Institutional births – deliveries that take place in a health facility – play an important role in reducing maternal and neonatal mortality.  Given the critical lifesaving role such deliveries often play, various countries around the world aim at ensuring all births take place in an institutional setting as their main strategy for reducing maternal mortality (World Health Organization (WHO)). 

Across India, 88.6 percent of deliveries took place in a health facility, the latest round of the National Family Health Survey (NFHS) shows. Among urban areas, this share was higher – 93.8 births took place in a health facility, while in rural areas only 86.7 percent of all births were institutional.

The major reasons shared by women who did not have an institutional delivery were they felt it was not necessary, or their husband/family did not allow such a delivery, that a facility was too far and there was no transportation, or that such deliveries cost too much. 

The average out-of-pocket expenditure (OOPE) for an institutional delivery of a baby increased by 26.5 percent between 2015-16 and 2019-21, data collected by the last two rounds of the National Family Health Survey (NFHS) shows. When adjusted for inflation, this was an increase of 5.1 percent over this time period. While on average, it cost Rs 7,935 to deliver a baby in a health facility in 2015-16, the expenditure went up to Rs 10,035 by 2019-21.

The NFHS asked women aged 15-49 who had a live birth in the five years preceding the survey how much expense they had incurred during the delivery of their most recent child. The out-of-pocket expenses include costs of transportation, the hospital stay, tests, and medicines. 

There was great variation in the absolute cost and increase in expenditure by type of facility. While, on average, the OOPE for a delivery in public health facilities was Rs 3,245, the corresponding expenditure in private facilities was nearly eight times more: Rs 24,663.

The increase in expenditure over the two rounds of the NFHS – was marginal for public health facilities, where the expenditure increased by 1.5 percent in the period between 2015-16 and 2019-21. When adjusted for inflation, the cost of delivering in a public facility actually decreased by 15.7 percent in this period. 

But it was a completely different picture for the private sector where the respondents surveyed in 2019-21 spent 49 percent more (and 24 percent more when adjusted for inflation) on institutional deliveries as compared to their counterparts from 2015-16. Nearly 30 percent of all institutional deliveries were in a private facility, data from the latest round of the NFHS shows – with this share being 43.2 percent in urban areas, and 24.3 percent in rural areas.  

Not only does the OOPE vary greatly by type of facility, there are wide inter-state disparities too. 

Kerala, Manipur and Goa were states where the OOPE for institutional delivery was the highest. The average expenditure recorded in Kerala was Rs 26,134 – nearly 2.6 times the national average. 

Sikkim, Punjab and Andhra Pradesh, on the other hand, recorded the greatest jumps (89 percent, 67 percent and 65 percent, respectively) in the average OOPE on institutional deliveries between the two recent rounds of the NFHS. In Sikkim and Punjab, the jump was driven by a doubling of OOPE for deliveries in public health facilities. In Andhra Pradesh, it was led by a near-doubling of expenses for deliveries in private facilities.

However, when considering expenses only for private healthcare facilities, it was Tamil Nadu where the expenses were the highest for the country, with an average OOPE of Rs 36,909. One in three (32.6 percent) institutional births took place in a private facility in the state. 

While the OOPE is much lower for deliveries that took place in public health facilities, Manipur recorded high expenditure here too. On average, the expenditure for giving birth in a public facility in the state was Rs 14,518, almost 4.5 times that of the national average, and nine times that of Madhya Pradesh, which saw respondents incurring the lowest expenditure in the country. While Manipur’s case seems extreme, respondents from all states of the North-Eastern region (barring Meghalaya) spent much more than the national average on delivering a baby in a public health facility.

When it comes to child birth, caesarean procedures are costlier than vaginal birth. And caesarean deliveries are much more common in the private sector, the NFHS report notes. The survey found that while 21.5 percent of births took place by caesarean section in the country, in the private sector nearly half (47.5 percent) of deliveries were in the cesarean section.  In public health facilities, the share of C-Section deliveries was 14.3 percent. 

The international healthcare community considers the ideal rate for caesarean sections to be between 10% and 15%, the WHO has said. In addition to a financial cost, caesarean procedures also have a potential health cost. While caesarean procedures can help reduce maternal and neonatal mortality and complications such as obstetric fistula, a caesarean procedure performed without a medical need can put the mother at risks of short and long-term health problems, the NFHS notes. 

This high reliance on the private sector is not limited to deliveries. Only half of Indian households seek treatment for illnesses from a government facility, the NFHS-5 found, while the other half (48.2 percent) seek care from the private sector. The preference for private facilities increases among those from wealthier households and is slightly higher in urban areas versus rural areas. 

“Poor quality of care”, “waiting time too long” and “no nearby facility” were the major reasons given by respondents for not seeking care from a public health facility. 

India’s government spending on healthcare remains low as compared to global standards, resulting in high reliance on the private sector and high proportions of out-of-pocket expenditures by households. Almost 55 percent of all expenditure on health in India is financed out-of-pocket, data compiled by the World Bank (as of 2019) shows. This is significantly higher than the global average of 18 percent.

A Health Systems Review of India by the WHO published earlier this year notes that the “sustained underfunding of public sector facilities, and the rapid growth of private sector providers has contributed to rising OOP costs on health care for households” (Selvaraj et al. 2022). The review points out that the cost of outpatient care, especially medicines, contributes to nearly two-thirds of OOP expenses. An “oversupply of health services in the form of excessive prescription of drugs, and unnecessary procedures and tests, has been one important consequence of such a payment system”, the review adds (Selvaraj et al. 2022).

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