Debt, Distress Sales: How Indians Pay For Healthcare

“We knew that Tata [Memorial Hospital in Mumbai] was the best in terms of quality of treatment, and we did not want our father to be denied good quality affordable treatment,” Ghazala told IndiaSpend. The sisters brought Imran to Mumbai in January 2020, along with all the gold the family had at the time.

Over the next two months, they sold all of their gold (including that meant for Ghazala’s sister’s wedding later that year), and a plot of land in Jharkhand of one katha (a unit of measurement used in Jharkhand equal to approximately 1,742 square feet) to pay for Imran’s treatment. The plot of land was at least worth Rs 900,000 but fetched only Rs 200,000 because they could not furnish all the required paperwork in time and needed money urgently.

Only 41% of Indian households said at least one family member has health insurance, according to the latest National Family Health Survey data. Because Ghazala’s family lives in a house they own, officials in Tatanagar did not give them an Ayushman Bharat card--which provides for an insurance cover of Rs 5 lakh per family--says Ghazala.

Ghazala has spent more than Rs 7 lakh in the last two years for her father’s treatment. She could have saved some of that amount by opting for surgery in Kolkata, but it would have involved a long wait. “Even Tata Hospital told us there were no OTs (operation theatres) available until April-May 2020, so they suggested that we opt for surgery in a hospital affiliated to them in Kharghar. Had we waited, we would have surely been caught in the lockdown in a strange city,” said Ghazala. Imran had his surgery at Tata Memorial Hospital Advanced Centre for Treatment, Research and Education in Cancer in Navi Mumbai.

In 2014, the last year for which data is available, the average cost of inpatient care per hospitalisation was Rs 26,475 in urban areas and Rs 16,676 in rural areas.

Definition of out-of-pocket expenditure needs to be extended: experts

Out-of-pocket expenditure (OOPE) includes expenses borne directly by a patient when insurance does not cover the full cost of the health good or service, according to the Organisation for Economic Cooperation and Development. If the financing of healthcare becomes dependent on OOPE, its burden is shifted towards those who use the services, “possibly from high to low income earners, where health care needs are higher”.

In India, OOPE on health was more than the government’s expenditure on health (48.2% compared to 40.6%), according to the Economic Survey 2022.

Khadeeja Bano (46) is a domestic worker who lives in Mumbra in Thane. In 2019, she had to undergo a mastectomy as part of her treatment for cancer. She opted for BYL Nair Charitable Hospital instead of Tata Memorial because “the entire procedure, including postoperative care, cost me Rs 15,000 in Nair”, she told IndiaSpend.

She completed chemotherapy in 2020 and is now cancer-free. Since she opted for a municipal hospital, she did not need to borrow money for her treatment, she says. However, she has been spending Rs 12,000-13,000 every four months for the last two years on tests and medicines that are not provided at Nair, including a scan for which she needs to visit Tata Memorial.

“Now I need multivitamins and protein-rich foods, besides the routine transabdominal and CT (computer tomography) scans,” she said. The only earning member in her family of three, she makes Rs 9,100 in a month, half of which she spends on rent and utilities.

Khadeeja missed out on work for almost a year because of her treatment and the Covid-19 lockdown. This income loss, and the cost of her postoperative care, are not captured in the health expenditure data gathered by the National Statistical Office, according to economist Jay Dev Dubey, an economist and consultant with UNICEF India.

Ghazala’s father, a small business owner, suffered losses before and during the lockdown that rendered him almost penniless, recalls Ghazala. After he got Covid-19, the family was left with no money for treatment and had to resort to asking friends and family for help.

Travelling to a different state is recorded as a healthcare expense, according to the questionnaire used by surveyors. “The railways offer a concessional fare for cancer patients and their attendants, but the form for that is available at the hospital. I had to pay the full fare for the trip from here to Mumbai, but on the way back, I managed to avail of the concession,” said Ghazala.

Inadequate benefits under healthcare schemes, no option but to travel to cities for treatment

In rural India, only 84.7% of the sanctioned doctor positions in district hospitals and 79.4% of the positions in sub-district hospitals were filled, as per the Rural Health Statistics 2021-22. Specialists like oncologists are hard to find, said Heena* (50) from a village near Unchahar in Uttar Pradesh, who had to live in Delhi for six months in 2022 to get treated for leukaemia at the Rajiv Gandhi Cancer Institute and Research Centre in New Delhi.

Heena needed a bone marrow transplant, and she found a matching donor in her sister. The cost of the procedure was covered by insurance. However, the procedure also required her to be injected with a rare drug (whose name she could not recall). The cost of the injection, combined with the prolonged stay in Delhi, required her mother to sell some of the family’s land in Uttar Pradesh to raise part of the Rs 2.5 lakh required.

“I first went to Tata Memorial [in Mumbai], where they told me I needed surgery for which they gave me an appointment in late 2023. Since there was a good chance my condition would worsen if I waited that long, my family insisted I get treated elsewhere,” she told IndiaSpend.

Ghazala’s father Imran was asked to get an injection a month by doctors he approached in Jamshedpur, after the lockdown made it impossible to travel to Mumbai in 2020. He told them that the doctors in Mumbai had told him that these injections would not be required if he got surgery, but they refused to proceed with any other treatment. Since the injections would cost Rs 17,000-18,000 every month, he refused and decided to consult doctors at Tata Memorial online instead for a consultation fee of Rs 500 every month, who reassured him that the injections were unnecessary.

While Ghazala has a vague idea of how state-sponsored health insurance is supposed to work (“we are not that educated or aware”, she told IndiaSpend), Heena is covered by her husband’s health insurance. As he is a central government employee, he and his dependents are entitled to cashless healthcare at government hospitals and those empanelled by the government.

Khadeeja has no idea what health insurance is, and does not know if she is eligible for any benefits. As a domestic worker, she has no social security and uses her savings to pay for her treatment.

High OOPE (more than 29% of the total health expenditure) increases the number of people below the poverty line by 1.8%, according to this paper by economists at the Universiti Putra Malaysia. Over 63 million Indians are faced with poverty every year due to health costs alone, according to government estimates.

“Insurance has not really helped reduce OOPE. We need more regulation to ensure that there is no room for exploitation of beneficiaries with health insurance,” said Chhaya Pachauli, an activist with Prayas, an organisation that works on securing health security.

“Treatment requires health facilities, doctors and medical caregivers, medicine supply, etc. The hidden terms and conditions that are a part of the insurance packages such as waiting period (in which the insured person cannot file a claim), copayment (which is the amount that a beneficiary has to pay out of their pocket) and deductible (amount below which the insurance company does not cover treatment costs) are not very helpful for the poor and less educated. I would advise a greater government role,” added Dubey.

All OOP healthcare costs in India are catastrophic: experts

About 8-9% of all Indian households were pushed below the poverty line due to healthcare costs, as per this paper by economists from the National Institute of Public Finance and Policy based on NSO data. However, this includes data on hospitalisation costs only.

“According to my analysis of data, healthcare expenditures are above 10% (a generally accepted threshold for catastrophic expenditure) of total consumption expenditure. If the poverty line were redefined by including healthcare costs, there would be a massive jump in the share of the poverty-ridden population,” said Dubey, one of the authors of the paper.

Ghazala recalls the sombre wedding they held for her sister in 2021, shortly after her father contracted Covid-19. By then, the family had exhausted all their savings. “We had to send her off to her in-laws with no jewellery. Because the groom’s family were friends of my mother’s, they were aware of our situation. That definitely helped,” she told IndiaSpend.

Ghazala, who works as a schoolteacher, supplements her salary with money that her friends arrange every month to buy her father’s medication. In the months when she comes up short, she leaves out the dietary supplements that were prescribed to him. “We have to prioritise, and his chemotherapy drugs take precedence over nutrition.”