Government-Sponsored Health Insurance in India: Are You Covered?

October 11, 2012


The World Bank has carried out the first comprehensive review of India’s major government-sponsored health insurance schemes.

  • Public financing for health in India is low, leaving households to rely heavily on out-of pocket payments for health expenses.
  • New World Bank research finds over the last five years, government-sponsored schemes helped cover over 300 million people with some form of insurance.
  • As India contemplates a significant increase in health spending and debates the best way to target benefits to the poor, the report outlines a way forward to achieving universal coverage.


Health spending is one of the important causes of poverty in India. The country’s public financing for health care is less than 1 percent of the world’s total health expenditure, although it is home to over 16 percent of the world’s population. Families meet almost 70 percent of their health expenses out of their own pockets, placing considerable financial burden on poor households, often pushing them deeper into poverty.

As India contemplates a significant increase in public spending on health care, the World Bank has carried out the first comprehensive review of India’s major government sponsored health insurance schemes.

The report, “Government-Sponsored Health Insurance in India: Are You Covered?”, authored by Gerard La Forgia and Somil Nagpal, finds that over the last five years, government-sponsored schemes have contributed to a significant increase in the population covered by health insurance in the country, scaling up at a pace possibly unseen elsewhere in the world.

Over 300 million people, or more than 25 percent of India’s population, gained access to some form of health insurance by 2010, up from 55 million in 2003-04. More than 180 million of these were people below the poverty line.

Given these trends, the report projects that more than 630 million persons, or about half of the country’s population, can be covered with health insurance by 2015. By this time, spending through health insurance is also likely to reach 8.4 percent of total health spending, up from 6.4 percent in 2009–10, the study says.

" This excellent study has provided, for the first time, a comprehensive understanding of health insurance in India. The recommendations are insightful and need to be carefully examined by the policymakers at the central and state levels when designing future strategies. "

K. Sujatha Rao

Former Secretary, Ministry of Health and Family Welfare Government of India, New Delhi


The report says that the new generation of government-sponsored health insurance schemes (GSHISs) is introducing explicit entitlements, improving accountability, and leveraging private capacity, particularly with an aim of reaching the poor.

Some of the innovative features common to all these schemes include giving patients the choice to visit any public or private provider empanelled by the government. In most schemes transactions are fully cashless, requiring no payment to be made by the patient to the hospital. These schemes also target low-income groups, make impressive use of information and communication technology, and use pre-agreed package rates for payment.

In addition, they create a novel mechanism of engaging with the private sector and contribute to improvements in the performance of public hospitals. For example, schemes in the states of Kerala and Andhra Pradesh are providing public hospitals with additional sources of financing, which is now being used to upgrade hospital infrastructure and introduce new services.

States such as Andhra Pradesh and Tamil Nadu have managed to cover as much as 50-80 percent of their population under the health insurance umbrella. Other states such as Himachal Pradesh and Kerala are trying to deepen the benefits package for the population below the poverty line already enrolled in the centrally sponsored Rashtriya Swasthya Bima Yojana (RSBY) beyond the secondary and maternity benefits the scheme currently offers.

Building upon lessons learned

The GSHISs face a number of challenges which are highlighted in the report. For example, coverage, remains far from comprehensive as it is focused on inpatient, often surgical, care. Besides working on deepening their benefit package, GSHISs also need to address several operational constraints, the study says. For example, most schemes need to strengthen operational elements related to quality enhancement, cost containment, consumer protection and monitoring and evaluation.

The report provides detailed recommendations on how to address these issues, drawing on both Indian and international experience. Addressing these issues in the near future will be critical to realize the potential gains from this model and for its sustainability, the report finds. The study recommends increasing health insurance coverage for both outpatient and in-patient care to include all poor and near-poor patients. It suggests a balanced approach, building upon the public infrastructure already available, augmenting it with accessible private capacity, and utilizing the lessons learned from the GSHISs. The report also recommends how GSHISs can improve the performance of primary care centers and their linkages with secondary and tertiary facilities.