Abstract
Background: This study examines health-related “hardship financing” in order to get better insights on how poor households finance their out-of-pocket healthcare costs. We define hardship financing as having to borrow money with interest or to sell assets to pay out-of-pocket healthcare costs.Methods: Using survey data of 5,383 low-income households in Orissa, one of the poorest states of India, we investigate factors influencing the risk of hardship financing with the use of a logistic regression.Results: Overall, about 25% of the households (that had any healthcare cost) reported hardship financing during the year preceding the survey. Among households that experienced a hospitalization, this percentage was nearly 40%, but even among households with outpatient or maternity-related care around 25% experienced hardship financing. Hardship financing is explained not merely by the wealth of the household (measured by assets) or how much is spent out-of-pocket on healthcare costs, but also by when the payment occurs, its frequency and its duration (e.g. more severe in cases of chronic illnesses). The location where a household resides remains a major predictor of the likelihood to have hardship financing despite all other household features included in the model.Conclusions: Rural poor households are subjected to considerable and protracted financial hardship due to the indirect and longer-term deleterious effects of how they cope with out-of-pocket healthcare costs. The social network that households can access influences exposure to hardship financing. Our findings point to the need to develop a policy solution that would limit that exposure both in quantum and in time. We therefore conclude that policy interventions aiming to ensure health-related financial protection would have to demonstrate that they have reduced the frequency and the volume of hardship financing.
Highlights
This study examines health-related “hardship financing” in order to get better insights on how poor households finance their out-of-pocket healthcare costs
We developed an asset-index as proxy for socioeconomic status by performing a principal component analysis (PCA) on various aspects of household assets, following the guidelines of Vyas and Kumaranayake [28]
When looking at the financing sources used by members and non-members, we found that Self-Help Group (SHG) members rely significantly more often on microfinance as a source of borrowing than non-members when paying for all health expenditures, hospital expenditures, or outpatient expenditures (4.4% vs. 2.3%, p < .001; 8.5% vs. 4.7%, p < 0.01; 3.7% vs. 2.1%, p < .01 respectively, Chi2)
Summary
This study examines health-related “hardship financing” in order to get better insights on how poor households finance their out-of-pocket healthcare costs. All over India, the level of out-of-pocket spending is 69.5% of total health expenditures [2]. This considerable burden warrants a better understanding of how poor households finance these out-of-pocket healthcare costs. Xu et al [3] fix the threshold at 40% of disposable income net of subsistence needs; Russell [4] and Van Doorslaer et al [1] use a threshold of 10% of total annual household income. These methods fail to recognize that a uniform threshold might represent varying levels of hardship. Morduch and Rutherford [7] reported this cash-flow pattern to hold true in most lowincome countries
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