Health Policy Changes and Its Effect on Equity in Healthcare Financing in India

Abstract

Reduction of catastrophic healthcare payments, horizontal inequity, and progressivity of out-of-pocket spending (OOPS) are three crucial issues in healthcare financing. In many countries, these issues have been addressed through health sector reforms. This study examines the effect of health policy changes on equity of financing among households by using four successive rounds of national sample survey data on consumer expenditure in India. The horizontal and vertical equity of healthcare payment was measured by Wagstaff and AJL (Aronson, Johnson and Lambert) decomposition method of redistributive effect. The study shows that out-of-pocket expenditure declined during 1993 and 2009, but increased suddenly during 2009 and 2012 for lower income group. It has been also seen that the value of fairness of financial contribution index declined overtime. This means that healthcare payment structure produce less equity in out-of-pocket payment. Value of Kakwani index increased during 1993–1994 and 2004–2005, but suddenly decreased by 92% between 2004–2005 and 2009–2010, and then increased. This implies that the healthcare payment structure was more progressive during this period but became less progressive later on. This means that poor income group is sending higher share of income compared to high income groups. The government-sponsored health programmes may increase the utilization of health care services but not produce higher equity in OOPS on health.