrel/fiveyr/12th
/pdf/12fyp_vol3.pdf

Rural Health Statistics in India 2012, Ministry of Health and Family Welfare, http://www.im4change.orghttps://im4change.in/siteadmin/tin
ymce//uploaded/Rural%20Health%20Statistics%20of%20India%20
2012.pdf

Consumer Price Index Numbers on Base 2010=100 for Rural, Urban and Combined for the month of February, 2014, http://mospi.nic.in/Mospi_New/upload/t4.pdf

Consumer Price Index Numbers on Base 2010=100 for Rural, Urban and Combined for the month of February, 2013, http://mospi.nic.in/Mospi_New/upload/t4_12mar13.pdf

Include right to health in party manifestos, demand activists -Kundan Pandey, Down to Earth, 20 March, 2014, http://www.im4change.org/latest-news-updates/include-right
-to-health-in-party-manifestos-demand-activists-kundan-pan
dey-24575.html

Spending won't make it better -Meeta Rajivlochan, The Indian Express, 19 March, 2014,
http://www.im4change.org/latest-news-updates/spending-wont
-make-it-better-meeta-rajivlochan-24547.html

India's right to health-Nitin Desai, The Business Standard, 18 March, 2014,
http://www.im4change.org/latest-news-updates/india039s-rig
ht-to-health-nitin-desai-24546.html

 

Image Courtesy: National Rural Health Mission, http://nrhm.gov.in/