Catastrophic spending on healthcare, defined as expenditure constituting more than 10 percent of a household’s general expenditure, is a significant burden on India’s population, particularly its low- and middle-income households. According to the World Health Organization’s Global Health Expenditure database, India is ranked as 10th out of 186 countries in terms of percentage of total out-of-pocket expenditure on health; Bangladesh was the only other South Asian country with a higher percentage. With over two-thirds of health expenditure in India coming from out-of-pocket spending, health systems in India are burdened by the complex health needs of a population plagued by communicable and non-communicable diseases (contributing to one fifth of the global burden of disease) but the cost of healthcare itself is increasingly placing a financial burden on households.
The problem with the current state of healthcare financing in India is not only that expenditure by individuals and households on healthcare is double the current rate of government spending on healthcare, but also that it is responsible for pushing households into poverty and destitution. According to a study conducted by the Public Health Foundation of India (PHFI), out-of-pocket health expenditure plunged 55 million Indians into poverty in a single year. The same PHFI study also found that, of those 55 million people, 38 million were pushed below the poverty line due to spending on medication alone. While this phenomenon is not exclusive to India, in a broader regional context (with South Asians accounting for 60% of the 97 million people across the world impoverished by health expenditure), India alone accounts for over half of this population.
Demand-side factors and a changing picture of India’s disease burden may have also contributed to the increased utilization of healthcare services, and thus, out-of-pocket health expenditure. An increase in the average life expectancy to 66.9 years for men and 70.3 years for women, coupled with a rise in the share of the Indian population which can be classified as elderly, means that India has a larger aging population with greater healthcare needs. Furthermore, non-communicable diseases such as cardiovascular and respiratory diseases, cancers, diabetes, and other chronic diseases associated with lifestyle and pollution, now make up 61 percent of all deaths in India, meaning that demand has increased for long-term treatment and medication to manage chronic conditions.
Under-investment in public health services has also been cited as a supply-side factor in the increase in catastrophic and impoverishing out-of-pocket healthcare expenditure in a 2018 report by the World Health Organization. This report also found that catastrophic health care expenditure was more common among poor households compared with rich households, as well as those with older people, and households headed by women. Catastrophic out-of-pocket expenditure was further noted as having increased in the past 20 years, highlighting the relative failure of measures such as the 2005 National Rural Health Mission and2008 Rashtriya Swasthya Bima Yojana, a government health insurance scheme intended to provide cashless health insurance cards to cover medical expenses up to $440 per family per year, for 36 million of India’s poorest families. The insufficiency of prior government efforts do not bode well for the recently-announced National Health Protection Scheme, which seeks to expand health insurance coverage to 100 million of the country’s poorest families. The Indian government has further attempted to mitigate rising rates of impoverishment from health costs (particularly due to purchase of medicines) by setting up government pharmacies across the country dispensing low-cost generic drugs under the Jan Aushadhi scheme. These pharmacies have, however, been subject to frequent stockouts, concerns about the quality of generic drugs compared with branded counterparts, and low public awareness of the campaign.
Despite these measures aimed at increased health insurance coverage and reducing the crippling effects of health expenditure, an inescapable fact about public health in India remains that government spending on healthcare has remained stagnant at 1.3% of GDP between 2008 and 2015, only marginally rising to 1.4% in 2016-2017. In order to meet the demands of a population with increasingly complex health needs, including the largest number of malnourished children in the world as well as the fifth highest rates of obesity, India must increase its investment in public health facilities so as to prevent populations from seeking healthcare from more expensive private health practitioners. If the Indian government is to meet its own target of spending 2.5% of GDP on healthcare by 2025 (as outlined in its 2017 National Health Policy), it will have to increase spending by 20 percent each year, not 0.1 percent. Only then will it be able to meet the health burdens of its people, rather than burdening them further with impoverishment.