Health insurance for the poor in India: An analytical study

Rajeev Ahuja
March 2005

In comparison to phenomenon of micro-credit which started in a big way in India in the 90s, micro-insurance is a very recent phenomenon.Micro-insurance, that basically refers to insurance for the low income people, is picking up in India. A strong interest in the development of micro-insurance in India comes from three different quarters.One is the growing evidence of a strong positive link between health security and poverty reduction; accordingly those involved in poverty alleviation are looking for way to address healthcare needs of the poor.Two, hard constraint on public budget is making the health financing specialists explore alternative financing mechanisms such as insurance,user charges, revolving funds etc.Third,the imposition of social and rural obligations by the insurance regulator in post-reform phase of the Indian insurance market is necessitating insurance companies to develop products for the low-income segment of the market. The confluence of all three forces is leading to the development of micro-insurance India. Also,micro-insurance is a natural extension of micro-credit operations. Accordingly, microfinance agencies and organization are increasingly showing interest in micro-insurance, including micro health insurance.
This analytical study charts the early development of micro-insurance in the country, with a focus on health insurance, mainly with the view to bring out certain issues that come up in the design of micro health insurance.The findings of this research should be of interest to all the stakeholders.
This research was funded by South Asia Network of Economic Research Institutes (SANEI).