Health Empirics

The Indian health system is predominantly characterized by out-of-pocket healthcare expenditure and limited insurance coverage. While affluent households typically finance treatment through income and savings, economically disadvantaged households to rely on distressed sources like selling assets and borrowing to meet the healthcare needs. This study examines the levels and patterns of distress financing for hospitalization care in India across various demographic and socioeconomic groups. Furthermore, it compares the prevalence of distress financing across major ailment categories. The analysis utilizes data from the 75th round of the National Sample Survey 2017-18 to examine the overall prevalence of distress financing and the final analytic sample consists of 66237 participants. The key respondents include individuals who were hospitalized within the last 365 days. The binary outcome variable indicates whether patients funded their inpatient care through household income/savings (0), or distress means borrowings, sale of physical assets, contributions from friends and relatives, and other sources. The explanatory variables include MPCE quintiles, education, and place of residence. Four ailment categories were cancer, cardiovascular diseases, diabetes, and accidents. The analysis indicates that overall, 43.9% of inpatient cases relied on distress means of financing as either primary or secondary source. Across private and public facilities, the prevalence of distress financing was 35.9% and 49.4% respectively. Within private hospitalization facilities, a sharp gradient was observed across MPCE quintiles with a prevalence of 58.5% amongst the poorest as compared to 35.0% amongst the richest households. These findings highlight the need for strengthened social protection policies and expanded healthcare coverage to alleviate the reliance on distressed healthcare financing. Furthermore, prioritizing insurance-based healthcare systems is critical to achieving equitable and sustainable reductions in the financial burden of healthcare.