Background & Objectives: 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.

Methods: 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.

Results: The median cost of one illness episode was INR 340. 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.

Interpretation & Conclusion: 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.