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Subsistence expenditures are defined as a share of expenditure being tied to a specific consumption bundle, which must be consumed no matter what changes in prices and incomes may arise in the simulation (Minor and Mureverwi 2013).
While the CDE provides a good basis for modeling private consumption across a broad range of households and countries, it is not ideal for modeling extreme situations, where poverty and subsistence expenditures are dominant.
The size of DP in Norway is enough to cover of subsistence expenditures, while the Russian DP is below the level of minimum subsistence level.
In case of the patient who has not been granted a DP, or if the granted DP does not cover his/her basic needs, he/she has right to apply for the social support to cover his/her subsistence expenditures.
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This is intuitive if one wants to interpret (a^h_t) as a subsistence expenditure.
Where Xi is the consumption expenditure of ith household and f(X) is the subsistence expenditure of the population.
In such cases, we have used the state specific poverty line to account for the subsistence expenditure.
On the other hand the CHS is used at household level, derived from household consumption expenditure, subsistence expenditure and household's OOPE.
The second approach by Xu et al. (2003) [3] derives CTP by deducting the subsistence expenditure (SE) and is largely used in literatures [48, 49].
The CHS is estimated based on capacity to pay, derived from household consumption expenditure, the subsistence expenditure (based on state specific poverty line) and household OOPE on maternal care.
Besides, in calculating CHS, we have used the state specific poverty line (for subsistence expenditure) for rural and urban areas as recommended by the Planning Commission for 2004 05 and 2011 12 [45].
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