Paying off healthcare bills is crippling Indian households.
India’s per capita out-of-pocket (OOP) expenditure to pay for healthcare costs
has gone up from ` 41.83 in 2005 to ` 68.63 in 2010. The per
capita spending on drugs has increased from 29.77% to 46.86% during the same
period, while hospitalization costs have gone up from 11.20% to 22.47%. Outpatient
expenditure has also increased from 30.63% to 46.16%. The OOP expenditure on
healthcare has also shot up in districts covered by insurance schemes. In fact,
catastrophic spending, or percentage of households spending more than 10% of
their overall income on healthcare, is nearly 15% in states that have insurance
in place as against 11% in states that don’t have such policies.
According to a recent study conducted by Public Health Foundation of India publicly financed health insurance schemes are ineffective in reducing OOP expenditure and that hospitalization expenses as a share of overall household expenditure have increased further during 2009-10 to 1.9%, from about 1.6% in 2004-05. As far as the per capita expenditure on health by households is concerned, the evidence suggests an all round increase in not only nominal terms, but also in real terms. Households’ real per capita OOP spending increased significantly during the last five years of the survey period, at an average annual growth rate of 1.9%. The rise in real OOP expenses appears to be largely due to hospitalization expenditure.
While most insurance schemes focus primarily on hospitalization,
over two-thirds of the household spending on health actually goes into buying
drugs. Moreover, the current publicly financed health insurance schemes cover
only hospitalization and not outpatient care, thus affecting a relatively large
proportion of poor who have to bear the brunt. This is especially true of
spending on drugs, where medicines account for three fourths of all OOP
spending by the poor, while for the rich it still accounted for over two thirds
of expenses. The current thrust of insurance schemes clearly demonstrates the
distortion and lopsided priorities of programmes. The difference in household’s
per capita spending on hospitalization has increased from ` 8.05 to ` 13.48 in
non-intervention districts, while it rose from ` 12.70 to ` 15.81 in intervention
districts. According to experts the main strategy to reduce OOP expenditure
would be to step up government investment in public health — from the current
1.2% of GDP to about 3%. One of the quick gains of this strategy would be to
focus on providing free medicines to all. India must not only flaunt its status
of being the pharmacy of the South, but must turn its attention to providing
medicines free of cost.
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