Out-Of-Pocket Health Payments, Poverty and the Impact of Health Sector Reforms in India

Soumitra Ghosh, International Institute for Population Sciences (IIPS)

India’s healthcare system has undergone considerable changes in the past one and one-half decades. The analysis of this study suggest that the impact of current market-oriented reforms in the health sector has been contrary to stated objectives, as a significant number of households slip into poverty because of catastrophic health payments. The results indicate that impoverishment due to catastrophic health care expenditure increased during the period 1993-1994 to 2004-2005. More than forty-seven million people fell below the poverty line due to out-of-pocket payments on health care in a single year (2004-2005). The estimates reveal that spending on drugs accounts for more than 70% of OOP payments. The proportion of households becoming impoverished due to out-of-pocket (OOP) health payments varied widely among states. The analyses clearly indicate the need for targeted health financing policies to prevent the large section of population from falling into poverty because of high OOP spending.