Impact of Health Insurance Coverage on Out-of-Pocket Healthcare Expenditure and Equity in India
DOI:
https://doi.org/10.66635/x2fgez24Keywords:
Health Insurance, Out-of-Pocket Expenditure, Propensity Score Matching, Equity, Concentration Index, Kakwani Index, Catastrophic Health Expenditure, Financial Protection, AB-PMJAY, India, NSS 80th RoundAbstract
This study examines the effect of health insurance coverage on household out-of-pocket healthcare expenditure (OOPE) and assesses the equity of healthcare financing in India, using nationally representative unit-level microdata from the 80th round of the National Sample Survey (NSS), Household Social Consumption: Health (January–December 2025). Analysis is based on 650,842 individuals (139,732 households) after cleaning. A binary logistic regression identifies the socio-economic determinants of insurance enrolment, and one-to-one nearest-neighbour Propensity Score Matching (PSM) with caliper restriction is used to reduce observable selection bias when estimating the causal effect of insurance on OOPE. Equity in healthcare financing is assessed using the Concentration Index, the Gini coefficient, and the Kakwani Progressivity Index. Age, education, household size, monthly per-capita consumption expenditure (MPCE), religion, and social group are all significant predictors of insurance enrolment. Matching achieved excellent covariate balance (mean absolute standardized mean difference falling from 0.102 to 0.007). On the matched sample, insured individuals incurred approximately 29.8% higher out-of-pocket expenditure than comparable uninsured individuals (β = 0.2609, p < 0.001), suggesting that insurance is associated with greater healthcare utilization rather than a reduction in direct payments. The Concentration Index (0.274) and Gini coefficient (0.291) indicate that OOPE and consumption are both concentrated among relatively better-off households, while a small negative Kakwani Index (−0.017) indicates that healthcare financing is mildly regressive, close to proportional, but still imposing a marginally larger relative burden on poorer households. Coverage is overwhelmingly publicly financed: the two large public schemes, AB-PMJAY and the state health insurance schemes, together account for 88.9% of all reported coverage. Assessed at the household level, 5.99% of households incur catastrophic health expenditure at the 10% threshold of annual consumption, and both the incidence and the intensity of these payments fall steadily as household consumption rises, so that the burden of catastrophic spending is concentrated among poorer households.
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