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Health Care Spending and Hidden Poverty in India

Author

Listed:
  • Michael P. Keane

    (UNSW Sydney)

  • Ramna Thakur

    (Indian Institute of Technology Mandi)

Abstract

India has a high level of out-of-pocket (OOP) health care spending, and lacks well developed health insurance markets. As a result, official measures of poverty and inequality that treat medical spending symmetrically with consumption goods can be misleading. We argue that OOP medical costs should be treated as necessary expenses for the treatment of illness, not as part of consumption. Adopting this perspective, we construct poverty and inequality measures for India that account for impoverishment induced by OOP medical costs. For 2011/12 we estimate that 4.1% of the population, or 50 million people, are in a state of “hidden poverty” due to medical expenses. Furthermore, while poverty in India fell substantially from 1999/00 to 2011/12, the fraction of the remaining poverty that is due to medical costs has risen substantially. Economic growth appears less “pro-poor” if one accounts for OOP medical costs, especially since 2004/05, and especially in rural areas.

Suggested Citation

  • Michael P. Keane & Ramna Thakur, 2018. "Health Care Spending and Hidden Poverty in India," Discussion Papers 2018-02, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2018-02
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    Cited by:

    1. Jay Dev Dubey, 2021. "Measuring Income Elasticity of Healthcare-Seeking Behavior in India: A Conditional Quantile Regression Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 19(4), pages 767-793, December.
    2. Shrinivas, Aditya & Jalota, Suhani & Mahajan, Aprajit & Miller, Grant, 2023. "The importance of wage loss in the financial burden of illness: Longitudinal evidence from India," Social Science & Medicine, Elsevier, vol. 317(C).
    3. Mun, Har Wai & Hook, Law Siong & Niaz Ahmad, Mohd Naseem & Mazlan, Nur Syazwani, 2022. "Does Recomposed Institutions Quality Alleviate Extreme Income Inequality?," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(2), pages 1-16.
    4. Owen (O.A.) O'Donnell, 2019. "Financial Protection Against Medical Expense," Tinbergen Institute Discussion Papers 19-010/V, Tinbergen Institute.
    5. Anand Sahasranaman, 2020. "Long term dynamics of poverty transitions in India," Papers 2010.06954, arXiv.org.

    More about this item

    Keywords

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    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East

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