New Index to Measure Health Cost Burden

 Hyderabad: A new study has flagged serious gaps in how catastrophic health expenditure is measured in India, warning that current methods fail to capture the depth of financial distress households face due to medical costs.

The research, by Prof. Dushyant Kumar and Bheemeshwar Reddy A. of BITS-Pilani Hyderabad, examines how families are classified once health spending crosses a fixed threshold of income or consumption. The authors argue that widely used measures treat all such cases alike, whether a household has barely crossed the limit or has been overwhelmed by medical bills.

“That approach hides the intensity of suffering. A family that slightly crosses the threshold is counted in the same way as a family that has lost financial stability altogether. Policy cannot be designed well if measurement ignores this difference,” Prof. Kumar said.

To address this, the study proposes a new framework adapted from poverty measurement, known as a Chakravarty-type index. Unlike conventional methods, it gives greater weight to households facing extreme medical overshoots. “The idea is to recognise inequality within catastrophic health spending itself. Not all distress is equal,” Prof. Kumar added.

Bheemeshwar Reddy said the flexibility of the method was crucial for public health policy. “Measurement should help identify who needs urgent protection. If the most vulnerable are drowned out by averages, the system fails them,” he noted.

The study also introduces a way to estimate how long households take to recover financially after catastrophic health spending. Existing models often assume uniform recovery, but the authors argue this is unrealistic. “Recovery depends on how severe the shock was. Households with larger medical overshoots face longer and more uncertain exit paths. Ignoring that gives a false sense of resilience,” Prof. Kumar said.

Using nationally representative household data, the study estimates both catastrophic health expenditure and recovery times across income and social groups. Findings show poorer and marginalised households face higher risks and slower recovery.

According to the authors, the framework offers policymakers a more sensitive tool to assess financial protection in healthcare. “This shifts the focus from counting households to understanding hardship. That distinction matters if health policy is meant to reduce real suffering,” Prof. Reddy told Deccan Chronicle.