Health Insurance for the poor in India

Rajeev Ahuja
March 2004

Community based health insurance (CBHI) is more suited than alternate
arrangements to providing health insurance to the low-income people living in
developing countries. The universal health insurance scheme, launched recently by the
Prime Minister of India, is only one of the forms that CBHI can take. While analysing the
proposed scheme, we examine alternate forms of CBHI schemes prevalent in the country.
The development of private health insurance market in the country will not leave the poor
unaffected. Insurance sector reform can affect the poor through its effect on the provision
of health services (i.e., cost, quality and access) used by the low-income people as well as
through its access to financing of health care. In this paper we also explore how insurance
sector reforms alter health insurance prospects facing the poor in India, and what changes
on the health front affecting the poor have happened or are likely to happen as a result of
insurance sector reforms. We conclude that in diverse settings of India all forms of CBHI
have a role to play and therefore need to be encouraged by the government through
appropriate interventions. Formal insurance providers can also be reigned to serve lowincome
population. At the same time, developments in formal health insurance market
need to be guided so as to minimise cost escalation of health care provision.