By Deepabali Bhattacharjee
Inequity in health system are systematic differences in health outcomes. According to the World Health Organization, Health inequities are differences in health status or in the distribution of health resources between different population groups, arising from the social conditions in which people are born, grow, live, work and age.
However, these inequities lead to large economic costs both to individuals and societies. Out of Pocket Expenditure (OOPE) on healthcare is a serious concern. OOPE on health care is the medical expenditure (both direct and indirect) less of reimbursement that individual pay while availing health care services.
However, according to a report by Ministry of Health and Family Welfare (2025) between 2014-15 and 2021-22, the share of OOPE in the Total Health Expenditure (THE) declined from 62.6% to 39.4% which remains a meaningful indicator of financial burden, particularly for the Empowered Action Group (EAG) states.
It cannot be neglected since this directly connects not only the well-being of that individual, but also family as a whole. The entire phenomena hits differently when the family belongs to the marginalized sections of the society. OOPE on healthcare forces people into financial catastrophe and reduces economic welfare.
But the impoverishment due to OOPE is most common among the poor or marginalized population group, and that creates hurdles in eradicating poverty in many countries. The catastrophic expenditure can force people to cut down on other necessities such as education and thereby further impact poverty. Also, some poor households might not take the health care services, in fear of catastrophic healthcare expenditure. They cannot afford the high medical expenditure involved which require compromise of other important necessities.
This further exacerbates their ill health and impacts earnings. They are therefore, being trapped in poverty. The EAG states of India are also lagging in the context of basic health infrastructure and health outcomes. Poor quality and waiting time in public hospitals is a serious problem for the inpatients of EAG states which lead to an increase in OOPE on health care in EAG states of India.
Three-fourths of inpatients rely on private hospitals in both rural (70 per cent) and urban (78 per cent) areas. Studies show that lack of quality and accessibility of the public health system coupled with the growing dominance of the private health sector have resulted in the poor resorting to private care, even though they are interested in seeking care from the public sector, both at
the national level and for EAG states. Further to the quality of health care, almost 63 percent of clinicians practicing in rural India have inadequate medical training and these have a large bearing on the indirect cost of medical care.
Three important factors to be taken care of that leads to catastrophic expenditure - first, accessibility of health services that requires OOP payments; household’s low ability to pay; and low prepayment mechanisms like insurance. However, elderly population, handicapped, chronically ill and infants are more vulnerable and exposed to this catastrophic health spending because they cannot afford to ignore their ill health and the high expenditure involved in the process.
Government intervention through public health spending or mass insurance coverage is required. Universal Health Coverage (UHC) is important to bring those marginalized and vulnerable people out of the vicious circle of poverty caused by this overburden of OOPE.
Ayushman Bharat was introduced to visualize the concept of Universal Health Coverage in India. UHC ensures all people having access to quality healthcare services – from prevention, promotion, treatment to rehabilitation and palliation – without facing financial constraints. This initiative was taken in response to high OOPE in India.
However, Health is a state subject, and implementation capacity varies widely. States with low per capita income struggle with monitoring and grievance redressal. Also, awareness about eligibility, procedures and entitlements under Ayushman Bharat is uneven.
Marginalized groups and people residing in extreme rural parts of the country lack clear information. Some regions even have poor internet connectivity, low digital literacy and understaffed hospitals. This leads to huge disparities in health facilities across states. Also, Ayushman Bharat takes into account hospitalization, rather than preventive and primary care.
In regions or states, where primary health services are weak, this leads to late-stage treatment rather than early intervention. Therefore implementation of the scheme has deep structural inequities. Existing unequal health facilities, regional imbalances and persistent OOPE indicates that the scheme benefits the population in developed regions of the country, limiting the potential to reduce health system inequity in India.
(Dr Deepabali Bhattacharjee is Faculty, Economics and Public Policy at the Indian Institute of Management in Haryana, India.)
The views expressed are personal and not necessarily those of The South Asian Times.
