The paper addresses some critical issues with regard to extending health insurance coverage to poor households in general and those working in the informal sector in particular. A review of the existing health insurance schemes in India and select Asian and Latin American countries, such as China, Thailand, Sri Lanka, Chile, Uruguay, Colombia, Brazil, and Argentina, is undertaken with a view to drawing lessons for India. On the basis of a pilot study undertaken in Gujarat during 1999, the paper examines the feasibility of providing health insurance to poor people in terms of both willingness and capacity to pay for such services. The paper also suggests various options available to introduce an affordable health insurance plan for workers in the informal sector.