Refining estimates of catastrophic healthcare expenditure: an application in the Indian context

Empirics of catastrophic healthcare expenditure, especially in the Indian context, are often based on consumption expenditure data that inadequately informs about the ability to pay. Use of such data can generate a pro-rich bias in the estimation of catastrophic expenditure thereby suggesting greater concentration of such expenditures among richer households. To improve upon the existing approach, this paper suggests a multidimensional approach to comprehend the incidence of catastrophic expenditure. Here, we integrate the information on health expenditure with other social and economic parameters of deprivation. An empirical illustration is provided by using nationally representative survey on morbidity and healthcare in India. The results of the multidimensional approach are consistent with the theoretical underpinnings of the ability-to-pay approach and emphasizes on the severity of the problem in rural areas. The suggested methodology is flexible and allows for context-specific prioritization in selection of parameters of vulnerability while estimating the incidence of catastrophic expenditures.