Abstract:
The present paper attempts to modify definition of catastrophic out-of-pocket health expenditure by
characterising it based on consumption of necessities. In literature, catastrophic expenditure is defined
as that level of OOP health expenditure which exceeds some fixed proportion of household income or
household’s capacity to pay. In the present paper, catastrophic health expenditure is defined as one
which reduces the non-health expenditure to a level where household is unable to maintain
consumption of necessities. Based on this definition of catastrophic health expenditure, the paper
examines determinants of catastrophic OOP health expenditure in India. Findings suggest that it is
important to carefully revise the concept of catastrophic health care spending and the method
developed in this paper can be considered as one of the possible alternatives. We find that education is
one of the important policy instruments that can be used to reduce incidence of catastrophic spending
in India. The findings also suggest that even after efforts to reduce differences among various social
classes in India, socially deprived classes are still vulnerable as they are more likely to experience
financial catastrophe due to illness.
