We estimated the unit costs incurred for COVID-19 testing and treatment interventions, the affordability and financial burden to households, and the total costs borne by governments and households. Our findings showed that on average the unit cost of COVID-19 interventions ranged from a low of Rs. 2,229 (US$ 30) for testing to a high of Rs. 140,000 (US$ 1,907) per episode for ICU admission. While COVID-19 testing combined with home isolation were relatively more affordable (five days, seven days, and 11 days of work needed by regular employees, self-employed and casual workers respectively), hospital isolation and ICU admission were not affordable (232 days, 318 days, and 481 days respectively for regular employees, self-employed and casual workers). Casual workers therefore are the most impacted implying that their annual wage fell short of per episode cost for 90% of workers when seeking treatment for ICU hospitalization and 48% of workers while receiving treatment for hospital isolation. However, since fewer people require ICU hospitalization or hospital isolation, the financial impact is concentrated in the households affected and not generalized to the entire population. By contrast, a significant portion of the population are required to home isolate whenever there is suspicion of an infection and this creates a problem for casual workers in particular, some of which earn annual incomes that fall below the cost of home isolation.
The estimated total costs to households (i.e., out-of-pocket payments) for COVID-19 testing and treatment over the period April 2020 to March 2021 was Rs. 340,413 million (US$ 4,639 million) while total costs to the government over the same period was Rs. 307,594 million (US$ 4,191 million) respectively. The second wave caused by mutation of original variant, the Delta variant, was far more transmissible and deadly. Therefore, the number of cases in just one quarter of 2021 (April to June, 2021) was estimated to be 17.86 million cases against 12.22 million during the entire financial year April 2020 to March, 2021. Consequently, the associated total costs to households was far higher at Rs. 292,385 million (US$ 3,943 million) in one quarter of April to June, 2021 as against Rs. 348, 779 (US$ 4,704 million) during the financial year (April 2020 to March, 2021). For the government alone in the second wave involving only three months (April to June, 2021), the estimated cost works out to about 12% of annual budget of states and central government put together.
To our knowledge, this is the first estimation of unit-costs, affordability, and total costs of COVID-19 testing and treatment in India. Therefore, our findings make valuable contributions to the discussion of COVID-19 financing in India and around the world. Our findings confirm concerns of a significant financial burden placed by COVID-19 on poor and middle income households in India.[i] A disproportionately lower spending on health budget reported in middle income economies (less than US$ 10 per capita) as COVID-19 response is also confirmed by this analysis[ii].
Findings from this study have important policy implications for financing of COVID-19 care and treatment in India. Our study reveals the aggregate financial burden that COVID-19 places on Indian households and the government are significant and closely aligned to current COVID-19 concentration in Indian states.[iii] [iv] However, since COVID-19 also creates economic pressures on government and private spending, policy makers are faced with increasing demands for emergency healthcare funding and simultaneous reduced availability of funds. [v]. A sharp rise in joblessness and wage loss induced by lockdown and the epidemic has put strain on household’s ability to pay for health care. This is more so for casual workers whose wage remains seasonal and relatively lower than other worker households. Even for self-employed and regular employees, their relative annual salary falls far short of episodic cost of treatment for COVID-19. In planning for COVID-19 funding, special care must therefore be taken to protect existing funds for other routine health services so that COVID-19 wins do not automatically translate to losses for other sectors. Each service had different capped rates between public vs. private facilities and restrictions by way of package rates on the total amount billable for private facilities remain. To resolve this, governments should revise the reimbursement policies to fully cover costs of treatment and thus reduce out-of-pocket payments especially for those who access private facilities. Despite its best intentions, the COVID-19 coverage by PMJAY remains extremely low at 1.77 million tests and 0.60 million hospitalization, accounting for 0.49% and 14.25% respectively of the total tests and hospitalization during the period from April, 2020 to June, 2021.
Our study has some limitations. Since the estimates focused on direct financial costs of COVID-19 care, the larger costs to individuals and the health care system were not considered. Even other additional direct costs such as transport cost, payment made to funeral expenses, etc. are unaccounted for. Further, during the second wave of the infections, shortages in oxygen supplies, medicines, hospital beds and funeral space led to high level of black-marketing and rent-seeking slamming deep holes on patients’ pockets. For instance, Remdesivir, an anti-viral drug, was sold in the range of Rs. 4,000 – Rs. 40,000 for a 100 mg vial of injection, which otherwise would have costed barely Rs. 899 per vial in the market[vi]. Moreover, we did not estimate economic and opportunity costs such as costs of missed treatments or forgone prevention. These costs are likely to be considerable because of the effect of COVID-19 policy responses on service interruptions. However, since these costs do not require immediate mobilization of financial resources to meet emergent needs, they would have little impact on cash-flow and felt financial-burden. Nevertheless, our estimates should be considered the low-end of the full costs of COVID-19 interventions. Households are increasingly bearing the brunt of continuous investment in PPEs, personal hygiene, masks, procuring oxygen concentrators, medical equipments (pulse oximeter, spirometers) and quarantine measures, while governments are tasked with the implementation of public hygiene measures, additional monitoring and surveillance, and hospital infection control measures.
This study was devoted to measuring medical costs of testing and treatment. We did not seek to generate comprehensive economic costs of the pandemic, lockdowns, productivity loss and wage loss associated with the disease conditions. Future research must address and demonstrate comprehensive economic costs of the pandemic and the imperative for pandemic preparedness besides the need to prevent lockdowns and other stringent economic measures that can cripple vulnerable households. In the absence of a national household survey, future research must look for measurements around catastrophe and impoverishment that can help to further quantify the financial vulnerabilities on households. Quantifying foregone resource allocation for other basic needs within a household must also be assessed in order to understand the extent of financial vulnerabilities.