Determinants of Household Health Expenditure: Case of Urban Orissa



To substantiate the objective, i.e., to find out the effect of income and education on
household health expenditures, regression analysis is used and descriptive statistics are
estimated. Mainly, three variables are used for this purpose: household health expenditure,
income of the household and education of the head of the household. To represent the household
health expenditure, per head health expenditure (PHE) is calculated by dividing total annual
health expenditure of the household by the household size. Similarly, for income of the
household, per head income of the household (PHI) is calculated by dividing total annual
household income by size of the household. Dummy variable is used for education in the
regression analysis, those head of the family is educated the value one is assigned and those of
uneducated, zero value is assigned.

III. DISCUSSION OF RESULTS

The descriptive statistics shows (see Table 1) that PHI is Rs.24, 220.83 per annum with
23546.06 and 0.97 as standard deviation and coefficient variation respectively where as PHE is
Rs.1898.10 per annum with 2466.27 and 1.3 as standard deviation and coefficient variation
respectively. The mean education is 0.97 with 0.18 and 0.19 as standard deviation and coefficient
variation respectively. In urban Orissa, an average person spends 7.83 per cent of his/her income
on health expenditure from his own pocket.

In an average, a person in rural area spends 46 per cent of what a person in urban area
spends on health expenditure from his own pocket as his / her income is only around 41 per cent
of his / her urban counterparts. But a person in rural area spends around nine per cent of his / her
income on health care from his own pocket which is more than a person in urban area who
spends only around eight per cent of his / her income (Rout, 2005). This is because (i)
government spending on health care is more in urban than rural area which reduces people’s
expenditure on it from their own pocket; (ii) in urban area, government and people take more
preventive measures than rural area which reduces people’s expenditure on their curative care;
(iii) urban people take more precautionary measures for health care due to their higher education
than rural people; and (iv) a person in rural area spends more on transport cost, which is one of
the main component of the health expenditure, to avail the medical facility, than a person in
urban area, as it is available far away from his / her residence.



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