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      Economic consequences of ill-health for households in northern rural India

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          As compared to other countries in South East Asia, India’s health care system is characterized by very high out of pocket payments, and consequently low financial protection and access to care. This paper describes the relative importance of ill-health compared to other adverse events, the conduits through which ill-health affects household welfare and the coping strategies used to finance these expenses.


          Cross-sectional data are used from a survey conducted with 5241 households in Uttar Pradesh and Bihar in 2010 that included a household shocks module and detailed information about health care use and spending.


          Health-related adverse events were the second most common adverse events (34%), after natural disasters (51%). Crop and livestock disease and weddings each affected about 8% of households. Only a fourth of households reported to have recovered from illness and/or death in the family (by the time of the survey). Most of the households’ economic burden related to ill-health was depending on direct medical costs, but indirect costs (such as lost earnings and transportation or food costs) were also not negligible. Close to half of the health expenditures were made for chronic conditions. Households tried to cope with health-related expenditures mostly by dissaving, borrowing and selling assets. Few households reported having to reduce (food) consumption in response to ill-health.


          In the absence of pre-financing schemes, ill-health events pose a substantial threat to household welfare in rural India. While most households seem to be able to smooth consumption in the short term, coping strategies like selling assets and borrowing from moneylenders are likely to have severe long term consequences. As most of the households’ economic risk related to ill-health appears to depend on out of pocket spending, introducing health insurance may contribute significantly to alleviate economic hardship for families in rural India. The importance of care for chronic diseases, however, represents a big challenge for the sustainability of community based health insurance schemes, since it is necessary to ensure a sufficient degree of risk pooling.

          Electronic supplementary material

          The online version of this article (doi:10.1186/s12913-015-0833-0) contains supplementary material, which is available to authorized users.

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          Most cited references 35

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          Estimating wealth effects without expenditure data--or tears: an application to educational enrollments in states of India.

          Using data from India, we estimate the relationship between household wealth and children's school enrollment. We proxy wealth by constructing a linear index from asset ownership indicators, using principal-components analysis to derive weights. In Indian data this index is robust to the assets included, and produces internally coherent results. State-level results correspond well to independent data on per capita output and poverty. To validate the method and to show that the asset index predicts enrollments as accurately as expenditures, or more so, we use data sets from Indonesia, Pakistan, and Nepal that contain information on both expenditures and assets. The results show large, variable wealth gaps in children's enrollment across Indian states. On average a "rich" child is 31 percentage points more likely to be enrolled than a "poor" child, but this gap varies from only 4.6 percentage points in Kerala to 38.2 in Uttar Pradesh and 42.6 in Bihar.
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            What are the economic consequences for households of illness and of paying for health care in low- and middle-income country contexts?

            This paper presents the findings of a critical review of studies carried out in low- and middle-income countries (LMICs) focusing on the economic consequences for households of illness and health care use. These include household level impacts of direct costs (medical treatment and related financial costs), indirect costs (productive time losses resulting from illness) and subsequent household responses. It highlights that health care financing strategies that place considerable emphasis on out-of-pocket payments can impoverish households. There is growing evidence of households being pushed into poverty or forced into deeper poverty when faced with substantial medical expenses, particularly when combined with a loss of household income due to ill-health. Health sector reforms in LMICs since the late 1980s have particularly focused on promoting user fees for public sector health services and increasing the role of the private for-profit sector in health care provision. This has increasingly placed the burden of paying for health care on individuals experiencing poor health. This trend seems to continue even though some countries and international organisations are considering a shift away from their previous pro-user fee agenda. Research into alternative health care financing strategies and related mechanisms for coping with the direct and indirect costs of illness is urgently required to inform the development of appropriate social policies to improve access to essential health services and break the vicious cycle between illness and poverty.
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              Coping with health-care costs: implications for the measurement of catastrophic expenditures and poverty.

              In the absence of formal health insurance, we argue that the strategies households adopt to finance health care have important implications for the measurement and interpretation of how health payments impact on consumption and poverty. Given data on source of finance, we propose to (a) approximate the relative impact of health payments on current consumption with a 'coping'-adjusted health expenditure ratio, (b) uncover poverty that is 'hidden' because total household expenditure is inflated by financial coping strategies and (c) identify poverty that is 'transient' because necessary consumption is temporarily sacrificed to pay for health care. Measures that ignore coping strategies not only overstate the risk to current consumption and exaggerate the scale of catastrophic payments but also overlook the long-run burden of health payments. Nationally representative data from India reveal that coping strategies finance as much as three-quarters of the cost of inpatient care. Payments for inpatient care exceed 10% of total household expenditure for around 30% of hospitalized households but less than 4% sacrifice more than 10% of current consumption to accommodate this spending.Ignoring health payments leads to underestimate poverty by 7-8% points among hospitalized households; 80% of this adjustment is hidden poverty due to coping.

                Author and article information

                BMC Health Serv Res
                BMC Health Serv Res
                BMC Health Services Research
                BioMed Central (London )
                26 April 2015
                26 April 2015
                : 15
                [ ]Cologne Graduate School in Management, Economics and Social Sciences, University of Cologne, Cologne, Germany
                [ ]Institute of Health Policy and Management, Erasmus University Rotterdam, Rotterdam, The Netherlands
                [ ]Micro Insurance Academy, New Delhi, India
                © Quintussi et al.; licensee BioMed Central. 2015

                This is an Open Access article distributed under the terms of the Creative Commons Attribution License (, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited. The Creative Commons Public Domain Dedication waiver ( applies to the data made available in this article, unless otherwise stated.

                Research Article
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                © The Author(s) 2015

                Health & Social care

                rural india, coping strategies, health expenditures, health shocks


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