In India, health services are funded largely through out-of-pocket spending (OOPS). The objective of this article is to provide data on the cost of an illness episode and parameters affecting cost. The data was obtained through a household survey carried out in 2005 in five locations among resource-poor persons in rural or slum India. The analysis is based on self-reported illness episodes and their costs. The study is based on 3,531 households (representing 17,323 persons) and 4,316 illness episodes. The results this study are that the median cost of one illness episode was INR 340 and when costs were calculated as % of monthly income per person, the median value was 73% of that monthly income, and could reach as much as 780% among the 10% most exposed households. The estimated median per-capita cost of illness was 6% of annual per-capita income. The ratio of direct costs to indirect costs was 67:30. The cost of illness was lower among females in all age groups, due to lower indirect costs. 61% of total illnesses, costing 37.4% of total OOPS, were due to acute illnesses, chronic diseases represented 17.7% of illnesses but 32% of costs. Our study shows that hospitalizations were the single most costly component on average, yet they accounted for only 11% of total on an aggregated basis, compared to drugs that accounted for 49% of total aggregated costs. Locations differ from each other in the absolute cost of care, in distribution of items composing the total cost of care, and in supply. The study concluded that interventions to reduce the cost of illness should be context-specific, as there is no one-size-fits-all model to establish the cost of healthcare for the entire sub-continent. Aggregated expenses, rather than only hospitalizations, can cause catastrophic consequences of illness.
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