Integrating Health Insurance for the Poor into the Indian Insurance Scenario

Publication Date: Jul 2005
Document Type: Journal Article

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Health insurance – Customizing it for the poor in India

This paper outlines options that could be explored within the existing structure of open market competition with multiple players, to make health insurance more accessible to the rural poor in India.

The paper highlights that:

• There is an untapped market due to low penetration of health insurance products.
• However, a market for micro-health insurance products exists.
• The most prevalent distribution channel is the partner-agent model.
• The arrangement is not viable due to conflict between the divergent objectives of the agent and the insurance company, as a result of which, the client focus is lost.
• Multiple client-based insurance schemes can, however, bring the desired client focus.

The paper recommends the following environment and infrastructure building efforts that the government can invest in to support this sector:

• Differentiate between health and general insurance by encouraging single purpose health insurance companies to operate;
• Allow operation of accredited micro health insurance schemes and support them with regulations to protect the insured;
• Standardize data collection for administration, reporting, product development;
• Provide reinsurance for micro health units;
• Subsidize insurance/ reinsurance premiums;
• Build sector competence by increasing the knowledge base and networking;
• Regulate health care through standardization of cost and quality of medical treatment.

It concludes by underlining the need for both public and private sector participation to make health insurance to the poor in India a reality.