OBJECTIVES: At 89.2% in out-of-pocket (OOP) expenditure on health, India ranks third in the list of countries with the highest OOP spending in Southeast Asia. Nearly 39 million Indian residents become impoverished yearly due to high OOP health expenditures. Understanding healthcare utilization and sources of financing for acute illnesses would enable the design of effective health insurance programs, and allocation of inadequate resources among competing needs.

METHODS: Social consumption and health data from the National Sample Survey Organization Round 71 (2014) obtained from the Ministry of Statistics and Implementation from the Government of India was used. Health care spending in India was described. A multiple regression model was used to study the association between various sources of financing and OOP health expenditures using STATA version 14.1.

RESULTS: A sample of 31,240 individuals was studied. Average total expenditure for outpatient services was INR852.17. Average amount spent on medical expenses was INR774.14. Amount reimbursed by insurance/employer was INR54. Average OOP medical expenditure for acute illness was INR720. About 95.81% (n=29,814) used household income for acute illnesses, 2.61% (n=811) people borrowed money, and only 0.35% (n= 110) were covered by health insurance. Majority of the time, service provision followed payment (75.92%). People who used their household income for treatment incurred lower expenses than those who borrowed money for their health expenditure INR924.78 (CI: 768.58 – 1080.97) followed by people who sold their physical assets INR2148.98 (CI: 1172.22 – 3125.74).

CONCLUSIONS: In India, economically disadvantaged individuals who borrowed money and sold assets faced higher OOP expenditures. Current national policy efforts centered on expanding health protection schemes for hospitalization, lack consideration of outpatient care costs and their significant contribution to individual OOP expenses. Focusing policy efforts on a sliding fee schedule that favors the disadvantaged is vital to reduce the burden of OOP health expenditures.