November 18, 2025
Overview:
Rising health expenditures are a significant driver of financial stress for households in India, often leading to reductions in consumption, indebtedness, and even impoverishment. While previous research has examined the catastrophic effects of out-of-pocket spending, much less attention has been paid to why health spending varies so dramatically among people with similar illnesses.
This One Health Trust collaborative study uses National Sample Survey data and a finite mixture model approach to find hidden subgroups (“latent classes”) of healthcare users in India.
By identifying these distinct classes, each with unique spending patterns and characteristics, the study provides deeper insight into the drivers of health expenditures and their implications for health equity and financial protection policies.
The Question:
Are there distinct groups of people with different health-spending patterns, and what factors explain these differences?
The Findings:
The study identified three distinct groups of healthcare users, each showing very different levels of medical spending.
- A small group of older, socioeconomically disadvantaged healthcare users, including men, individuals from marginalized social groups, and those with lower education, bear extremely high healthcare costs. They seek care less often, but when they do, they require longer hospital stays or more intensive treatment, resulting in consistently high financial burdens regardless of income.
- People with the same illness often spend very different amounts. Even with identical diagnoses, healthcare spending differs widely. This variation could be due to factors such as illness severity, type of healthcare provider chosen, ability to pay, and the quality of available services.
- Gender and socioeconomic inequalities persist across all groups. Women consistently spend less on healthcare, and people from lower-income households face more barriers to accessing quality healthcare. These inequalities become more pronounced among those requiring higher-cost treatment.
- Lower-income households tend to rely on cheaper, lower-quality providers, while wealthier individuals can access more qualified care.
- Those who spend heavily on healthcare are more likely to cut back on essential household needs, while others with lower expenses experience far less strain.
These results highlight that health spending is not uniform across the population, even among people with similar health conditions. Recognizing these hidden subgroups is crucial for designing more targeted and effective health policies, especially policies aimed at financial protection and reducing inequality.
Read the article in BMC Medical Research Methodology here.
