SPECIAL ARTICLE
Financial Burden of Transient Morbidity:
A Case Study of Slums in Delhi
Samik Chowdhury
Morbidity and its treatment can be potentially
burdensome or even catastrophic for poor households.
While public policy has shown some response to this
phenomenon, there is scope for improvement of the
coverage of the programmes. Health insurance schemes
like the Rashtriya Swasthya Bima Yojana cover only
conditional hospitalisation expenses. This paper argues
that treatment cost incurred on ailments not requiring
hospitalisation is also a substantial burden on the urban
poor. Based on a case study of 150 slum households in
south Delhi with a history of treated ailments within a
specific recall period, the study estimates the degree
and distribution of this burden across socio-economic
and disease characteristics in the sample. The paper
argues for a more holistic approach in social safety nets
like the RSBY, and for explicitly including uncovered
healthcare payments in measurement of the poverty
lines for a more accurate estimation of the marginalised.
I thank Amitabh Kundu for his comments on an earlier version of the
paper. I have also benefited from discussions with Dipendra Nath Das.
Finally, I thank the inhabitants of the Coolie Camp and Kusumpur
Pahadi for their unconditional cooperation.
Samik Chowdhury (samik@nipfp.org.in) is at the National Institute of
Public Finance and Policy, New Delhi.
Economic & Political Weekly  EPW   August 13, 2011  vol xlvI no 33
I
ndia spends around 4% of its gross domestic product (GDP) on
health. Public spending (central, state and local governments
combined) on health, however, accounts for just 1% of the
GDP, with the remaining 3% being spent by private and external
sources. The share of public expenditure in total health expendi-
ture is around 20% while households account for another 70% of
total health spending, almost all of which is in the form of out-of-
pocket (OOP) expenses.1 Reimbursement in any form is generally
availed of by those employed in the formal sector, which is a
m­inority in India.2 Such high levels of OOP spending by the
households have certain adverse implications. While for some,
access to healthcare is reduced considerably,3 others who opt for
treatment face the catastrophic burden of healthcare expendi-
tures, and are in consequent danger of becoming impoverished.
In recent years, the prevalence of illness-induced alteration in
the standard of living, especially amongst the poor, has been
studied extensively. However, the first concrete step in acknowl-
edging and addressing the phenomenon from a policy perspec-
tive has been the Rashtriya Swasthya Bima Yojana (RSBY) which
was formally launched in October 2007, and was operationalised
from April 2008. The scheme envisages to provide smart card
based cashless health insurance cover up to Rs 30,000 to all the
below poverty line (BPL) households in the unorganised sector in
the next five years. The programme intends to cover an estimated
six crore BPL workers in all 600 districts in the country in a
phased manner. As on 31 May 2011,4 about 2.34 crore smart cards
had been issued in 25 states and union territories that have taken
initiatives to implement the RSBY.
As is the case with most health insurance schemes, the services
under this programme are restricted to hospitalisation episodes
within the households. Though hospitalisation entails higher
treatment costs than non-hospitalised morbidity, the latter is
generally the more prevalent form of indisposition. Also, the
l­atest NSS round on morbidity (2004) shows that people prefer
private service providers for treatment as outpatients since the
waiting time in a public source is high. Sixty five per cent of
c­asual labour households (who might be assumed to be one of the
beneficiaries of the proposed scheme) in urban India get them-
selves treated from a private source in case of non-hospitalised
illnesses.5
Against this backdrop, this paper presents findings from a case
study of 150 slum households in south Delhi, carried out in May-
June 2008. The respondents had a history of at least one treated
ailment within a specific recall period. We attempt a disaggre-
gated analysis of the patterns in household health expenditure
59
SPECIAL ARTICLE
on non-hospitalised treatment across socio-economic and
a­ilment categories. The paper also estimates the financial burden
imposed by these ailments. This burden is recurrent unlike that
of hospitalisation expenses, and is largely unaddressed by
schemes such as the RSBY. The paper is organised as follows.
S­ection 1 presents a review of literature on financial implications
of OOP healthcare spending. Section 2 presents a general descrip-
tion of the sample along with the pattern of morbidity and health
service utilisation prevailing in the slums. Section 3 briefly out-
lines the two approaches used in the literature to measure the
effects of OOP spending. Section 4 reports the results of the sur-
vey using the two approaches, quantifying catastrophic expendi-
ture and “medical poverty” and its variation. Section 5 concludes
with a discussion on emerging policy perspectives.
1  Literature Review: Implications of Health Expenditure
The existing literature on the financial implications of healthcare
has largely used two proxy measures to compute this burden –
catastrophic health expenditure and healthcare induced im­
poverishment. Catastrophic payments represent circumstances
when OOP payments cross some threshold share of household
e­xpenditure, and are a major concern in the health financing sys-
tem of any country.6 It has been recognised that the choice of this
threshold is somewhat arbitrary – 10% of total expenditure has
been a common choice (Pradhan and Prescott 2002; Ranson
2002; Wagstaff and Van Doorslaer 2001). The rationale is that
this represents an approximate threshold at which the household,
is forced to sacrifice other basic needs, sell productive assets,
i­ncur debt, or be impoverished (Russell 2004). A survey by the
World Health Organisation (WHO), using data from 89 countries
finds that 3% of households in low-income countries, 1.8% of
households in middle-income countries, and 0.6% of households
in high-income countries incur catastrophic health expenditures
(Xu et al 2007).
Soaring healthcare expenditure often affects the magnitude
and pattern of household consumption. When a member falls ill,
the household faces several different costs (treatment cost, trans-
portation cost, opportunity cost of care giving, etc) and takes
r­ecourse to diverse strategies to finance the same. While the OOP
expenses set in “real time” deterioration in the standard of living,
the coping strategies very often turn out to be potential poverty
traps. The chain of events has often been termed as the “poverty
ratchet” (Chambers 1983) or the “medical poverty trap” (White-
head et al 2001). Gertler and Gruber (2002), for instance, studied
the impact of health shocks on households’ consumption patterns
in Indonesia, providing evidence that illness reduced labour sup-
ply and household income. Similarly, Wagstaff (2005) found that
health shocks were associated with a reduction in consumption
in Vietnam, in particular for the uninsured and better-off house-
holds. Dercon and Krishnan (2000) show that in Ethiopia the
consumption risks associated with health shocks are not borne
equally by all household members. In addition, estimates of the
financial burden of illness are available for at least six Latin
American countries (Baeza and Packard 2005), China (Lindelow
and Wagstaff 2005), Thailand (Limwattananon et al 2007), and
14 Asian countries and territories (Van Doorslaer et al 2007).
60
Studies on India have found average expenditure on medical
care rising invariably with monthly per capita consumer expendi-
ture or income of the household (NSSO 1992, 1998; Visaria and
Gumber 1994; Rajarathnam et al 1996). However, medical ex-
penditure as a proportion of total resources at the household’s
disposal was much lower for the rich (Krishnan 2000). Based on
household data from rural and urban areas of 15 major states and
the north-east, Gumber (2002) showed that health expenditure as
a percentage of annual income varies from 3% in the richest 20%
of the households to 12% in the bottom 20% of the households.
The prevalence of illness-induced impoverishment has also been
studied in the Indian context. A study of 35 villages in Rajasthan
found that health and health expenses were one of the main
causes for 85% of all cases of impoverishment (Krishna 2004).
One-half to two-thirds of all households falling into poverty men-
tioned ill-health and health expenses as a contributory cause
(ibid). Such impoverishment is of even greater concern given the
evidence from another detailed study in Rajasthan that shows
healthcare purchased is often of poor quality, even harmful
(Banerjee et al 2004). More than 37 million people in India were
pushed below the poverty line in 1999-2000 because of OOP
e­xpen­diture, as per the $1 norm of the poverty line (van Doors-
laer et al 2005). This is in addition to those who are already be-
low the poverty line and are further pushed into acute poverty
because of OOP payments. A more recent study using the NSSO
data reports that after adjusting for the sources (borrowings,
contributions and sale of assets, etc) of OOP expenditure, 63.22
million individuals or 11.88 million households were impover-
ished due to healthcare expenditure in 2004 (Berman et al 2010).
2  Sample Description and Study Design
The non-notified jhuggi-jhonpri (slum) colony at Coolie Camp in
Vasant Vihar was built on land owned by the Delhi Development
Authority. The slum hosted approximately 350 households mostly
from the neighbouring states of Uttar Pradesh and Rajasthan. It
was located along a nallah (drain) fed by sewage from the nearby
commercial and residential establishments. For the entire slum,
there were just two taps with a very infrequent supply of water.
Supplementary arrangements of water tankers arrived at odd
hours when the male members of the household were at work. It
was often not possible for women to carry filled jerry-cans of
w­ater into their jhuggi from the main road where the tanker was
parked. Many of the jhuggis were of the unserviceable kutcha
v­ariety and roughly measured six feet by six feet. There was no
toilet and the inhabitants defecated in the forest nearby. The
community toilet that had been built ceased to function due to
infrequent water supply. The drains inside the slum were open
and kutcha. Although there was electricity in all the jhuggis, the
slum-dwellers complained of disproportionately high metre
(newly installed) readings. The nearest private hospital, doctor
or chemist shop was located within a distance of 1.5 km. How-
ever, the nearest government hospital or health centre was rela-
tively far from the slum.
Situated alongside the remnants of the endangered Delhi
Ridge Area around Vasant Kunj, Kusumpur Pahadi was a slum
cluster more in the form of an urban village. It had a population
August 13, 2011  vol xlvI no 33  EPW   Economic & Political Weekly

of more than 20,000. The inhabitants were more diverse vis-à-vis
the Coolie Camp, with respect to their places of domicile. There
was substantial disparity in access to basic services, especially
water, and the deprivation was along the lines of political inclina-
tion, economic status or even place of domicile. However, a pucca
motorable road within the slum allowed water tankers, among
other vehicles, to serve the farthest corner of the colony. A majo­
rity of the houses were of the serviceable kutcha variety but with-
out their own toilet. Drainage within the clusters was of open
kutcha type. The slum was self-sufficient as far as services such
as provision store, chemist shop, grocery shop, stationery shop,
jewellery shop, tea stalls, etc, were concerned. However, medical
facility available within the slum was of a rather dubious nature.
There were a number of shady clinics run by bangali daakters,7
who reportedly charged meagre amounts and were not ade-
quately trained in medicine. However, the dearth of genuine
medical facility – public or private – had allowed entry points to
some non-governmental organisations (NGOs) which were doing
a commendable job in this area.
Table 1: Distribution of the Selected Sample
Coolie Camp Kusumpur Pahadi All
Number of households surveyed 40 110 150
Number of individuals surveyed 207 664 871
Number of ailment cases 47 111 158
South Delhi hosts two of the largest public health institutions
in India, the All India Institute of Medical Sciences (AIIMS) and
the Safdarjang Hospital, which cater to patients not only from
Delhi and neighbouring areas, but from all over India and even
from abroad. The rationale for the selection of these slums is that
these were situated at a distance of 7-10 kms from these institu-
tions, which could hardly be termed as proximal, especially when
the case in question is that of a medical emergency. This presum-
ably has a bearing on the healthcare utilisation pattern of the
slum-dwellers. Thus, in a way, the selection of the sample itself
brought in an element of randomness in the choice of the medical
provider, which again had a direct bearing on the financial bur-
den of treatment. The randomness was further enhanced when
we considered some other factors such as the presence of private
healthcare institutions in the vicinity and their charges, the quality/
efficacy and quantity of services by provider-type, the general level
of health awareness among households, the occupational pattern,
and the presence or absence of any formal health insurance.
A questionnaire designed to elicit responses on the type of
morbidity, health service utilisation and the cost of treatment
was canvassed among 150 households with a history of outpa-
tient visit within a brief recall period of 30 days (Table 1). Thus,
this was a case of non-probabilistic purposive sampling8 covering
only those households with a history of ailment. The following
methodology was adopted for the selection of the sample. First,
we obtained a complete house listing of the slums from the local
councillor in the case of Kusumpur Pahadi and from an NGO
working on maternal health issues in the case of the Coolie Camp
slum. Both the slums were demarcated into blocks (five in case of
Kusumpur Pahadi and two in case of Coolie Camp) for adminis-
trative purposes. As is often the case, the blocks were different
from each other in terms of the places of origin of the residing
Economic & Political Weekly  EPW   August 13, 2011  vol xlvI no 33
SPECIAL ARTICLE
households. Second, we randomly identified 44 and 40 house-
holds from each block of Kusumpur Pahadi and Coolie Camp res­
pectively, which had a case of treated ailment within the speci-
fied recall period. Thus in effect, we selected and numbered 300
households with ailments, i e, 220 from Kusumpur Pahadi and 80
from Coolie Camp. Third, we chose every odd-numbered house-
hold out of these 300 households for canvassing of the full ques-
tionnaire. So finally we had 150 households, 40 from the smaller
Coolie Camp and 110 from the larger Kusumpur Pahadi.
The households have been living in the selected slums for 18
years on an average and a majority (95%) of them had migrated
from rural areas, mostly from the neighbouring states. The
a­verage and modal household size was 5.66 and 5 respectively.
The mean age of the respondents was 23. Almost 3% were infants
(less than or equal to one year of age), 60% were in the age group
15-59 years while 4.5% of them were more than 60 years old.
Women constituted 48% of the sample population. The married
accounted for around 41% of the population while 4% were
w­idowed or divorced. Nearly 30% were illiterate. A majority of
the literate respondents had dropped out after the fifth standard.
Their economic condition notwithstanding, most of the children
in the school-going age were found to attend schools. Out of the
871 individuals surveyed, 303 (around 35%) were currently em-
ployed, 58% of whom worked as daily wage earners. Only 14%
of the working population were salaried employees, and the
r­emaining 28% self-employed. The average monthly expenditure
of the sample households was Rs 4,100. The median of the house-
hold expenditure was consistently lower than the average, imply-
ing the presence of outliers at the upper end of the income ladder.
Though just 38% of the individuals in the sample were found to
be “officially poor”,9 the deplorable status of basic necessities
within the slums underscored the limited potency of consump-
tion expenditure levels as a proxy for access to services. A visit
to these slums and a study of the living standards of the inhabit-
ants raises serious doubts on official poverty estimates and
their methodology.
Fever, gastrointestinal diseases, and respiratory diseases in-
cluding asthma were the three major ailments, together consti-
tuting around 60% of all cases. The women accounted for all the
cases of anaemia and generalised weakness. People displayed a
marked preference for private sources of treatment. In about 73%
of the cases, the respondents approached a private doctor for
treatment. The most appalling finding, however, was that almost
15% of the ailing sample opted for treatment from an unregis-
tered and unqualified private practitioner. These were quacks,
locally known as bangali daakters, who were quite conspicuous
within the slums. These shady clinics attracted a lot of patients
owing to their locational utility and low charges. Despite being
aware of the limited efficacy, and in certain cases even fatality of
the treatment offered by these men, people approached them
since the direct cost and opportunity cost incurred on treatment
from their formal counterparts was often high and burdensome.
Another significant observation was that only 12% of the ailing
individuals opted for public institutions for treatment. Personal
communication with the respondents indicate a variety of r­easons
for this – the opportunity cost in terms of work-hours lost,
61
SPECIAL ARTICLE

p­rocedural complications, failure to precisely communicate with the Figure 1: Diagrammatic Exposition of Illness-Induced Impoverishment
doctor, dependence on private sources anyway for medicines, travel MPCE
MPCE
expenses, and informal payments sought by hospital staff.

3  Effects of OOP Health Spending: Two Approaches

Household
Household Expenditure
Expenditure
Gross
Gross of OOP
OOPPayment
Payment Household
Household
Catastrophic Impact of OOP Health Expenditure: The metho­ Expenditure Net
Expenditure Net
of OOP Payment
dology applied for computing the extent and depth of cata- of OOP Payment
Poverty
Poverty
strophic expenditure and impoverishment is based on Xu et al Line
Line C
AA C
(2003) and Wagstaff and Doorslaer (2003). The treatment cost B
B
components10 were added to arrive at the total health expendi-
ture. Reimbursement, if any, was deducted to get the net OOP
gross
H gross net
H net
H H
health payments made by the household (say P). Suppose X rep- Cumulative Proportion
Cumulative proportion of
Source: World Bank (2008). of Population Ranked by
population ranked by
resents the total consumption expenditure of the household. Household MPCE MPCE
household

Health expenditure is assumed to be catastrophic when P/X > Z considered as non-poor in spite of their MPCE net of OOP health-
(a fraction). Catastrophic payment headcount or CPH = 1/N ∑ E, care payments being below the poverty line. The rationale for
where E = 1 for all P/X > Z and N stands for total population/ this measure is that standard measures of poverty that compare
sample. Catastrophic payment gap captures the average degree total household expenditure with a stipulated poverty line, fail to
by which payments as a proportion of income exceeds/over- adequately reflect healthcare needs that are highly stochastic.
shoots the threshold, Z. The catastrophic payment gap (G) is Households might be classified as non-poor just because higher
given by G = 1/N ∑ Oi, where Oi = Ei ((Pi/ Xi)-Z). The rationale health spending on critical healthcare raises their total spending
for this measure is that spending a substantial proportion of the above the poverty line levels, while spending on other non-­
Table 2: Average Cost of Treatment as Outpatient (in Rs) discretionary items is below the
Slum Medical Expenditure Associated Expenditure Total Expenditure
subsistence level.
Min Max Med Avg Min Max Med Avg Min Max Med Avg
Coolie Camp 0 3,000 300 490 0 500 0 43 0 3,500 350 533 For computational convenience,
Kusumpur Pahadi 0 4,300 300 608 0 500 0 42 0 4,800 300 651 we exclude four households that re-
All 0 4,300 300 573 0 500 0 43 0 4,800 305 615 ported more than one (two) ­illness
(i) Associated Expenditure includes transport, charges paid to the escort and others.
(ii) Min – minimum, Max – maximum, Med – median, Avg – average. episodes within the r­eference
Source: Computed from data collected during the case study. ­period. This also allows us a map-
household budget on medical treatment is by and large at the ping (one-to-one) of the burden across two very important indi-
­expense of the consumption of other essential goods and services. vidual characteristics, viz, nature of disease and source of treat-
The affected household has to bear this opportunity cost in the ment. If we retain a household with multiple cases of treated ail-
short-term or in the future, depending on whether healthcare is ment, and that household was found to experience economic
financed by cutting down current consumption or through burden of illness by the current definition, it would not be possi-
s­avings, sale of assets or credit. ble to isolate the particular episode (nature) of ailment, or the
type of service utilisation12 that constituted the burden on the
Impoverishing Effects of OOP Health Expenditure: The metho­ household. This is a departure from earlier studies on economic
dology is an adaptation of Wagstaff and Doorslaer’s (2003) at- burden of illness, with a distinct possibility of a more holistic
tempt to estimate the impact of OOP payments for healthcare on understanding of the phenomenon of financial ramifications of
the two fundamental measures of poverty – the headcount and OOP expenses.
the poverty gap11 – for Vietnam in 1993 and 1998. Figure 1 plots
the household monthly per capita expenditure (MPCE) pre- and 4  Methodology-wise Survey Results
post-payment (OOP payment) on the Y-axis against households
ranked by pre-payment MPCE on the X-axis. The case displayed in 4.1  Catastrophic Impact of OOP Healthcare Payments
the figure makes an implicit assumption that the relative position The monthly average and median expenditure on treatment for
of households in the gross and net of OOP expenditure distribu- the entire sample was Rs 615 and Rs 305 respectively. The aver-
tion does not change. In the standard case (pre-­payment), head- age associated expenditure incurred, mostly on account of trans-
count is Hgross and poverty gap is equal to the area “A”. In the spe- port, amounted to Rs 43 per capita per month (Table 2).
cial case (post-payment), poverty headcount increases to Hnet and The median and mean of the share of OOP health expenditure
the gap is now given by the sum of “A”, “B” and “C”. Area “B” rep- in total income was 10% and 15% respectively. Table 3 presents
resents the increase in the intensity of poverty due to healthcare the aggregated results of the analysis. As many as 39% of the
payments, for those households who were a­lready poor on the Table 3: Catastrophic Impact of OOP Payments within the Sample Households
b­asis of pre-payment MPCE. Catastrophic Threshold (more than)
10% (Median) 15% (Mean) 20% 40%
Similarly, area “C” stands for the addition to the poverty gap
Headcount (%) 50.0 38.7 26.6 6.5
due to new entrants into poverty after paying for healthcare. The Mean gap (%) 7.9 5.6 3.9 0.9
value of (Hnet - Hgross) corresponds to the fraction of households Source: Same as Table 2.
62 August 13, 2011  vol xlvI no 33  EPW   Economic & Political Weekly
 SPECIAL ARTICLE

households spent more than 15% of their household expenditure A disease-specific summary of treatment cost (Table 5) shows
on healthcare, which also happens to be the mean for the entire that persons with orthopaedic ailments incurred the highest
sample of households with at least one treated ailment. The a­verage expenditure followed by gastro-intestinal and cardio-
a­verage overshoot amounted to 8% of total income, which means logical ailments. The most common ailments, i e, fever and ENT
that the households spending more than a tenth of their income on infection, accounted for an average cost of Rs 252. The fact that a
healthcare exceeded the threshold by 8% on an average. What visit to a quack (“private unregistered” formally) costs around
is alarming is that there are households which have spent 40% or Rs 80 explains why the urban poor opt for treatment of such du-
even 50% of their monthly income on non-hospitalised t­reatment. bious quality, in spite of being aware of the often limited efficacy
Table 4 presents the distribution of the burden of illness across of the medicines sold by these units. The corresponding costs for
expenditure quintiles and occupation of the main earner of the the registered private and even the public counterparts are much
household. The average expenditure demonstrated a slightly higher. Table 5 also shows the incidence and intensity of burden
p­ositive income gradient. As we move up the expenditure quin- across ailment categories and type of service provider.
tile, the catastrophic headcount declines. Thus a poorer person Treatment of “others”, which included accidents and injuries
bears a disproportionately higher burden of treatment cost. among other problems, required the highest share of household
resources (OOP share). Individuals suffering
Table 4: Distribution of Burden of Illness across Expenditure Quintiles and Occupation of the Main Earner
of the Household from these ailments had to spend around 19.2%
Medical Associated Total Average Catastrophic of their total monthly household expenditure
Expenditure (Rs) Expenditure (Rs) Expenditure (Rs) OOP Impact – 10%
Mean Median Mean Median Mean Median Share (%) Head- Gap (%) on treatment. This was closely followed by
count (%) g­y naecological and gastrointestinal diseases.
Expenditure Quintile This is not surprising since prenatal and post-
  Poorest 526 300 41 0 567 300 20.3 79.2 11.2
natal check-ups involve expensive and unavoid-
  Lower middle 656 375 38 0 693 425 20.2 66.7 11.8
able diagnostic tests and prolonged medication.
  Middle 384 250 34 0 417 300 13 43.8 6.4
More than half the individuals with cases of tuber­
  Upper middle 706 250 67 0 773 300 15.4 38.1 8.7
  Richest 669 450 39 0 708 450 10.1 31 3.7
culosis, respiratory diseases including asthma,
Occupation of the main earner gastrointestinal diseases and others spent more
  Salaried 804 555 31 0 869 585 13.2 40.7 6.2 than 10% of their household expenditure on
  Casual and contractual labour 644 500 49 0 698 550 16.3 53.2 8.8 treatment. The average intensity of f­inancial
  Others 481 280 78 0 559 400 13.1 50 6.3 burden was the highest for patients with uncate-
All 573 300 43 0 615 305 15 50 7.9 gorised ailments (others) which included acci-
Source: Same as Table 2.
dents and injuries. It might be noted that acci-
The intensity of burden presents a more or less similar picture. dents or injuries have a more acute manifestation and therefore
The average as well as the median expenditure was higher for the treatment expenses are often high and inflexible. However, the
the households whose main earner was salaried. However, the issue of major concern is that even the most common and appar-
average share of OOP health expenses in total expenditure was ently inexpensive diseases such as fever and diarrhoea are impos-
the highest among households whose main earner was a casual ing a major financial burden on the lives of the urban poor.
labourer. They were also found to bear a disproportionate eco- The average OOP shares across treatment sources exhibit wide
nomic burden of illness, both in terms of headcount as well as gap. disparity. The share of health expenditure in the household
Table 5: Distribution of Burden of Illness across Disease Categories and Source of Treatment
Medical Expenditure (Rs) Associated Expenditure (Rs) Total Expenditure (Rs) Average OOP Catastrophic Impact – 10 %
Mean Median Mean Median Mean Median Share (%) Headcount (%) Gap (%)

Ailment type
  Anaemia and generalised weakness 404 465 0 0 404 465 8.3 28.6 2
  Cardiological 697 500 3 0 700 500 12.2 28.6 3.6
  Fever and ENT infection 243 198 10 0 252 198 6 22.5 0.9
  Gastro-intestinal 887 450 69 0 956 500 17.3 51.4 9.9
  Gynaecological and obstetric 612 300 40 0 652 300 17.5 40 9.5
  Nervous system 517 500 115 75 632 550 16.2 33.3 8.6
  Orthopaedic 960 260 75 100 1,035 460 13.7 44.4 6.6
  Respiratory including asthma 446 500 41 0 486 500 13.3 58.8 5.6
  Skin disease and infection 308 200 40 50 348 300 5.7 0 0
  Tuberculosis 400 500 133 100 533 700 11.5 66.7 3.2
  Others 551 425 40 0 591 475 19.2 50 11.6
Source of treatment
  Public 174 200 88 75 262 245 6.3 15 0.7
  Private registered 741 500 43 0 785 500 15.3 72.2 7.4
  Private unregistered 78 80 0 0 78 80 2.2 0 0
All 573 300 43 0 615 305 15 50 7.9
Source: Same as Table 2.

Economic & Political Weekly  EPW   August 13, 2011  vol xlvI no 33 63
SPECIAL ARTICLE

budget was the highest for people who opted for treatment from p­atients who were poor remained unchanged (no new entrant
a registered private source. The average share was more than into poverty due to treatment cost). However, the net income
double that of those who opted for a public mode of treatment, (income net of treatment cost) of the poor anaemia patients was
i e, a government hospital or dispensary. Those who were lower with respect to the poverty line. Hence the post-payment
treated by the quacks within the slum presumably incurred the gap was more than the pre-payment gap. Individuals suffering
lowest OOP share. In terms of extent and depth of the cata- from tuberculosis were the worst affected in terms of the impov-
strophic burden too, those who chose private medical treatment erishing impact of healthcare payment due to the high cost of
had to bear a relatively greater economic burden of illness. Ail- treatment associated with the disease. It seems little has
ing persons treated by unqualified medical practitioners were changed in terms of the burden of the disease despite the con-
not found to experience economic burden of illness as per our scious effort of the government to allocate resources and raise
definition. This only goes to show that the possibility of a finan- public awareness towards its eradication. The other burden-
cial burden might be playing a role in the decision of the urban some ailments within the slums were gynaecological, orthopae-
poor to opt for treatment of inferior quality, which might even- dic, cardiological and gastro-intestinal in nature.
tually have an impact on their physical constitution and future Private sources of treatment contributed largely to the impov-
earning potential. erishing effects of OOP payments for healthcare. The worst con-
dition was probably of those who were impoverished after treat-
4.2  OOP Health Expenses and Impoverishment ment from an unqualified private source. Apart from the adverse
The OOP expenditure on health raised poverty levels within the financial implications of the health shock, the quality of treat-
sample by around 13 percentage points. The gap also went up by ment meted out to them made them more susceptible to subse-
Rs 51 per capita per month (Table 6). Female-headed households quent episodes of illness. Poverty headcount increased by
Table 6: Increase in Poverty Due to Ill Health-Related Expenditure around 16% for individuals who availed of a private source for
by Sex of Household Head and Occupation of the Main Earner treatment of their ailments. The corresponding figures for the
Headcount (%) Gap (Rs)
private u­nregistered source and the public source were 3.6%
Pre-Pay Post-Pay Difference Pre-Pay Post-Pay Difference
and 0% r­espectively. One interpretation of this result is that
Sex of household head
  Male 36.3 48.4 12.1 43 94 51
preference for the public source was largely prevalent among
  Female 59.3 76.5 17.2 98 144 46 those who were already poor and therefore there were no new
Occupation of the main earner entrants into poverty on account of treatment cost incurred.
  Permanent employee 46.1 58.5 12.3 54 117 63 However once we consider the indirect cost of such treatment in
  Casual and contractual labour 42.5 59.3 16.8 83 125 42 terms of workdays lost, they might ultimately prove to be more
  Others 9.0 19.8 10.8 2 16 14 burdened. On the other hand, individuals who opted for a pri-
All 38.4 50.9 12.6 48 98 51 vate registered source were predominantly above the poverty
Source: Same as Table 2.
line. Given the higher e­xpenditure incurred in case of treatment
and the contractual labour households were the most vulnerable from a private source, there were more cases of treatment cost
in terms of the number of individuals in the respective group induced poverty within this group. Individuals who could not
who were impoverished due to health payment. The poverty protect their living standards (with respect to the poverty line)
gap, however, was higher for the male-headed
Table 7: Increase in Poverty Due to Ill Health-Related Expenditure across Ailment Categories
households and for those whose main earner and Source of Treatment
was a permanent e­mployee. A similar analysis Headcount (%) Gap (Rs)
Pre-Pay Post-Pay Difference Pre-Pay Post-Pay Difference
across ailment cate­gories and source of treat-
ment makes for some interesting observations. Ailment categories
  Anaemia and generalised weakness 52.9 52.9 0 128 151 23
For individuals suffering from gynaecolo­
  Cardiological 31.4 51.4 20.0 7 40 33
gical ailments, the pre-payment headcount   Fever and ENT infection 31.3 36.5 5.2 26 60 34
­ratio of 62.9% changes to 100% post-payment,   Gastro-intestinal 42.6 62.2 19.6 57 123 66
implying that while 62.9% of the individuals   Gynaecological and obstetric 62.9 100.0 37.1 57 169 112
who had this ailment were poor even before   Nervous system 17.9 17.9 0 2 59 57
payment, all of them were impoverished post-   Orthopaedic 25.0 59.1 34.1 51 114 63
payment (Table 7). Although the headcount   Respiratory including asthma 56.6 70.7 14.1 62 136 74
­remained unchanged for individuals suffering   Skin disease and infection 18.7 18.7 0 13 22 9

from certain kind of ailments, poverty gap in-   Tuberculosis 44.4 83.3 38.9 50 125 75

creased post-payment for all the ailment cate-   Others 37.2 37.2 0 83 130 47
Source of treatment
gories. For example, in the case of those suffer-   Public 38.5 38.5 0 53 79 26
ing from anaemia, 52.9% of individuals suffer-   Private registered 39.9 55.8 15.9 50 111 61
ing from the ailment were poor even before in-   Private unregistered 29.1 32.7 3.6 28 40 12
curring the treatment cost (i e, on the basis of All 38.4 50.9 12.6 48 98 51
their consumption expenditure). After paying Based on poverty line for urban Delhi (Rs 612.91) according to the press release by the Perspective Planning Division,
Planning Commission of India, March 2007.
for treatment the absolute number of anaemia Source: Same as Table 1.
64 August 13, 2011  vol xlvI no 33  EPW   Economic & Political Weekly
 SPECIAL ARTICLE

after visiting an u­nqualified medical practitioner for treatment
of their ailments actually formed the marginal cases. They were
neither able to bear the direct costs of a qualified private source
nor the indirect costs associated with a public source. Again, in
spite of being marginally above the poverty line, the relatively
lower expenditure they incurred on treatment from an unquali-
fied source could not prevent 3.6% of this category from falling
into poverty.
5  Conclusions
In this paper, we have provided a detailed account of the finan-
cial burden of treatment cost due to non-hospitalised ailments by
applying two measures largely used in health expenditure analy-
sis – catastrophic burden of OOP health expenses and impover-
ishment effect of healthcare payments – to the data collected
from a case study of selected urban slums in Delhi. OOP health
expenditures are found to be highly regressive in nature, ac-
counting for 20% of the total consumption expenditure for
households (with cases of treated ailments) belonging to the
poorest quintile. Half of the sample households spent more
than 10% of their resources on health. Though the possibility of
sampling biases in the current case study cannot be undermined,
it seems extremely unlikely that the spending proportion of the
urban poor households on healthcare can be different, especially
in view of the clear preference for the private sources of treat-
ment.13 The female-headed and casual labour households within
the sample were disproportionately b­urdened by the financial
ramifications of OOP expenses.
The paper introduces two new aspects in assessing the finan-
cial burden of treatment – type of ailment and nature of service
provider. Individuals suffering from tuberculosis, respiratory,
gastrointestinal and gynaecological ailments were found to be
more prone to the burden. A household facing a health shock
o­f ten does not have the resources to seek formal sources of
treatment and falls in the hands of unqualified medical practi-
tioners who charge less but provide services of dubious quality.
This seems to be one of the alarming findings of the study
­especially since none of these households were found to experi-
ence the burden of illness according to our definition. The rela-
tively lower f­inancial burden associated with unqualified
sources of treatment may further dictate the treatment seeking
behaviour among the slum-dwellers. So in a way, the cost of
service determines the choice of provider. Although public
sources of treatment cost less, the poor by their own admission
have been found to avoid them due to reasons ranging from
lengthy, time-­consuming procedures to informal payments to
hospital staff.
Although observations from a single case study cannot be the
basis for broader policy perspectives, one can safely argue that
the time has come to target the reasons for impoverishment
rather than the poor per se. While social security programmes
like the RSBY make an attempt in this direction, this study shows,
albeit in a restrictive domain, that there is room for reformula-
tion of the scheme to include outpatient episodes also, which are
highly debilitating for the households, notwithstanding the rela-
tively lower cost of treatment vis-à-vis inpatient cases. Even in
the context of counting the poor, there is a need to explicitly
i­ncorporate OOP health expenses in deciding upon the poverty
lines for a more accurate representation of the marginalised
s­ections of the society. This is particularly true in view of the
gradual withdrawal of the State from its role as a provider of
health services in the recent years.

Notes
1 “National Health Accounts India (2004-05)”,
NHA Cell, Ministry of Health and Family Welfare.
2 Unorganised workers constitute about 92%, while
unorganised non-agricultural workers constitute
around 72% of the total workforce in India
(Report of the National Commission for Enter-
prises in the Unorganised Sector 2007).
3 Three consecutive National Sample Survey
(NSS) Rounds (42nd, 52nd and 60th) on morbidity
and healthcare have shown that financial dif­
ficulties are one of the most oft-cited reasons for
not treating ailments and the phenomenon is
showing a rising trend.
4 Press Information Bureau (PIB) release, GoI,
29 December 2010.
5 Computed from NSS 60th round unit record data
on Morbidity and Treatment of Ailments (2004).
6 Several scholars have worked on this subject. See
Berki (1986), CMH (2001), Kawabata and Xu
(2002), Meesen and Zang (2003), OECD and WHO
(2003), Pradhan and Prescott (2002), Wyszewian-
ski (1986), Whitehead et al (2001), Wagstaff and
Van Doorslaer (2003); Xu et al (2003).
7 Self-identified medical practitioners. Personal
communication with the respondents reveal the
general belief that Bengalis make good doctors
and hence the name bangali daakter.
8 The reason was that Delhi displayed a very low inci-
dence of morbidity (around 1.6%) as per the 60th
round of the NSS. Purposive sampling is generally
applied in situations where we need to reach a tar-
geted sample (households with ailments, in this
case) quickly and where sampling for proportion-
ality is not the primary concern. With a purposive
sample, one is likely to get the response of the
target population with the associated danger of
overweighting subgroups in the population that
are more readily accessible.
9 Poverty line for urban Delhi was Rs 612.91 (Plan-
ning Commission of India, March 2007).
10 Information was collected on doctor’s fee, medi-
cines, diagnostic tests, physiotherapy, personal
medical appliances, food, ambulance services
and transport, and miscellaneous.
11 The headcount measures the number of individu-
als or households living below the poverty line as
a percentage of the total population/households.
The poverty gap measures the total amount of
i­ncome transfer that is needed to lift all the poor
households out of poverty.
12 In case they were different for each episode with-
in the household.
13 The NSS consumption expenditure data regularly
puts the average health share in the household
budget of urban India at a meagre 5%. Even on
the basis of the NSS 60th round data on morbidi-
ty, the health share in the household budget of
urban Delhi for the lowest expenditure quintile
was found to be around 1.2% that happens to be
the lowest in the country.
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