Does social network impact rising out‐of‐pocket health care expenditure in India? A propensity score matching approach

Background The out‐of‐pocket expenditure (OOPE) on health care in India is more than two‐third as per the recent estimates and is catastrophic. Literature identifies different factors, but little attention has been given to social network or social relationships as an essential factor in dealing with OOPE on health care. Objectives This paper targets to find the link or association between social network and OOPE on health care through access to information. Methods The paper uses India Human Development Survey (2011–12). Among the standard methods of impact evaluation, the Propensity Score Matching (PSM) method is identified as the best fit to explain the role of social network on health care outcomes. Social network is considered as the treatment variable. The independent variables include age, sex, education, place of residence, household expenditure per capita and information index. The paper also applies Principal Component Analysis method to estimate information index with equal weight using variables such as newspapers, mobile phones, and Internet facilities. Results PSM result shows that direct social network reduces OOPE on health care by ₹1417 in a year. In balancing test, we see that for each of the covariate, the bias is actually reduced by applying PSM. The Information index has a positive relationship with both direct and indirect social network. Conclusion The paper suggests policy‐based interventions to enrich the social relationships and spread of information, in order to curtail the rising OOPE on health care in India. Highlights Social network is an important factor for dissemination of the health‐related information and thereby, reduction in out‐of‐pocket expenditure (OOPE) on health care. Social network is explained through Direct and Indirect Social network. The results of Propensity Score Matching method show that direct social network is more appropriate than indirect social network. Direct social network reduces OOPE on health care by ₹1417 a year. Devolution of funds to the local tier health care management is essential.