Abstract
BackgroundThis 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.MethodsUsing 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.ResultsOverall, 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.ConclusionsRural 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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