Health and Millennium Development Goal 1: Reducing Out-of-pocket Expenditures to Reduce Income Poverty - Evidence from India

The first of the eight Millennium Development Goals is to halve extreme poverty and hunger by 2015. In India, thirty two and a half million people fall below the national poverty line by making out-of- pocket payments for health care in a single year. This paper shows how in a country with large out of pocket payments, targeting a few poor states, rural areas and urban poor could drastically bring down the number of people falling below the poverty line and also reduce the poverty deepening effect for those already below the poverty line. High expenditures on drugs are shown to be one of the main reasons for high out of pocket payments. Improved drug availability in public facilities and totally subsidizing the urban poor and rural areas are required for reducing the poverty impact of out of pocket payments. [EQUITAP WP No. 15].