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

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How to Provide Healthcare

This refers to the paper: “Catastrophic Payments and Impoverishment Due to Out-of-Pocket Health Spending” (19 November 2011) by Soumitra Ghosh. The paper contains some very good analysis of the data on healthcare expenditures in India. We would, however, like to take this opportunity to debate some of the conceptual underpinnings of the paper.

At 5% of the gross domestic product (GDP), Indians spend about Rs 2,500 per capita on healthcare per year, with considerable variations, as the author points out, from state to state and household to household. There is, however, no evidence to suggest that Indians at both ends of the income spectrum on average are spending excessive amounts on healthcare relative to what they need. If that is true, then given the low per capita income it would indeed be the case that all expenditures, including those on food, clothing, and education would be impoverishing. It therefore does not follow from this analysis alone that an essentially private good such as healthcare needs to be singled out for special treatment.

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