A Predictive Analysis of Inflation in Medical Sector & Its Impact on Indian Households

The basic objective of this study was to analyse the relationship between perceived inflation in medical sector with financial status of Indian households using primary survey data which was analysed by Chi-square test, one-way ANOVA test and linear regression with 90 respondents. The results strongly and significantly support the sequential, largely mediated association: medical inflation is strongly and significantly associated with higher perceived OOP medical expenditure, which is strongly and significantly associated with higher perceived burden on the household financial resources, both in terms of reduced savings and increased borrowing and asset sales. The effect of medical inflation on the financial burden is much more muted when tested at the same time as out-of-pocket expenditure, suggesting that the influence of medical inflation on financial stability is more indirect than direct. Health insurance and household income are the two key conditioning factors that come into play. Overall, the presence of insurance status did not affect the reported amount of OOP costs, although it was marginally associated with a lower level of downstream financial burden, which implies that insurance does not fully protect against the effects of increasing medical expenses. Household income was found to have a clear and statistically significant relationship both with out-of-pocket expenditure and financial burden, with lower income households being overrepresented in the high financial impact category, thus demonstrating that the burden of medical inflation in India is not evenly distributed and affects the economically weaker households more. The overall findings of these results support five out of the six hypotheses tested (H1, H2, H5 and H6 fully; and H3 on the 10% rather than 5th significance level) and give grounds for rejecting hypothesis H4 because the difference between perceived out-of-pocket spending and insurance status alone was not significant. The results further support the argument advanced in the literature review that the financial protection mechanism in place in India is useful but limited and household income remains a primary driver of vulnerability to medical inflation. Policy-wise, the findings imply the need for health insurance and public funding for health that better address the primary out-of-pocket costs of receiving care (not just the downstream financial effects), along with targeted interventions for low-income households, who are here demonstrated to have a disproportionate financial burden from increasing health care expenses.

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