Health Insurance for India’s Missing Middle – NITI Ayog

Health Insurance for India’s ‘Missing Middle’ - a comprehensive report, which brings out the gaps in the Healh insurance coverage across India, was released by NITI Aayog in October 2021.

Major Findings

• India’s population is vulnerable to catastrophic spending, and impoverishment due to high Out of pocket expenditure, and it impacts all segments of the population About two-thirds of the population seek treatment in the costlier private sector.
• Missing Middle: At least 30% of the population, or 40 crore individuals are devoid of any financial protection for health. This is known as the missing middle.
• Rural Areas: Self-employed in agriculture constitutes the largest segment of the rural ‘missing middle’ with approximately 40% to 60% of the households. Second is the self- employed in non-agriculture, constituting around 20% of all household.
• Urban Areas: Approximately 45% to 70% of households are engaged in managerial, professional, or technical occupations. The category of ‘managers, senior officials, and legislators’ constitutes the largest urban missing middle occupation segment with 25% to 45% of all household

Key Issues

• Low awareness and the difficulty in understanding a complex product like health insurance limit its uptake.
• On the supply side, identification of, and outreach to customers is the primary hurdle as a large share of the missing middle is employed in the informal sector where there is a lack of a robust employee database.
• The missing middle population is highly price sensitive. Slight increase in prices of health insurance roots out many potential buyers.

Prospects and Possibilities

• Increasing consumer awareness and confidence in health insurance through information, education, and communication (IEC) campaigns.
• Government should develop a modified, standardized health insurance product to ensure consumer protection through a guaranteed basic minimum package of services.
• Government can share its data and infrastructure as a ‘public good’ to build distribution and operational efficiencies in private health insurers. For eg: PMJAY’s platform and network, especially its IT capabilities can be shared with private insurance companies for covering the missing middle.