Background: The prohibitive cost of hospitalization is one of the causes of impoverishment in India. Every year, about 2-3 percent population of India is being pushed into below poverty line because of out-of-pocket expenditure on hospitalization (Garg and Karan, 2009). Presently, around two-thirds of the total health expenditure in India is out of pocket (NHA, 2013-14). Therefore, the study on cost of hospitalization is paramount important from a policy perspective. Study Objectives: The objectives of the study were to examine the inter-state disparity in the cost of hospitalization, to study the gross and net differentials in the cost of hospitalization and to examine the source of finance for hospitalization in India. Materials and Methods: This paper is based on the unit level data of NSSO 71st round survey. NSSO is the main survey agency at national level in India and responsible for collecting data on socio-economic and health for the purpose of planning and policy making. The present survey was based on a sample size of 65,932 households across the country. Both bi-variate and multi-variate statistical techniques were used for data analyses using Stata and SPSS. Results: In India, the cost of hospitalization is rising over the years. The average total cost of hospitalization in nominal terms has increased more than two and half times both in rural and urban areas during the decade of 2004 to 2014. The net differential in the cost of hospitalization among various sub groups of population was relatively lower than the gross differentials. In 2014, the gross total cost of hospitalization in private facilities was nearly 4.5 times that of public facilities. Household income/saving and borrowing were the two major source of finance for hospitalization for nearly three-fourth and one fifth households in India, respectively. Conclusions: Strengthening public health sector in the country is the need of the hour. The increasing use of the low cost public health facilities would help in achieving the twin objective of the new national health policy: reduction of out-of-pocket spending on health care and reduction of poverty. Ultimately it is a step forward to attain the objective of ‘universal health care’ as envisaged in the SDGs.
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