ESTIMATING INDIVIDUAL MEDICAL EXPENDITURES FROM HOUSEHOLD SURVEYS IN THE CONTEXT OF URBANIZATION AND ECONOMIC DEVELOPMENT: INDIA, 1995-2010

Purpose: As lower income countries like India experience rapid economic development, resources available for health interventions increase. Cost-effectiveness analysis (CEA) is critical for leveraging these newly acquired resources most efficiently. When interventions differentially extend life expectancy, CEA best practices require accounting for background medical spending that varies by age and sex. This practice is common in the US and Europe but less so for developing countries where data on background medical spending are sparse. We developed an approach to estimate time-varying age- and sex-specific medical spending from household consumption expenditure surveys and applied them to a policy-relevant example in India.

Method: We analyzed nationally representative household expenditure data (871,702 households) collected in 15 cross-sectional waves (1995 to 2010) by India’s National Sample Survey Organization. The main outcome was real household medical expenditure. We quantified the average expenditure attributable to household members by age and sex for the overall population and for urban and rural subpopulations for each wave using regression analysis to decompose household expenditure. We characterized time-trends with inverse-variance-weighted, local polynomial smoothing. We inflation adjusted expenditures to 2012 Rupees and accounted for complex survey sampling designs to achieve nationally representative estimates.

Result: Real per-capita average monthly medical expenditure rose nearly 60% (from 50 to 80 Rupees) between 1995 and 2010, with urban expenditure rising faster and higher than rural expenditure. Expenditure on drugs in outpatient settings accounted for 78% of total medical expenditure, lower in urban areas (74%) than in rural areas (79%). Monthly expenditure for males aged 0-19 years averaged 10 Rupees from 2005-2010 and increased with age to 225 Rupees for males aged 60+. For females aged 0-19 years during this period, expenditure averaged 8 Rupees, rose rapidly during childbearing years (150 Rupees), and were lower than men for those aged 60+ (200 Rupees). The largest growth in spending over 1995-2010 has been for urban men aged 50+ and women aged 30-59, particularly in urban areas.

Conclusion: In India, higher medical expenditure has become increasingly concentrated in urban areas particularly in older males and for outpatient drug purchases. More generally, the methods we used demonstrate that it is possible to estimate individual-level background medical expenditure from household consumption expenditure surveys for many developing countries for the purpose of conducting best-practice CEAs.