ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Impoverishing Effect of Healthcare Payments in India: New Methodology and Findings

The paper reflects the personal views and analysis of the authors and not the official views of the World Bank or its affiliates. The authors gratefully acknowledge the financial support of the World Bank and Department for International Development for this work.Peter Berman ( ) is with the Health Nutrition and Population Unit of the World Bank, Washington DC, Rajeev Ahuja ( ) is with HNP Unit of the World Bank, New Delhi and Laveesh Bhandari ( ) is with the Indicus Analytics, New Delhi. High private healthcare spending as well as high out of pocket spending in India are placing a considerable financial burden on households. The 60th national morbidity and healthcare survey of the National Sample Survey Organisation provides an opportunity to examine the impoverishing effect of healthcare spending in India. This paper presents an analysis of the nsso survey data with some new approaches to correcting some of the biases in previous assessments of the "impoverishing" effect of health spending. Despite these corrections, the results suggest that the extent of impoverishment due to healthcare payments is higher than previously reported. Furthermore, outpatient care is more impoverishing than inpatient care in urban and rural areas alike. The analysis of the extent of impoverishment across states, regions (urban and rural areas), income quintile groups, and between outpatient care and inpatient care yields some interesting results.

Government Health Spending in India

Although the government of India has set a goal of increasing government health spending to 2-3 per cent of gross domestic product over the next five years, even with optimistic assumptions, it cannot meet the stated goal. After analysing the recent trends in government health spending by the centre and states, this paper notes that sound fiscal targets for health spending should be based on goals for outcomes and the resources needed to achieve them, which are largely lacking. It suggests that large and sustainable increases in government health spending will require more focus on the states' own spending as well as improving the capacities of states and districts to use resources for health effectively.
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