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Health Insurance for India’s Missing Middle


Health Insurance for India’s Missing Middle: Relevance

  • GS 2: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.


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Health Insurance for India’s Missing Middle: Context

  • NITI Aayog has recently released a report titled, ‘Health Insurance for India’s Missing Middle’ where it has reported that 40 crore ‘missing middle’ has no financial protection for health.


Health Insurance for India's Missing Middle_3.1


‘Missing middle’ meaning

  • The ‘missing middle’ is a broad category which lacks health insurance, positioned between the deprived poorer sections, and the relatively well-off organized sector.
  • The deprived and poor sections receive Government subsidized health insurance, while the relatively well-off in the organized sector of the economy are covered under social health insurance, or private voluntary insurance.
  • The missing middle refers to the non-poor segments of the population who remain prone to catastrophic, and even impoverishing health expenditure, despite the financial capacity to pay for contributory health insurance.
  • The missing middle constitutes the self-employed (agriculture and non-agriculture) in rural areas, and a broad array of occupations – informal, semi-formal, and formal – in urban areas.


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Health Insurance for India’s Missing Middle: Key findings

  • Low Government expenditure on health has constrained the capacity and quality of healthcare services in the public sector.
  • At least 30% of the population, or 40 crore individuals – called the missing middle in this report – are devoid of any financial protection for health.
  • In the absence of a low-cost health insurance product, the missing middle remains uncovered despite the ability to pay nominal premiums.


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Challenges in increasing insurance penetration

  • Awareness: Consumer education of health insurance, especially amongst the missing middle, is important to increase its uptake.
  • Identification: Targeting the missing middle segment will require a different outreach strategy which distinctly focuses on this population.
  • Affordability: The missing middle population is highly price sensitive. Lowering the costs of the product, where feasible, will be important to ensure affordable prices and high demand.


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Health Insurance for India’s Missing Middle: Recommendations

  • The report has recommended three models for increasing the health insurance coverage in the country.
  • The first model focuses on increasing consumer awareness of health insurance,
  • The second model is about “developing a modified, standardized health insurance product” like ‘Arogya Sanjeevani’, a standardised health insurance product launched by the Insurance Regulatory Development Authority of India (IRDAI) in April 2020.
    • A “slightly modified version” of the standardised Aarogya Sanjeevani insurance product will help increase the update amongst the missing middle.
  • The third model expands government subsidized health insurance through the PMJAY scheme to a wider set of beneficiaries.
    • This model can be utilized for segments of the missing middle which remain uncovered, due to limited ability to pay for the voluntary contributory models outlined above.
    • This is the only model out of three proposed which has fiscal implications for the Government.
    • Though this model assures coverage of the poorer segments on the missing middle population, premature expansion of PMJAY can overburden the scheme



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