Health-Seeking Behaviour and Equity in Public Health Expenditure in India

Executive Summary

Universal Health Coverage (UHC), a cornerstone of global health policy, aims to ensure that everyone, everywhere has access to quality, affordable healthcare without suffering financial hardship. While financial protection through health insurance is a crucial aspect of UHC, the effectiveness of such schemes hinges on the underlying strength and equity of the healthcare system itself. This paper examines the case of India, a nation actively pursuing UHC applying health insurance model as key strategy, to investigate the critical question: Can India achieve UHC while simultaneously addressing the diverse healthcare needs of its population, particularly the most vulnerable segments?

India’s path towards UHC presents a unique challenge due to its fragmented healthcare system, characterised by an under-resourced public sector and a rapidly growing, largely unregulated private sector. This study utilises data from the National Sample Survey (NSS) 75th round (2018) and the National Health Accounts (NHA) (2019–20) to explore healthcare utilisation patterns, out-of-pocket expenditures (OOPE), and the distribution of government health benefits across different income groups and social categories in India.

Unequal Access and Reliance on Private Care

The analysis reveals a significant reliance on private healthcare facilities for both inpatient and outpatient care, despite the associated high OOPE. While the poorest income quintile shows a higher likelihood of utilising public facilities for inpatient care, a considerable proportion (38%) still opt for private care. For outpatient care, the preference for private facilities is even more pronounced, with over 60% of individuals in the poorest two quintiles choosing private providers. This trend persists across social groups as well, indicating a pervasive reliance on private care irrespective of socio-economic background.

Several factors contribute to this preference for private care. The study highlights quality concerns, long wait times, unavailability of specific services, and the distance of public facilities from home as key drivers pushing individuals towards the private sector, particularly for outpatient care. Financial constraints are identified as a less significant deterrent, raising concerns about the effectiveness of purely insurance-based approaches to UHC in addressing access barriers.

The Burden of Out-of-Pocket Expenditures

The study underscores the substantial financial burden imposed by OOPE on Indian households. Compared to other BRICS nations, India exhibits the highest OOPE as a percentage of current health expenditure (50.6%). The poorest quintile bears a disproportionate share of this burden, with OOPE constituting 8% of their annual per capita consumption expenditure – a level considered catastrophic by the World Health Organization (WHO). This financial strain is exacerbated by the opportunity cost of lost wages and other associated costs of seeking care, pushing vulnerable households further into hardship.

Regression analyses reveal that social determinants, including income, education, age, and place of residence, significantly influence OOPE. The type of provider emerges as a critical factor impacting the magnitude of OOPE, with expenditures in private facilities averaging nine times higher than those in public facilities. This reinforces the concern that reliance on private care, while addressing immediate access barriers, can exacerbate financial vulnerability.

Analysing the Distribution of Government Health Benefits

A Benefit Incidence Analysis (BIA) is employed to assess the equity of government health expenditure distribution. The findings reveal a contrasting picture for inpatient and outpatient care. While the government inpatient care system appears largely equitable and pro-poor at the national level, the outpatient care system exhibits a pro-rich bias.

A deeper dive into state-level data reveals significant variations. In EAG states (characterised by lower incomes), both inpatient and outpatient benefits distribution favour the poor. However, in non-EAG states (higher-income states), the benefits are skewed towards the richer quintiles, indicating a pro-rich system. This disparity underscores the need for targeted interventions to address regional inequalities in healthcare access and benefits distribution.

Implications for Achieving Universal Health Coverage in India

The study highlights the limitations of focusing solely on financial protection through health insurance as a means to achieve UHC in India. The fragmented nature of the healthcare system, persistent reliance on private care, high OOPEs and inequitable distribution of government benefits pose significant challenges to realising equitable access to quality care for all.

Based on the findings, the study recommends a multi-pronged approach to address these challenges and facilitate progress towards UHC in India. Key recommendations include:

• Strengthening the Public Healthcare System: Increasing the density of public healthcare facilities, particularly in underserved areas, is crucial to improve access and reduce reliance on private care. Ensuring adequate staffing, essential medicines, and diagnostic services at all public facilities will enhance the quality of care and encourage greater utilisation.
• Improving Efficiency and Quality of Care: Addressing long waiting times, streamlining referral processes, and enhancing the responsiveness of healthcare providers are essential to improve patient experience and reduce forgone care. Investing in quality improvement initiatives will build trust in the public healthcare system and incentivise utilisation.
• Expanding Coverage for Outpatient Care: Incorporating outpatient care under the health insurance model will alleviate the financial burden on vulnerable households, encourage early treatment-seeking behaviour, and prevent the escalation of health conditions.
• Targeted Interventions to Address Regional Inequalities: Implementing targeted programmes and resource allocation strategies to address healthcare disparities between EAG and non-EAG states is crucial to ensure equitable access and benefits distribution across all income groups and regions.

Achieving UHC in India requires a comprehensive strategy that goes beyond financial protection and focuses on strengthening the public healthcare system, improving the quality and efficiency of care, expanding coverage for outpatient services, and addressing regional disparities. By addressing the underlying weaknesses of the healthcare system and prioritising equitable access for all, India can ensure that the pursuit of UHC translates into tangible improvements in the health and well-being of its entire population.