Pattern, growth and determinant of household health spending in India, 1993–2012

This paper examines the pattern, growth and determinants of household health spending in India and compares the growth of per capita household health spending and per capita consumption expenditure over the last two decades.

The unit data of various rounds of the National Sample Survey (consumption expenditure surveys 1993–1994, 2004–2005 and 2011–2012 and morbidity and health care surveys 1995–1996 and 2004) along with data from other secondary sources are used in the analyses. The patterns and growth of health spending are analyzed by demographic, social and economic attributes and economic well-being is measured using per capita consumption expenditure. Household health spending is subdivided into age structure, population growth, real cost of medical care and increased hospitalization. Descriptive statistics, fixed effect models and simple decomposition methods are used in the analyses.

Results suggest that during 1993–2012, the annual growth rate of real per capita household health spending was twice (6.14 %) the real per capita consumption expenditure (2.60 %). On average, per capita household health spending among the richest consumption quintile was at least eight times higher than that of the poorest consumption quintile, linking household health spending to ability to pay. Household health spending was income inelastic. Though medicine accounts for a larger share of household health spending, household spending on medical tests is growing fast. We found a strong and positive gradient of age on per capita household health spending after controlling for income and other confounders. During 1995–2004, the age structure, hospitalization and real cost of hospitalization accounted for a 14, 42 and 26 % increase in the cost of hospitalization respectively.

Household health spending is growing faster than the consumption expenditure (economic well being) of household and changing age structure is significantly affecting health spending in India. Increased public spending on health, upgrading the public health system and increasing access to health insurance can reduce the household health spending in India.