SECTION IV

Health insurance
in India

S
OCIAL SECURITY FOR MEDICAL EMERGENCIES IS NOT NEW TO THE INDIAN ETHOS.
It is a common practice for villagers to take a ‘piruvu’ (a collection) to support a house-
hold with a sick patient. However, health insurance, as we know it today, was intro-
duced only in 1912 when the first Insurance Act was passed (Devadasan 2004). The
current version of the Insurance Act was introduced in 1938. Since then there was
little change till 1972 when the insurance industry was nationalized and 107 private
insurance companies were brought under the umbrella of the General Insurance Cor-
poration (GIC). Private and foreign entrepreneurs were allowed to enter the market
with the enactment of the Insurance Regulatory and Development Act (IRDA) in 1999.
The penetration of health insurance in India has been low. It is estimated that only
about 3% to 5% of Indians are covered under any form of health insurance. In terms
of the market share, the size of the commercial insurance is barely 1% of the total
health spending in the country. The Indian health insurance scenario is a mix of manda-
tory social health insurance (SHI), voluntary private health insurance and commu-
nity-based health insurance (CBHI). Health insurance is thus really a minor player in
the health ecosystem.

Social Health Insurance

Universal coverage has two dimensions: health care coverage (adequate health care)
and population coverage (health care for all) and, coupled with the societal values that
underpin it, leaves essentially two financing options—general taxation and SHI. The for-
mer implies financing care entirely from general revenue; its viability as the single
mechanism to finance universal health coverage is necessarily limited in an environ-
ment of competing demands on a severely limited tax base. The SHI is based on
income-determined contributions from mandatory membership of, in principal, the
entire population with the government subsidizing the financially vulnerable sections.
While the SHI is an effective risk-pooling mechanism that allocates services according
to need and distributes the financial burden according to the ability to pay (thereby
ensuring equity in access), such schemes are difficult and expensive to implement
where a majority of the workforce is unemployed or employed in the informal sector.

International experience in SHI: Factors that affect the speed of transition

Achieving universal coverage through SHI is not easy. Evidence from 8 countries with
SHI schemes for which sufficient information is readily available—Austria, Belgium,
Costa Rica, Germany, Israel, Japan, Republic of Korea (ROK) and Luxembourg—
shows that the transition period (defined as the number of years between the first
law related to health insurance and the latest law enacted to implement universal
K. SUJATHA RAO coverage) is 79 years (Austria), 118 years (Belgium), 20 years (Costa Rica), 127 years
SECRETARY, NATIONAL (Germany), 84 years (Israel), 36 years (Japan), 26 years (ROK) and 72 years (Luxem-
COMMISSION ON bourg). These countries embarked on SHI when their economies were still underde-
MACROECONOMICS AND veloped; moreover, coverage is not necessarily a simple linear increase, as some groups
HEALTH, GOVERNMENT OF are harder to reach than others. For example, moving from 25% to 50% coverage
INDIA, NEW DELHI might take less time than moving from 50% to 75% (Carrin and James 2004).
E-MAIL: International experience suggests the following factors impacting the speed of tran-
ksujatharao@hotmail.com sition to universal coverage using the SHI financing option:
1. The level of income and structure of the economy (specifically, the relative size of

Financing and Delivery of Health Care Services in India 275

SECTION IV Health insurance in India
Box 1
The Insurance Regulatory and Development
Act (IRDA) 1999
The IRDA was passed in December 1999 by Parliament. The Act allows
for the entry of private sector entities in the Indian insurance sector,
including health insurance, and envisages the creation of a regulatory
authority. The IRDA is supposed to protect the interests of the policy-
holders, promote efficiency in the conduct of insurance, regulate the
rates and terms and conditions of the policies offered by insurers and
direct the maintenance of solvency margins.
The IRDA provides sufficient protection for capital and solvency margins.
There is an entry requirement of a minimum capital of Rs 100 crore. Then
there is a minimum lower bound of Rs 50 crore for the solvency margin
along with a requirement of 20% of net premiums or 30% of the average
of net incurred claims in the 3 preceding years. The IRDA has wide powers
for accounting and auditing insurers. The Insurance Act does not allow
the insurers to undertake additional business that is not directly linked
to insurance. It discusses the liquidation of a company but does not talk
of a Guarantee fund.
The IRDA specifies a code of conduct for the insurance agents and also
allows for a Tariff Advisory Committee to oversee premium rates,
insurance plans and to prevent discrimination. However, there is no
specific clause for the consumer, who has to use the CPA of 1986 to
redress any complaints. The IRDA does not have much to say about the
relationship between the insurer and the provider.
Though the Tariff Advisory Committee can make recommendations the
IRDA also does not have much to say about rating the premium. The
IRDA does not also specify the benefit packages. It however allows for
the entry of re-insurers in the market. Its main two functions are
maintaining market standards, and overseeing solvency and financial
regulations.
Conclusion: The legislation concerning health insurance in India is fairly
comprehensive even in comparison to a model set of regulations when
focusing on auditing, financial controls, investment guidelines and
licensing regulations. There is much less regulatory focus on the
consumer of insurance products and the overall goals of health policy
in the form of regulation that curbs risk selection, protects consumers,
promotes HMOs, etc. It also cannot involve in the relationship between
insurers and providers (which comes under the MRTP Act) or the
expansion of ESIS (which is the ESIS Act).
In India health insurance is not given much importance. The IRDA itself
contains no reference whatsoever to the health sector or to health
insurance. Nor is health mentioned in the nearly 175 pages of the
Insurance Act of 1938. This broadly reflects the policy environment in
India, where health insurance continues to be neglected. Even in GOI’s
report on Insurance reforms (1994), there was precisely one reference
to health insurance.
Source: Mahal A. Assessing private health insurance in India: Potential impacts and regulatory
issues. Economic and Political Weekly 2002:559–71.
the formal and informal sector) determine the feasibility
of collecting contributions as well as the amounts that
may be raised through SHI schemes.
2. Distribution of the population and infrastructure deter-
276 Financing and Delivery of Health Care Services in India
mine the capacity of SHI schemes to deliver the benefit
package.
3. The administrative structure and solidarity in a country
determine its ability to actually implement SHI and with
legitimacy.
In India, its large rural and informal sector accounting for
90% of the population, lack of cohesion and solidarity, and
poor institutional capacity to organize them etc. will be con-
stricting factors for the upscaling of the SHI in the near or
medium term. The experience with collecting income tax pre-
dicts problems in assessing incomes and collecting premiums
from small, unregistered firms, unorganized industries and the
rural sector. The consumer redressal mechanism may also not
function effectively because of the large illiterate population.
The SHI is therefore likely to be restricted to the employed
population and largely in urban areas, where collection of pre-
mium is easier and administrative costs minimal (Annexure).
The existing mandatory health insurance schemes in India—
the Employees’ State Insurance Scheme (ESIS) and the Cen-
tral Government Health Scheme (CGHS)—were first started
as pilot projects in 1948 and 1954, respectively in the con-
text of achieving universal coverage via the SHI. Table 1
summarizes the provisions under these schemes.
Employees’ State Insurance Scheme (ESIS)
Enacted in 1948, the Employees’ State Insurance (ESI) Act was
the first major legislation on social security in India. The scheme
applies to power-using factories employing 10 persons or more,
and non-power and other specified establishments employing
20 persons or more, with employees earnings up to Rs 7500
per month being covered, along with their dependants. The
current coverage stands at 84 lakh employees and 353 lakh
beneficiaries across 22 States and Union Territories (expect-
edly, the membership is higher for more industrialized States).
The benefit package is quite comprehensive in its coverage
of health-related expenses, going beyond the cost of medical
care to include cash benefits (sickness, maternity, permanent
disablement of self and dependant) as well as other benefits
such as funeral expenses and rehabilitation allowance. How-
ever, the actual package of benefits available is determined more
by the type of facility accessed rather than the type of cover.
Medical care comprises outpatient care, hospitalization or
specialist treatment as well as services of the Indian systems of
medicines. These services are provided through a network of
ESIS facilities, public care centres, non-governmental organi-
zations (NGOs) and empanelled private practitioners.
Corresponding to these arrangements, a variety of pay-
ment mechanisms are employed from salaries for ESIS staff
to capitation fees for private doctors. The ESIS is financed by
a three-way contribution from employers, employees and
the State Government. Between 1993–94 and 1997–98, the
income of the scheme grew substantially (largely due to
increases in contributions which now account for 80% of
the ESIS income) while medical benefits have actually fallen
(from about 50% to less than 30% of the expenditures) and,
as a result, the net excess transferred to the ESI fund went up
 Health insurance in India SECTION IV

Table 1
Key features of the Employees' State Insurance Scheme (ESIS) and Central Government
Health Scheme (CGHS)
Mandatory social insurance schemes
Indicators ESIS CGHS

Types of beneficiaries
Coverage
Types of benefits
Premiums (financing of scheme) 4.75% of employees' wages by employers; 1.75% of
Provider payments
Administrative costs
Status of finances
Factory sector employees (and dependants) with income
less than Rs 7500 per month
About 353 lakh beneficiaries in 1998
Medical and other health-related provided through
ESIS facilities and partnerships
their wages by employees; 12.5% of the total expenses
by the State Governments
Mainly salaries for physicians in dispensaries and referral
hospitals. Hospitals have global budget financed by
ESIC through State Governments.
About 21% of the revenue expenditure. For paying
wages for corporation employees, and administering
cash benefits, revenue recovery and implementation
in new area.
Contributions: more than 80% of the ESIS income-
double the expenditure on benefits.
Employees (and dependants) of Central Government-current
and retired, some autonomous and semi-government
organizations, Members of Parliament judges, freedom
fighters, journalists
About lakh beneficiaries in 1996
Medical care through public facilities and restricted
private care
Varies from Rs 15 to Rs 150 per month based on salaries
of the employeesMainly financed by the Central
Government funds
Salaries for doctors. Treatment in private hospitals is
reimbursed on case basis, subject to actual expenditure
and prescribed ceilings
Direct administrative costs including travel expenditure,
office expenses, RRT 5% of the total expenditure. Part of
salaries can also be charged to administrative costs.
Contributions about 15% of the CGHS income-half of the
salary expenditures.

Employees' State Insurance Scheme (ESIS)

from 14% to 30%. Significantly, the cost of administering the If the scheme continues in its present form, and contributions
scheme has been steadily increasing as a proportion of expen- stagnate at Rs 50 crore, the proportion of contribution will fall
diture on the revenue account. further to 5% of the total over the next five years, given the ris-
ing expenditures This calls for steps to ensure that contribu-
Central Government Health Scheme (CGHS) tions keep pace with expenditure, and perhaps even reduce
the subsidy element; and (iii) The period 2001–04 also wit-
Established in 1954, the CGHS covers employees and retirees nessed a sharp increase in inpatient expenditures. Coinciding
of the Central Government, and certain autonomous, semi-
autonomous and semi-government organizations. It also cov- Fig 1
ers Members of Parliament, governors, accredited journalists
and members of the general public in some specified areas. CGHS expenditure 1999-2004
The families of the employees are also covered under the
scheme. Total beneficiaries stand at 43 lakh (10.4 lakh card
holders, 2003) across 24 cities with membership in Delhi being
the highest. Benefits under the scheme include medical care
at all levels and home visits/care as well as free medicines
and diagnostic services. These services are provided through
public facilities (including CGHS-exclusive allopathic, ayurvedic,
homeopathic and unani dispensaries) with some specialized
treatment (with reimbursement ceilings) being permissible
at private facilities. Of the total expenditure, about a third is
spent on wages and salaries of the CGHS staff (Table 2) and
Figure 1.
Table 2 highlights three important points: (i) that 18% of
the health department’s budget is spent on less than 0.5% of
the population; (ii) that most of the expenditure is met by the
Source: Ministry of Health and Family Welfare, GOI
Central Government as only 12% is the share of contributions.

Financing and Delivery of Health Care Services in India 277

SECTION IV Health insurance in India

visits per card per year, varying between 5.6

Table 2 visits in Bhopal to 28.4 visits in Bhubanesh-
Total expenditure on CGHS (Rs in crore) war. The approximate unit cost per visit comes
to a high of Rs 222 in 2002–03. Similarly
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 inequitous is the payment structure for inpa-
tient care too.
Establishment 117.1125 123.8712 125.3384 133.1083 139.4496 To assess the health-seeking behaviour
Supplies and materials 106.176 131.2345 165.3858 185.1242 222.9404 and the trends towards utilization of health
Professional services 47.8071 51.2002 65.7699 81.9203 140.7256 facilities after the CGHS opened up to over
TOTAL CGHS 271.0956 306.3059 356.4941 400.1528 503.1156 200 private hospitals for providing care at
TOTAL Department of Health 2132.46 2291.84 2577.04 2625.37 2800.64 pre-negotiated rates to their members, the
% Share of CGHS 12.7 13.4 13.8 15.2 18.0 NCMH took up a study of the CGHS pay-
Total contributions 54.27 52.54 50.65 70.9 60.58 ments pertaining to the reimbursements to
% of expenditure 20.2 17.15 14.21 17.71 12.04 pensioners, hospitals and diagnostic centres.
Source: Demand for Grants, MOHFW
A sample of 1000 claims were examined from
the total bills paid by the Pay and Accounts
Office of CGHS, Delhi, during 1999, 2003
with the sharp increase in the membership among retired per- and 2004. For 2003 and 2004, all the payments made to
sons, this indicates the trend towards adverse selection (Fig. pensioners in the randomly chosen successive months of June
2). and July were taken up for the study. Results of the claims
showed an increasing number of cases using private sector
facilities, which has budgetary implications for the Govern-
Fig 2
ment, particularly in view of the absence of any regulations
The increasing per person expenditure on regarding prices and the large number of pensioners joining
outpatient and inpatient (2001-04) the scheme (Table 4).
The 1999 sample (July to December) comprising of 104 reim-
bursement bills showed treatment being taken in government
institutions in 58 of the cases. The ratio of the amount spent
on government and private hospitals in 1999 was 1:1.25, or
4:5. These ratios changed in 2003–04 more adversely to gov-
ernment hospitals—1:12 in the 2003 sample and 1:8.5 in
2004. Thus, over the 5-year period from 1999 to 2004, there
was a sharp rise in the total number of bills, the total expendi-
ture on professional services and payments made to private
providers as a proportion of all payments, with government
providers claiming just one-tenth of the total payment for
provision of professional services in the 2004 sample.

Private Health Insurance

Source: Ministry of Health and Family Welfare, GOI
Expenditures that cover outpatient treatment, including
medicines for all serving and retired CGHS beneficiaries and
inpatient/diagnostic services availed by retired beneficiaries,
has thus grown between 12% and 25% per year over the past
four years. A gross estimate suggests that another Rs 200 crore
would have been incurred on inpatient treatment by serving
employees. The maximum increase is seen to have occurred
on professional services, i.e. reimbursement to pensioners and
direct payments to hospitals and diagnostic centres.
The CGHS is a high-cost enterprise with an inequitable spread
of service delivery and no control systems for checking mar-
ket failures such as moral hazard. As can be seen from Table
3, while each dispensary currently caters to an average of 3610
cardholders, varying between a low of 1073 cards per dis-
pensary in Bhubaneshwar to a high of 6662 cards in Pune,
the average OPD attendance during 2003–04 was 14.3 OPD
Since the liberalization of the insurance industry in 2000
India has been promoting private players to enter the health
insurance sector. With the enactment of the IRDA, the indus-
try now has a regulatory framework to protect the interests of
policy holders. This was followed by another landmark deci-
sion in 2001 establishing Third Party Administrators (TPAs) to
facilitate speedier expansion by providing an administra-
tive–intermediary structure to the insurance industry. There
are, at present, 12 general insurance companies and 25 TPAs.
The total number of insurance holders is reported to be 112
lakh with almost 90% enrolled with the four public sector
insurance companies. These four companies collected a pre-
mium of Rs 1128.64 crore under Mediclaim. Of the 102 lakh
enrolled by these four companies (excluding GIC, Employment
Guarantee Corporation, AICL), which are permitted to market
health insurance products, Mediclaim alone accounts for 97
lakh persons, the rest being enrolled under other insurance

278 Financing and Delivery of Health Care Services in India

 Health insurance in India SECTION IV

Table 3
City-wise utilization (of allopathy) during 2003-04

No. of cards OPD attendance No. per dispensary Cards per dispensary OPD per dispensary

Ahmedabad 6672 118764 5 1334 23752

Allahabad 17794 279625 7 2542 39946
Bangalore 61409 592042 10 6140 59204
Bhopal 2627 14656 1 2627 14656
Bhubaneshwar 2147 60927 2 1073 30463
Chandigarh 7762 103346 1 7762 103346
Chennai 48156 486342 14 3439 34738
Dehradun 1
Delhi 456468 87 5246
Guwahati 9243 106484 3 3081 35494
Hyderabad 90262 949448 14 6447 67817
Jabalpur 19534 227542 3 6511 75847
Jaipur 24504 380177 5 4900 76035
Kanpur 27439 529268 9 3048 58807
Kolkata 56426 17 3319
Lucknow 20068 6 3344
Meerut 13626 6 2271
Mumbai 91379 724995 28 3263 25892
Nagpur 21274 508847 10 2127 50884
Patna 13407 5 2681
Pune 46631 390151 7 6661 55735
Ranchi 2789 70999 2 1394 35499
Shillong 1771 12004 1 1771 12004
Thiruvananathapuram 6155 98160 3 2051 32720
Total 1047543 5653777 247 83041 832847
Average 3610 46269

OPD: outpatient department Note: Blank cells indicate data not available and have been excluded in the calculations Source: MOHFW, GOI

The question that arises is whether pro-

Table 4 moting the private commercial insurance sec-
Health-seeking behaviour and trends towards utilization of tor will help India achieve its health objec-
health facilities tives of equity, efficiency and quality? What
are its implications? Should India consider
Government Private Private/ Private as
other options, or is this a case of one size
institutions institutions Government a % of the
fitting all? International experience and eco-
(in Rs) (in Rs) ratio total
nomic theory on private insurance markets
however show evidence of widening inequity,
1999- Individual claims 733236 (58) 914897 (46) 1.25 55.5% excessive utilization, adverse selection,
2003- Individual claims 658083 (79) 2018361 (114) increase in inappropriate care, risk selection
2003- Hospital claims 1156281 (33) 16427031 (1425) increasing overall cost of care and in a highly
2003-Diagnostic provider claims 0 2900829 (1287) competitive, voluntary market, high admin-
2003 Total Paid 1814364 21346221 11.77 92.2% istrative costs, unviable risk pools, under-
2004- Individual claims 3281255 (305) 7277243 (332) cutting and unrealistic pricing leading to
2004- Hospital claims 1299264 (39) 29227474 (2072) market instability and bankruptcies. Private
2004-Diagnostic provider claims 0 2579414 commercial-led health insurance systems
2004 Total Paid 4580519 39084131 8.53 89.5% resulting in, etc.—factors that contribute to
Period selected for the study was June-July for 2003 and 2004, and July-December for 1999; Figures in parenthesis are number of cases inflation in costs. Yet of the 39(2001) coun-
Source: NCMH analysis, 2004
tries having private insurance contributing
schemes such as Jan Arogya, etc. During 2003–2004, the claim to 5% of the total health expenditure, 46% were low- and mid-
ratio was about 96.34%. The industry, however, believes that dle-income countries where private insurance is perceived as
the overall claim ratio is expected to go up from around 130% an important source of health financing (Sikhri 2005), con-
to 300%–350% in the next three years (Table 5). tributing to about 5%–20% of the country’s total health spend-

Financing and Delivery of Health Care Services in India 279

SECTION IV Health insurance in India

Table 5 ing. Private insurance in these countries arose

in response to increased expectations of afflu-
Premium and claim figures-Mediclaim (1999 to 2003-04) ent classes, covering the healthiest and the
1) National Insurance Co. Ltd wealthiest resulting in limited social gain.
(Rs in lakh)
Year No. of Number Premium No. of No. of Incurred Incurred
Therefore, no country relies on private insur-
policies covered received claims claims claim claim ratio
ance to resolve the problems of financial
issued reported settled amount (%)
risk protection for the poor and the ill. And
regulation is required to minimize some of
1999-2000 572308 748508 5210 48653 44760 3630 69.67 the adverse impacts.
2000--01 610571 803742 5668 84392 77643 6045 117.13
2001-02 897480 2497801 17614 213313 189595 14572 82.70 The case of Chile
2002-03 436273 2025610 22533 148963 140274 22037 104.17
2003--04 505260 3122536 29802 198573 186110 30471 102.24 The USA and Chile are the two best exam-
ples of private health insurance. Chile, a mid-
2) New India Assurance Co. Ltd
(Rs in lakh) dle-income country, consisting of 1.58 crore
Year No. of Number Premium No. of No. of Incurred Incurred people, spends US$ 697 per capita (7.2%
policies covered received claims claims claim claim ratio of the GDP) but has health outcomes that
issued (Rs) reported settled amount (%) almost equal those of the USA. Table 6 gives
a comparative statement of key indicators
1999-2000 489150 2163876 16165 108247 90573 15629.37 96.68 of India, Chile, China and the USA
2000-01 609255 2951010 23915 275774 305406 20349.96 85.09 Chile developed its health system in three
2001-02 822534 2794510 26996 165368 116819 18853.00 69.84` phases: the first till the 1980s was focused
2002-03 937012 3086763 35443 201108 196300 31053.00 87.61 on reducing the burden of infectious and
2003-04 949648 2856675 36641 167898 161959 30068.12 82.06 communicable diseases; the second during
the 1980s when the National Health Fund
3) Oriental Insurance Co. Ltd
(Rs in lakh) was established to administer the SHI scheme
Year No. of Number Premium No. of No. of Incurred Incurred (Fonasa) through a network of 194 hospi-
policies covered received claims claims claim claim ratio tals run by the National Health Services Sys-
issued (Rs) reported settled amount (%) tem; and the third during the 1990s when
health insurance was opened up to the pri-
1999-00 269288 1077151 7450 12220 11556 6570 87.13 vate sector (Isapres). As of date, 67% of the
2000-01 376878 1507512 10553 16386 15420 8870 84.06 population is enrolled with Fonasa, while
2001-02 502512 2010047 15075 63166 53617 14188 94.11 20% are covered under 40,000 private plans
2002-03 537061 2148247 20408 74620 64251 15754 77.19 with 18 licensed, private Isapres. Insurance
2003-04 555858 2223436 22953 83050 71907 22407 97.62 is mandatory and all have to pay 7% of their
wages for health insurance. Both schemes
4) United India Insurance Co. Ltd
(Rs in lakh) are regulated by the Superintendence of
Year No. of Number Premium No. of No. of Incurred Incurred Isapres, under the Ministry of Health (Gov-
policies covered received claims claims claim claim ratio ernment of Chile).
issued (Rs) reported settled amount (%) Under the Fonasa, care is provided through
its own public hospital network and for
1999-2000 322845 904594 9124 60120 54077 7620 83.52 enhanced contributions, accredited network
2000-01 105331 361600 11761 32452 27759 8850 75.25 of private hospitals based on a fixed price
2001-02 140441 482133 14518 30130 25626 15819 108.96 reimbursement for specific ambulatory and
2002-03 245000 772000 21569 40000 37889 22317 103.46 inpatient medical services. Seventy-five per
2003-04 305000 845000 23528 50500 42585 25018 101.92
cent of the Fonasa budget is released to
GIPSA Companies primary health centres that are obliged to
(Rs in lakh) provide a predefined package of health serv-
Year No. of Number Premium No. of No. of Incurred Incurred ices. Isapres, on the other hand, offers a myr-
policies covered received claims claims claim claim ratio iad and individually customized, risk-rated
issued reported settled amount (%) premium plans based on the age, health and
economic status. They function on a fee-
1999-2000 1653600 3924693 38040 229240 200968 33448 88 for-service basis. The Isapres have the free-
2000-01 1702035 5623864 51897 409004 426228 44114 85 dom to fix the premium, indicate the con-
2001-02 2362967 7575427 94400 471977 385657 64800 69
tent and coverage levels, degree of co-pay-
2002-03 2155348 7885465 102600 464691 438714 91160 90
2003-04 2315768 9047647 112900 500021 462561 106400 94 ment and set the limits for reimbursements.
Source: Department of Insurance, Ministry of Finance, GOI Regulation is only on contractual compli-

280 Financing and Delivery of Health Care Services in India


Table 6
Key indicators of India, Chile, China and the USA
Indicator India
Population in crore 103.34
Health expenditure per capita (in US$ 96
Public expenditure. on health* as % of GDP/2000 0.9
IMR per 1000 live-births 2001 68
Life expectancy at birth 62
Maternal mortality ratio per 100,000 lakh births* 540
Source: World Health Report, 2005, WHO, * MDG-UNDP, 2002
ance but not on the content of the policies. To safeguard the
stability of the insurance pool, Isapres are known to follow
rigorous procedures of screening out high risks, provide low
coverage for high-cost illnesses and expensive procedures,
discriminate against or even terminate subscribers with high-
cost chronic diseases by increasing the premium or contract
conditions, forcing the subscriber to opt out. Typically, there-
fore, the Isapres enrollees have a mean income that is four
times more than those enrolled in Fonasa; 70% of the ben-
eficiaries are in the age group of 15–64 years with 2.5% above
65 years compared to 62% and 10%, respectively in Fonasa.
Such tiered rating is inevitable so as to keep the premium
low enough to retain the young healthy subscribers.
As in India, Chile has the problem of inappropriate skill mix
in public hospitals, not in keeping with the changed epi-
demiology; the centralized budgeting system giving little dis-
cretion, salaried system of provider payments with no incen-
tives to improve efficiencies, resulting in 50% bed occu-
pancy in peripheral hospitals and overcrowded city hospitals.
Second, with private sector allowed to provide the same set
of services, there is duplication of infrastructure and result-
ant wastage in the system as a whole. However, since the qual-
ity of care is similar in public hospitals, despite a law, 12% of
Isapres beneficiaries were found to have availed free care in
public hospitals. In other words, the system induces the sub-
scriber to avail ambulatory care in Isapres and move to Fonasa
when sick. Besides, due to the short-term character of the
contracts and ability to offload patients when ill, the Isapres
have no incentive of providing preventive care. This dual sys-
tem has thus resulted in segmenting the population on the
basis of income and risk. With the freedom to fix premiums,
the risk-rating system has resulted in a systematic discrimi-
nation against fertile women, chronically ill and the elderly
through the three stratagems of higher premiums, reduced
benefits and refusal to enrol or renew contracts. The lack of
uniformity or transparency of insurance plans makes it eas-
ier to resort to such tactics. The effect of such a system is
seen in the disproportionate share of high-risk persons being
discharged onto the public hospitals: HIV/AIDS (82%), cervix
cancer (90%), kidney failure (83%) and leukaemia (80%).
The system encompasses all the incentives for increased cost
of care: fee for service as a basis of provider payment. With
mandatory insurance, the competition is on quality, based
Health insurance in India SECTION IV
on sophisticated technology, which may not
always be cost-effective and also puts pres-
sure on the public system to keep pace. Thus,
Chile USA China competition is on offering high-technology
clinical procedures to low-risk individuals.
1.54 28.8 128.52 Third, the need for spending substantial
642 5274 261 amounts on screening out high-risk patients.
3.1 5.8 1.9 Such risk-rated premiums also affect the old
10 2 31 or those who fall sick as their option to change
77 77 71 the insurers is only Fonasa, as no other Isapres
23 8 55 will accept a high-risk enrollee. The admin-
istrative costs of Isapres are 14% and esca-
lation of average fee per visit is 80%, higher
than that of Fonasa, which are 1.2% and
50%, respectively. The cost of the whole system is high as
despite mandatory payment of 7% of the wage, the out-of-
pocket expenditures account for another 35% of the total
health spending. Finally, in the event of insolvency or merg-
ers between one Isapres and another, the interests of the
enrollee are not protected.
In 2002, Chile launched a major health reform process. The
key features consist of mobilizing additional resources by
earmarking 1% of the value-added tax (VAT) for health; accred-
itation of facilities and providers in the public and private
sector; standardized benefit packages for delivery by Fonasa
and Isapres guaranteeing access, opportunity, quality and
financial protection; ensuring stability of enrollee interests in
case of insolvency of a private insurer; and regulations for
preventing risk discrimination and dumping of high-risk
enrollees. Of importance is the Standard Benefit Package: access
is guaranteed by entitling enrollees to receive care listed in
the package at the appropriate level and within reasonable dis-
tance; opportunity implies defining a maximum wait period
for each service, with the option to get the service from any
place of choice to be reimbursed by the plan; quality is ensured
by service provisioning by accredited members; and financial
protection ensures that none are denied care for want of abil-
ity to pay and a ceiling of co-payment to be 20% or not exceed-
ing a patient’s 2 months’ wage. For implementing these reforms,
organizational and financial restructuring have also been
designed with laws protecting enrollee interests and provid-
ing for a solidarity compensation fund to compensate private
insurers for the enrolment of high-risk persons.
Current status of private health insurance in India
India has lessons to learn from the experience of Chile. India
too has a dual system of care—a private fee-for-service based
sector where the money is paid out-of-pocket by individual
households and a tax-based public sector where the providers
are salaried. Utilization of insurance under both these systems
is partly restricted and rationed by the affordability of the
individual household and availability of the budget.
On the other hand, insurance as a means of financing is a
far more sophisticated mechanism, requiring a comprehen-
sive understanding of the failures that characterize health insur-
ance markets. For example, a problem such as asymmetry in
Financing and Delivery of Health Care Services in India 281
SECTION IV Health insurance in India
information puts the patient and the insurer at a disadvan-
tage due to their inability to resist or challenge medical opin-
ion regarding an existing condition or future treatment. Besides,
in the absence of knowledge of prices, the provider can short-
change the two by overcharging. Second, cashless insurance
creates disincentives to control costs as it appears to be a
‘free’ good for the patient and the provider, often resulting in
excessive treatment by the provider (induced demand) and friv-
olous use by the patient taking treatment even for a condi-
tion which he would normally have ignored or cured with a
home remedy (moral hazard). Third, it is only the patients
who know their health status. Since it is normally those in need
of health care who tend to subscribe to health insurance, this
puts the risk on insurance agencies to resort to extensive
processes of risk selection, such as medical examination, before
being given admittance as an enrollee and focusing on low-
risk groups, such as the young or healthy. Risk selection in indi-
vidual-based policies however results in increasing the load-
ing fee and consequently the cost of premium. This is one
reason for the attractive group discounts being as high as 67%.
For these reasons, private commercial health insurance is known
to select its customers—the young, healthy, rich, males—leav-
ing the bad risks to the government—old, poor, young women
in the reproductive age group, and the ill.
Health insurance in India is usually associated with the
‘Mediclaim’ policy of the GIC, which was introduced in 1986
as a voluntary health insurance scheme offered by the pub-
lic sector. The premium based on the age, risk and the bene-
fit package opted for, ranged from a minimum premium of
Rs 201 for those <25 years of age, to a maximum benefit of
Rs 15,000 with discounts for group memberships. In 2001,
there were 78 lakh persons covered under Mediclaim (Gupta
2003). The subscribers are usually from the middle and upper
class, especially since there is a tax benefit in subscribing to
Mediclaim. The standard Mediclaim policy covers only hos-
pital care and domiciliary hospitalization benefits. Most med-
ical conditions are reimbursed though there are important
exclusions, such as pre-existing diseases, pregnancy and child
birth, HIV/AIDS, etc. Hospitals with more than 15 beds and
registered with a local authority can be identified as providers.
The insurance company (or the TPA, where applicable) admin-
isters the scheme. Being an indemnity scheme, the patient pays
the hospital bills and submits the necessary documents to the
company. The company in turn reimburses the patient. A study
of 621 GIC claims for the year 1998–99 by Bhat and Reuben
(2001) showed that the average time between submission of
documents and reimbursement is 121 days. This study also
showed that one-third of the claims were due to adverse
selection; 38% pertained to doctor’s fees and 25% charges
for diagnostic services. The provider-induced claims thus
accounted for 63%. Yet another interesting insight was that
22% of the total claims were for the treatment of communi-
cable diseases, while 64% were for non-communicable dis-
eases. There is also uncertainty about the amount reimbursed,
there are times when the patient is reimbursed only partially,
the usual reason being the insufficiency of documentation.
The policy is not renewed automatically and is dependent on
282 Financing and Delivery of Health Care Services in India
the timely payment of premium. Ellis et al. observed that the
GIC was more interested in whether the claim pertained to an
existing disease or whether the facility was qualified or not,
but spent little time on detecting fraud. With claims exceed-
ing 30% a year, more than the household spending, it reflects
the problem of moral hazard which requires close monitor-
ing. Second, it was also observed that the GIC sets premium
on the filing of claims and not actual amounts settled, giving
it a cushion year on year as settled claims amounts are always
lower than those filed, an amount that remains unadjusted.
During 1994, 4.4% of the insured persons made a claim, of
which only 75% of claims were settled. The claims ratio was
45%. However, of late, the claims ratio is growing at a fast
rate, allegedly because of collusion between the patients,
insurance agents and hospitals.
From the above discussion, five features that characterize
the health insurance system in India emerge:
1. By and large, the system offers traditional indemnity,
under which the insured first pay the amount and then
seek reimbursement. Under indemnity, all known dis-
eases or health conditions are excluded and therefore
such policies typically have a large number of exclusions.
This also means that those most in need of insurance,
i.e. the sick, get excluded for any financial risk protec-
tion against the diseases they are suffering from.
2. It is a fee-for-service-based payment system. Such a
system of payment is advantageous for the provider since
he bears no risk for the prices he can charge for services
rendered by him. Combined with the asymmetry in infor-
mation, such a system usually entails increased costs.
3. Policies provide a ceiling of the assured sum. Such a sys-
tem, and that too within a fee-for-service payment sys-
tem, results in shortchanging the insured as he gets less
value for money, as the provider and the insurer have no
obligations to provide quality care and/or over provide/over
charge services so long as the amounts are within the
assured amount of the insurance policy.
4. The system is based on risk-rated premiums. This again
puts the risk on the insured as the premium is fixed in
accordance with the health status and age. Under such
a system, women in the reproductive age group, the old,
the poor and the ill get to pay higher amounts and are
discriminated against.
5. The system is voluntary, making it difficult to form viable
risk pools for keeping premiums low.
Reasons for poor penetration of health insurance
Penetration of health insurance has been slow and halting,
despite the ‘huge market’ estimated to range between Rs
7.5–20 crores. Some reasons that explain for the slow expan-
sion of health insurance in the country are as follows:
1. Lack of regulations and control on provider behaviour
The unregulated environment and a near total absence of any
form of control over providers regarding quality, cost or

data-sharing, makes it difficult for proper underwriting and
actuarial premium setting. This puts the entire risk on the
insurer as there could be the problems of moral hazard and
induced demand. Most insurance companies are therefore
wary about selling health insurance as they do not have the
data, the expertise and the power to regulate the providers.
Weak monitoring systems for checking fraud or manipula-
tion by clients and providers, add to the problem.
2. Unaffordable premiums and high claim ratios
Increased use of services and high claim ratios only result in
higher premiums. The insurance agencies in the face of poor
information also tend to overestimate the risk and fix high
premiums. Besides, the administrative costs are also high—
over 30%, i.e. 15% commission to agent; 5.5% administra-
tive fee to TPA; own administrative cost 20%, etc. Patients
also experience problems in getting their reimbursements
including long delays to partial reimbursements.
3. Reluctance of the health insurance companies to
promote their products and lack of innovation
Apart from high claim ratios, the non-exclusivity of health
insurance as a product is another reason. In India, an insur-
ance company cannot sell non-life as well as life insurance
products. Since insurance against fire or natural disaster or
theft is far more profitable, insurance companies tend to com-
pete by adding low incentive such as premium health insur-
ance products to important clients, cross-subsidizing the
resultant losses. With a view to get the non-life accounts,
insurance companies tend to provide health insurance cover
at unviable premiums. Thus, there is total lack of any effort
to promote health insurance through campaigns regarding
the benefits of health insurance and lack of innovation to
make the policies suitable to the needs of the people.
4. Too many exclusions and administrative procedures
Apart from delays in settlement of claims, non-transparent
procedures make it difficult for the insured to know about their
entitlements, because of which the insurer is able to, on one
stratagem or the other, reduce the claim amount, thus demo-
tivating the insured and deepening mistrust. The benefit pack-
age also needs to be modified to suit the needs of the insured.
Exclusions go against the logic of covering health risks, though,
there can be a system where the existing conditions can be
excluded for a time period—one or two years but not forever.
Besides, the system entail equity implications.
5. Inadequate supply of services
There is an acute shortage of supply of services in rural areas.
Not only is there non-availability of hospitals for simple sur-
geries, but several parts of the country have barely one or two
hospitals with specialist services. Many centres have no cardi-
ologists or orthopaedicians for several non-communicable dis-
Health insurance in India SECTION IV
eases that are expensive to treat and can be catastrophic. If we
take the number of beds as a proxy for availability of institu-
tional care, the variance is high with Kerala having 26 beds per
1000 population compared with 2.5 in Madhya Pradesh.
6. Co-variate risks
High prevalence levels of risks that could affect a majority of
the people at the same time could make the enterprise unvi-
able as there would be no gains in forming large pools. The
result could be higher premiums. In India this is an important
factor due to the large load of communicable diseases. A study
of claims (Bhat 2002) found that 22% of total claims were
for communicable diseases.
Third party administrators
With the entry of TPAs under the IRDA Regulations Act, 2001,
the insurance industry is taking a new turn towards ‘Man-
aged Care’. The TPAs are required to be registered under the
Companies Act, 1956, and licensed by the IRDA, and be con-
tracted by one or several insurance companies ‘for the provi-
sion of health services’. The original role of a TPA was to pro-
vide the back-office administrative set-up to insurance com-
panies—issuing ID cards to subscribers, processing claims, mak-
ing payments, etc. Taking advantage of the lack of clarity on
the specific role and responsibilities of TPAs, some among them
are rapidly developing capacity to establish provider networks
to service the needs of the insured, collecting and analysing
data, fixing and negotiating rates for procedures with providers,
contracting providers, processing claims and making direct
payment to them and arbitrating any dispute between the sub-
scriber and the provider. This system, often referred to as ‘cash-
less payment’, has resulted in relieving the patients of the
psychological stress of having to mobilize resources at short
notice. By scrutinizing provider claims, TPAs also help in
safeguarding the interests of the insuring company of any
fraudulent claims by the providers. For all these services, the
insurance companies pay 5.5% of the total amount of pre-
mium collected under the policy. In addition, TPAs were also
to be given a bonus from insurance companies for reduced
claim ratios or for promoting the companies with the insur-
ers. This then would have given them the financial incentives
to develop systems for provider control: contracting through
predetermined rates for procedures and treatment, utilizations
reviews, prior authorization for expensive surgeries, etc. and
also ensuring that the patients do not resort to frivolous use
of the services. However, with the administrative fee being
low and the idea of bonus not operationalized, there is really
no incentive for the TPAs to reduce the claim ratios. Secondly,
barring a few, for most TPAs health insurance itself is a sec-
ondary concern to their main activity of brokerage.
The system of TPAs has facilitated cashless payments and
expanded access to providers but is yet to show evidence of
having been able to control cost or provide appropriate care.
As the system of TPAs unfolds there are apprehensions: (i)
whether patients will get adequate treatment and appropri-
Financing and Delivery of Health Care Services in India 283
SECTION IV Health insurance in India
ate care; (ii) whether quality of treatment will be compro-
mised with the gradual loss of control and autonomy of the
physician on the kind of treatment to be given to his/her patient;
(iii) whether costs will go up due to the substantial adminis-
trative responsibilities placed on the providers for record main-
tenance, filling claim and billing forms—in USA, where health
insurance is organized on a TPA system, doctors spend almost
30% of their time on processing their claims and the admin-
istrative costs of the system are 25%–30% as compared to
3% in Canada.; (iv) will there be possibilities of collusion between
the TPA and some providers in the network, resulting in pro-
cessing their higher claims even if not justified, affecting the
interests of the insurance agency; (v) with TPAs getting organ-
ized over time, whether they may acquire monopoly control
over the processes and dictate higher administrative fees, since
in the current system the TPA bears no risk; and finally (vi) the
legal uncertainty of the future in view of the framework regard-
ing the functioning of TPAs being ambiguous and unclear. For
example, the IRDA does not supervise or regulate the finan-
cial activities of TPAs, the contractual relationships with providers
or relationships with the corporate or union health plans. In
the light of such limited regulatory oversight, some already
combine subscription plans being serviced by a provider net-
work without involving any insurance company such as for
example, the Karnataka Police insurance with Apollo-spon-
sored TPA which provides hospital services in a network of
some 35 hospitals. In the absence of any statutory control or
obligations imposed by the IRDA, such as networking only
accredited providers, or those adhering to certain quality bench-
marks, or submitting reports on the qualifications of the provider
and performance reports, etc., there is a major lacuna, mak-
ing it difficult to ensure appropriate accountability in the sys-
tem. Overall international literature1 does show that the TPA
system is expensive (personal communication with Professor
ao, Harvard School of Public Health); even when their role is
confined to payment of benefits and management of claims,
the administrative costs run up to 20%–30%. If they are assigned
the role of identifying providers then the amount can go even
higher to 45%, making insurance products very unafford-
able. Besides, such literature also seems to suggest that the
TPAs neither have any motivation to undertake the steward-
ship function to protect consumer interest nor enroll new
persons. In this context NGOs could be better agents.
Given the complexities of these markets, the key lesson for
India is to closely study behavioural responses that such financ-
ing systems generate among all the major players and institute
appropriate regulatory systems to minimize likely distortions.
Universal Health Insurance Scheme (UHIS)
For providing financial risk protection to the poor, the Gov-
ernment announced a UHIS in 2003. Under this scheme, for
a premium of Rs 365 per year per person, Rs 548 for a fam-
ily of five and Rs 730 for a family of seven, health care for an
assured sum of Rs 30,000 was provided. BPL families were
given a premium subsidy of Rs 200 per annum. The scheme
was redesigned in May 2004 with higher subsidy and restrict-
284 Financing and Delivery of Health Care Services in India
ing eligibility to BPL families only. The subsidy was increased
to Rs 200, Rs 300 and Rs 400 to individuals, families of five
and seven, respectively. To make the scheme more saleable,
the insurance companies provided for a floater clause that
made any member of the family eligible as against the Mediclaim
Policy which is for an individual member. Yet in the last two
years of its implementation the coverage has been around
10,000 BPL families in the first year and 34,000 in the sec-
ond year till 31 January 2005.
The reasons for failing to attract the rural poor are many. First,
the public sector companies who were required to implement
this scheme find it to be potentially loss-making and do not
invest in propagating it, resulting in very low levels of aware-
ness, reflected in the low enrollment and very poor claim
ratios. To meet the targets, it is learnt that several field officers
pay up the premium under fictitious names. Second, a major
problem has been the identification of the eligible families.
Identification became cumbersome as the family needed to
have some form of certification, which is difficult to obtain
from revenue authorities. Besides, the poor also find it difficult
to pay the entire premium money at one time for a future ben-
efit, foregoing current consumption needs. Third, the proce-
dures are cumbersome and difficult for the poor—the pre-
mium has to be paid in a lump sum; the paperwork required
for enrolment as well as getting claim amounts is very time-
consuming. Fourth, in most places there is a deficit in the sup-
ply or availability of service providers, particularly because
government hospitals are not eligible. For example, in Uttaran-
chal, only 17 hospitals could be accredited under this scheme,
which could have gone up to 37 if government hospitals were
allowed to be included and also expanded access and choice
to the enrollees. Besides, in several areas there are just no doc-
tors available. Fifth, there was a set-back due to health insur-
ance companies refusing to renew the previous year’s policies.
Finally, the TPAs are also not willing to implement this scheme
at 5.5% of premium amount as their administrative costs of
covering rural populations in dispersed villages makes it unvi-
able.
During 2004, the Government also provided an insurance
product under which for a premium of Rs 120 the sum assured
was Rs 10,000. This was, to be available only for self-help
groups (SHG). However, the intake is reportedly negligible. The
reasons for this poor intake are similar to those cited above.
With the Common Minimum Programme (CMP) commit-
ted to having a UHIS, there has been much effort and debate
to evolve a suitable and sustainable design. To expand the
health insurance business, recommendations are also being
made to reduce the minimum pre-qualification of Rs 100 crore
equity as it will require 15 years to break even. Another set of
recommendations is for permitting TPAs and hospitals to
introduce health insurance products. There are, however,
doubts regarding this model as it may promote conflict of
interest. In combining various aspects of provisioning and
insuring there could be perverse interests to provide low qual-
ity of care over-diagnose or under-treat—for making profits.

Community-Based Health Insurance
Community financing (CF) as a method of raising finance at
the community level was initiated by UNICEF under its Bamako
Initiative for Africa in 1987. The initiative had the following
objectives: (i) to revitalize public health systems; (ii) to decen-
tralize decision-making; (iii) to mobilize resources to cover
local operating costs; (iv) to encourage community partici-
pation through management of services and locally gener-
ated funds; and (v) to define the minimum package of essen-
tial health services. (UNICEF 1987). Though the experiment
failed in Africa, its concepts are once again gaining recogni-
tion as an appropriate strategy for low-income countries which
have a weak resource base, poorly developed markets and a
vast population having very low threshold of payment capac-
ity (WHO 2002).
In community financing, the community is in control of
the principal functions of collection and utilization, the mem-
bership of the scheme is voluntary and there is willingness to
prepay the contributions (Hsiao 2001). The scheme is based
on the hypothesis that with greater social capital there will
be more willingness to pay and participate. The community
has been defined as a group of households living in close prox-
imity or belonging to social, religious or economic organiza-
tion. The efficacy of the scheme is based on two implicit
principles: one, that the community has adequate homo-
geneity or social coherence that gets easily translated into a
capacity to mobilize resources; and two, that the willingness
to prepay will be influenced by self-interest when each indi-
vidual perceives his marginal benefit exceeding his costs, i.e.
accessing something of value which can be obtained easily
and more in quality through prepayment. Literature reviews
of such community-based schemes tend to suggest that
they have enabled an increase in the availability of resources;
inclusion of the poorest groups on account of government
subsidy; enhanced access to health services; and reduced
impoverishment on grounds of illness (Jakab 2001).
While the CBHI movement is vibrant in Africa, it is slowly
picking up momentum in India. Currently, there are about
22 voluntary CBHI programmes in India, initiated and admin-
istered by NGOs. Of these about 10 are active (Table 7). In
many schemes, the community is also involved in various activ-
ities such as creating awareness, collecting premiums, pro-
cessing claims and reimbursements, and the management of
the scheme (deciding the benefit package, the premiums, etc).
Devadasan, in his paper identified broadly three types of
community health insurance (CHI) schemes and also analyzed
their structure and basic features as discussed below: (Devadasan
et al. 2004; Fig. 3):

Type I—The provider of health care plays the dual role of
providing care and running the insurance programme (e.g
ACCORD, VHS)

Type II—where a voluntary organization/NGO is the insurer,
while purchasing care from independent providers (e.g. Trib-
huvandas Foundation, DHAN Foundation)

Type III—(intermediary design)—The NGO plays the role of
the agent purchasing care from providers and insurance
Health insurance in India SECTION IV
companies (TPA, e.g. SEWA, Karuna Trust, BAIF).
The membership of these CHIs scheme varies from 1000 to
more than 20 lakh. Most of the schemes operate in rural
areas and cover people from the informal sector. Enrolment
is usually facilitated by membership of the organizations,
e.g. micro finance groups, cooperatives, trade unions, etc. The
annual premium ranges from Rs 20 to Rs 120 per individual.
The unit of enrolment is an individual and the membership
is voluntary in most of the schemes.
All the schemes offer hospitalization; this ranges from the
classical Mediclaim product to a very comprehensive cover
including all conditions and no exclusions. Many NGOs have
been successful in negotiating an appropriate insurance pack-
age for their members. Most providers are either NGOs or pri-
vate for-profit organization. The utilization rates range from
6 to more than 240 per 1000 persons insured. The latter
obviously indicates extreme adverse selection.
The main strengths of the CBHIs schemes are that they
have been able to reach out to the weaker sections and pro-
vide some form of health security; increase access to health
care; protect the households from catastrophic health expen-
ditures and consequent impoverishment or indebtedness.
However, sustainability is an issue as these initiatives are
dependent on government subsidy or donor assistance. They
provide limited protection in view of the very little cross-
subsidy between the rich and the poor, resulting in the small
size of the revenue pool which also constricts getting a bet-
ter bargain from the providers. A disturbing factor in these
programmes, (barring one or two) is the very low claim ratio,
ranging from 0.25 to 0.66, which indicates that the scheme
is not able to overcome the barriers that are hindering access
or the cover provided is too inadequate or the members too
ignorant about their entitlements. It is also seen that the poor-
est of the poor get excluded on account of their inability to
pay their share within the specified time limit. Some NGOs
manage the scheme by themselves, which may be ‘illegal’
within the current IRDA regulations. Also, some of the schemes
cover very small numbers and so the potential for scaling-up
is restricted. Moreover, many of the schemes see health insur-
ance as an end in itself and do not seek to either promote
preventive and promotive health care or extend adequate
provider linkages.
There is no exhaustive evaluation of the CBHI schemes in
India due to the lack of uniformity in MIS. Many questions
remain unanswered and need to be researched to see if these
models can be implemented and replicated in India. For exam-
ple, it is not clear how much it costs to administer such schemes,
or its impact on strategic purchasing of services, developing
provider networks or on the local quack, or the problems for
upscaling and finally if the scheme has helped protect the
poor from penury and if so, how it can be sustained if NGOs
withdraw their support, etc.
Of all the schemes in operation, the one that has drawn
widespread attention in India is the Yeshaswani, an insur-
ance scheme for farmers, designed and implemented by the
Government of Karnataka since 2002. Under this scheme,
the Cooperative Department enrolled, through a govern-
Financing and Delivery of Health Care Services in India 285
SECTION IV Health insurance in India

Table 7
Some community health insurance schemes in India

Name and location Population covered Premium collected Benefit package

of the scheme (target population in 2003) (per cent target
population covered in 2003)

ACCORDGudalur, Tribals living in Gudalur taluk and who are Rs 25 per person Hospitalization cover up to Rs 1500 per person
Nilgiris, Tamil Nadu members of the AMS union (n =13,000) per year (36%) per year
BAIFUrali Kanchan, Women members (between 18 and 58 Rs 105 per person Hospitalization cover up to Rs 5000 per person
Pune, Maharashtra years) of the micro savings scheme in per year (58%) per year
22 villages (n =1500).
BUCCSBuldhana, Members of the Buldhana Urban NA Hospitalization cover up to Rs 5000 per person
Maharashtra Cooperative and Credit society per year
(n = 175,000).
DHAN Foundation Women members of the micro finance Rs 100 per person Hospitalization cover up to Rs 10,000
Kadamalai taluk, Theni scheme and living in Mayiladumparai per year (40%) per person per year
District, Tamil Nadu block (n =19049)
Karuna TrustT Narsipur BPL families in T Narsipur Block (n = Rs 30 per person per year. Hospitalization cover up to Rs 2500 per person
Block, Mysore District, 278,156) Fully subsidized for the per year. Includes ambulance services and
Karnataka SC/ST population (31%) loss of wages
MGIMS HospitalWardha, The small farmers and landless labourers Rs 48 per family of four Hospitalization cover up to Rs 1,500 per
Maharashtra living in the 40 villages around Kasturba (in cash or kind) (90%) person per year
Hospital (n= 30,000)
Raigarh Ambikapur Poor people living in the catchment area Rs 20 per person (58%) Primary and secondary health care
Health Association (RAHA) of the 92 rural health centres and hostel
Raigarh, Chhattisgarh students. (n = 92,000 individuals).
SEWAAhmedabad, SEWA Union women members (urban and Rs 22.50 per person or Hospitalization cover up to Rs 2000 per person
Gujarat rural), and their husbands living in 11 Rs 45 for a couple (10%)
Districts of Gujarat (n = 1,067,348)
SHADEKolencherry, Members of the SHGs operating in The Universal Health Hospitalization cover for family up to a maximum
Kerala Ernakulam district (n = 9000) Insurance Scheme (Rs 548 limit of Rs 30,000 per family per year
for a family of 5) (20%)
Student's Health Full-time student in West Bengal State, Rs 4 per student per Primary and secondary health care
HomeKolkata, from Class 5 to University level. year (23%)
West Bengal (n =56 lakh students)
Voluntary Health Services Total population of the catchment area Rs 250 per family Hospital cover
Chennai, Tamil Nadu of 14 mini-health centres (n= 104,247) of five (12%)
YeshasviniBangalore, Members of the District Farmer's Rs 120 per person (25%) Cover for all surgeries up to Rs 100,000
Karnataka cooperative societies and their
families (n = 80 lakh)

Source: Devadasan et al. 2004

ment fiat, over 17 lakh farmers within one year and created
a corpus of over Rs 15 crore. In the second year, an additional
5 lakh members have been enrolled against the target of 1
crore. The scheme provides financial risk protection against
1600 surgeries offered in 90 accredited hospitals at prefixed
rates. Outpatient treatment is free and any diagnostic serv-
ice resulting in surgery carries a discount of 50%. To keep
the premium low at Rs 90, now revised to Rs 120, a Trust
chaired by Secretary of the Department of Cooperatives, has
been constituted with the premium forming the corpus fund
from which the claims are settled. A commercial TPA has been
contracted by the Trust at 5.5% of premium collected to
provide ID cards to the members, process the claims and
make payments to the service providers. A doctor appointed
by the TPA gives prior authorization for expensive surgeries
and also scrutinizes correctness of the claims. Within one year
of establishment of this scheme, over 27,000 persons were
provided outpatient treatment and 4000 surgeries performed.
However, sustainability is an issue. The scheme is now facing
monetary problems and has a long wait list for surgeries and
claims to be paid despite the reimbursement being guaran-
teed by the Government of Karnataka. Focusing solely on sur-
gical aspects of health can have only a limited appeal and a
blind replication of this scheme can give wrong incentives

286 Financing and Delivery of Health Care Services in India

 Health insurance in India SECTION IV

Fig 3
Types of community health insurance schemes in India

NGO Insurance Company

(ACCORD, JRHIS, SHH, VHS)

Health
Premium
care Group
Reimbursement
Premium

Community
NGO
(SEWA, BAIF, Navsarjan and
Karuna)
Reimbursement
(Karuna Trust,
NGO Reimbursement
Navsarjan Trust)
(KKVS, RAHA) (RAHA)

Providers
Reimbursement
Premium
Reimbursement Providers Premium (SEWA, BAIF)
(KKVS)

Health care
Health care
Community Community
Source: Devadasan. 2004

for investing in surgery and neglecting other medical needs.
However, the scheme has been innovative in demonstrating
the benefits of utilizing government resources for the admin-
istration of insurance schemes, in bringing down the admin-
istrative overheads and facilitating lower premiums.
The Yeshaswani model as well as experimentation abroad,
seem to clearly point towards the fact that while CBHI is an
affordable model of financial risk protection in low-risk set-
tings, it needs institutional support and formal mechanisms
for carrying out the critical functions of health insurance—
collection of premium, settlement of claims, laying down
clear rules of entitlements and oversight. Only when such
systems are designed and put in place can the CBHI models
be upscaled to reach risk pools that are financially viable
and provide sustainability.
China’s model of Community-Based Health
Insurance
In China, a model is under implementation on a pilot basis
their combins certain design features to address the rotten
health system in the rural areas. The model, based on a part-
nership between the government and the community, uses
the village-based barefoot doctor as the key provider and
gatekeeper for referrals. (This portion on China is from
Professor Hsaio of Harvard School of Public Health, USA in
a personal communication with the author). The scheme
details are as under:
Three underpinning concepts
(a) People by themselves, especially those living in rural areas
and the poor, are unlikely to be able to raise enough
money for such schemes to be fully self-financing, neces-
sitating public subsidy;
(b) Even if financing could somehow be organized, there is
the issue of how services are to be delivered, since exist-
ing services are neither efficient nor effective in terms
of quality;
(c) Issues related to governance and management: how is
one to organize and manage such schemes and who
will perform the stewardship (or oversight) functions?
These include overseeing the financial functioning and
health of such schemes, the functioning of medical care
providers, contracting (if any) with providers.

Financing and Delivery of Health Care Services in India 287

SECTION IV Health insurance in India

Fig 4
China’s health insurance system

Regular budget

County and Public

health and County hospital
Town Government
prevention

Government
subsidy Reimbursement
for services and

Fund Management for village Township health

Office doctors' salaries center
and bonus after
THC find their Salary and
Co-insurance bonus
work meet
Premium payments to
quality standards village doctors

Enrollees Village Health Post

Source: Hsiao, HSPH, USA

Co-insurance

Outline of the scheme
Premium
The premium is Rs 100 per person plus the government sub-
sidy (Fig. 4). The contributions of each enrolled member are
roughly equal, except for the very poor, from whom no pre-
mium is charged. There is an upper limit of benefits. Enrol-
ment is on an annual basis—the first month of each year for
renewals or new enrolments—and after that no enrolments
are allowed to prevent adverse selection.
Jurisdiction of the scheme
Typically, each scheme covers several villages. The experience
has been that 93% of the people covered under the scheme
support it, but only 60% actually join it. Even this is sufficient
to ensure a deep enough pool of members—6000 and above.
Benefit package
Free consultation visits to the village doctor as he is salaried
under the scheme, but there is payment for the drugs prescribed.
Fifty per cent of the amount of payment is reimbursed by the
scheme upon examination of the prescription. Roughly 230
drugs can be prescribed—including both modern and tradi-
tional medicines—based on some type of essential drugs list.
In addition, in case of referral to the subdistrict facility (Tehsil
level), the patient is reimbursed 50% of the expenditures incurred;
20%–30% of all expenses for hospitalization at higher levels.
Referral
The patient can go to a higher order facility only if he gets a
referral from the village doctor, who in turn has to take notes
and justify why he is referring (Fig 5).
Government subsidy
A sum of Rs 110 per person is provided to those communities
willing to set-up community financing organizations with a
minimum number of members (about 70%). This acts as an
incentive as well as subsidy.
Provisioning
Typically in China, every village has one or a maximum of
two village doctors. The villagers decide which doctor is to

288 Financing and Delivery of Health Care Services in India


be involved with the scheme. This village doctor is employed
on a salaried contract that lasts for only one year at a time.
The village doctor gets paid in two parts: (i) a salary as per con-
tract, and (ii) a performance-linked bonus. The salary is just
enough to cover subsistence to ensure that he is interested
in the bonus. The bonus depends on three factors: (i) the
demand for the service of the doctor as reflected in the num-
ber of visits by the villagers; (ii) careful keeping of medical
records (patient details, age, sex, number of visits, diagnosis,
prescription); and (ii) regularity in attending continuing med-
ical education and passing medical exams.
Training
The ‘barefoot village doctor’ (who is like the RMP/quack in
India) is provided training. Those practising for over 5 years
are exempted from training in the first year of the scheme,
but in subsequent years they have to take continuing edu-
cation courses or pass exams to remain a part of the scheme.
For all others, a three-year course is necessary for qualifica-
tion to work in the scheme, followed by annual examinations,
and short continuing education courses on an annual basis.
The training (and continuing education) of village-based doc-
tors is focused on promoting the ability to treat the eight most
Fig 5
Model for provision of health care services in China
Patients who
decided to
bypass referral
(they get less
reimbursement)
Emergency
service
Patients
Normal
Source: Hsiao, HSPH, USA
Health insurance in India SECTION IV
common health conditions, and on recognizing when to refer
patients to higher-level facilities.
Medicines
The village doctor purchases the medicines from subdistrict
level storage facilities operated by some agency, which he is
allowed to sell at no more than 20% mark-up of the cost price.
The price lists are prominently announced and displayed on
notice boards.
Administration
A manager and a clerk handle the day-to-day operation of
each scheme. The manager reports on the functioning of the
scheme to a management committee; the clerk keeps pre-
mium receipts and payment records.
The ‘Management committee’ is organized at several lev-
els. First, each village under the scheme has a management
committee of 5—typically composed of retired teachers, retired
local officials, etc. Their functions are: (i) overseeing the func-
tioning of the local doctor’s clinic—making sure there are no
complaints, no price gouging, etc.; (ii) maintaining a sug-
gestion box where complaints can be placed; and (iii) organ-
County Hospital
Referral
Township Health
center
Referral
Village Health Post
Financing and Delivery of Health Care Services in India 289
SECTION IV Health insurance in India

izing enrolment under the scheme. (a) Auditing of accounts;

From each village-level ‘management committee’ one per-
son is nominated to represent them at the ‘Board of Direc-
tors’ at the subdistrict level (the level at which the scheme is
organized). Because of the large number of likely members
of the Board, it meets only four times a year. However, a ‘stand-
ing committee’ of 7 that works on behalf of this Board,
meets more frequently and oversees the manager and the clerk
along with other functions. The standing committee may
change from year to year. No payments are made to the stand-
ing committee and management committee members. The
standing committee, based on simple contracts, employs the
village doctors, etc. (Fig 6).
(b) Checking drug quality through laboratory testing and
random checks.
A broader approach to analyse/assess CBHI schemes is needed
through examination of two policy issues: (i) coordination of
CBHI and government risk pools, and (ii) equity implications
of CBHI schemes and the role of government subsidies in such
schemes. There is a strong need for empirical work to explore
how CBHI schemes and the broader health care financing sys-
tem interact. Even if individual schemes achieve their objec-
tives (in terms of equity, efficiency, etc.), it does not neces-
sarily imply that such objectives will be achieved at the sys-
tem level.

Oversight and stewardship by government What are the lessons for India?

In technical matters for which the committees at the village The lessons that emerge from the China Model and discus-
and subdistrict levels are not equipped, the government pro- sions in the earlier paragraphs are that given the huge size,
vides the support: diversity and levels of development in India, it is important

Fig 6
Regulation, monitoring and supervision of community-based health care system in China

County People's Supervise and Regulate and

Congress
County and County hospital
Monitor Monitor
Town Government
Party Secretary

Audit and
Supervise Subsidize Regulate
Supervise
and
Town People's and train
Board of Directors monitor
Congress
Report
Executive
Committee
Township Health
Centre

Pay,
Fund supervise
File and train
Elect 1 Management Office claim
members Monitor
records clinical
work
Financial
report
Village Health Post
Report

Enrolled peasants Board of Directors

Source: Hsiao, HSPH, USA Elect 5 members

290 Financing and Delivery of Health Care Services in India


to adopt a four legged strategy for affording real risk pro-
tection to the poor: (i) Bring down covariate risk in the com-
munity and address the containment of infectious and child-
hood diseases by intensifying public health programmes; (ii)
strengthen government facilities to enable them to provide
equally good quality care to the poor – this is the cheapest
and most affordable option for government in the short run
as a well functioning public health system has great poten-
tial to protect the poor from risk; (iii) experiment with dif-
ferent models of financing to spread risk and reduce the
burden on the government. Such models will imply design-
ing the features and implementing them on a pilot basis
before coming up with a final policy framework; and (iv) in
places/states where there are networks of self help groups
and evidence of solidarity experiment the China Model as it
would: (a) strengthen participation and that of local bodies
and Panchayat Raj institutions; (b) incorporate the RMP
into the system; (c) drastically reduce costs; (d) enable pro-
viding healthcare within the village itself.
Such designing needs to be based on, first, being clear as
to what the objectives of public policy are—is it deepening
insurance markets, or extending financial risk protection
against illness, or increasing FDI to India? Second, the size
of the risk pool and lowered risk factors are critical for low
premiums that could be affordable for the majority of peo-
ple. Thirdly if the system is to be based largely on a fee for
service system of payment, with zero cost at the point of
service, then it will entail putting in place a set of prerequi-
sites, such as standardized treatment protocols and unit costs;
regulations to control the provider, disease classification using
ICD-10 and/or grouping of diseases under Diagnostic Related
Group for payment system, pricing controls, putting sub-lim-
its to expenses rather than having a cap of assured sum to
contain charges, making it mandatory for data returns, stan-
dardization of claim forms etc. Besides, in any insurance sys-
tem it is equally necessary to have regulations for quality and
cost; mechanisms for accreditation and certification, issue
of unique ID cards for members, different premium structures,
controlling prices etc.
Implementation of the Package - Restructuring
Institutional Mechanisms and Reorganizing
Relationships
Most importantly, for the actual implementation of UHIS, a
critical institutional player needs to be inducted on the demand
side commanding considerable market power to negotiate
the best possible care at the most affordable prices for the
patients. The concept is based on the assumption that orga-
nizational structures are normally shaped to suit the objec-
tives of financing systems. If expenditure control is the
overriding objective then there is usually a tendency towards
centralization of all spending decisions—costing, sanction-
ing, releasing, accounting, mandating referrals through gate-
keepers, etc. But in a prepaid insurance system the key actor
is the consumer on whose willingness to contribute rests
the whole system. Since individual patients cannot be expected
Health insurance in India SECTION IV
to bargain prices on account of their vulnerability and the
superior strength of the provider who has more information
on their needs, Enthoven’s idea of a sponsor, as an instru-
ment to strengthen demand side to tilt the market to the
advantage of the consumer has force (Enthoven 1983, 1993).
It implies that the purchasing function needs to be central-
ized into one entity large enough to make a difference to
the practice and earnings of the providers. The concept also
draws from the power of a single payer being able to nego-
tiate better terms as in Canada than in a multipayer envi-
ronment as in US. This concept is then the theoretical basis
for proposing a Social Health Insurance Corporation as the
sponsor and reinsurer for independent health insurance com-
panies. One option for the establishment of such a SHIC in
Indian conditions is a) by the merger of the ESIS (medical
side) with the CGHS; and b) by steadily moving towards a
mandatory health insurance paradigm. For this the starting
point could be mandating all public servants working in the
government or government owned entities to compulsorily
pool their contributions to the SHIC. Combined with a broad-
ened ESIS membership, this alone will increase the corpus
amount over four to five times to the existing Rs. 1100 crore
of premium collected for Health Insurance. This corpus can
further be widened when the premium subsidy for the poor
is also pooled in here. Such a mechanism will provide the
required volume and velocity required to trigger establish-
ment of health insurance companies, professional provider
networks, mutual fund cooperatives like weavers and fish-
ermen cooperative societies, a federation of CBHI schemes,
HMO’s by hospitals having more than 500 beds and ability
to establishment own provider network etc. All these enti-
ties subject to meeting solvency rules etc could be the vehi-
cles to access the poor in the rural hinterland—like the com-
mercial banks reach out through the grameen bank networks.
For their operations the SHIC can act as the reinsurer. Sec-
ondly, in the future years, as this system settles down, the
SHIC can also establish an equalization fund as in Chile. In
Chile the equalization fund is made up of a proportion of
the premiums collected by all the insurance companies being
pooled into the fund. Subsequently, this fund reimburses the
companies in accordance with the risk profile of the insured.
This then acts as a positive incentive to adhere to the guide-
lines of not denying insurance to any one on grounds of risk
and having exclusions of any kind. The success of this model
will however depend upon our ability to bring in a high cal-
iber of professional management to the SHIC and other financ-
ing entities – having capacity to collect premiums, issue
ID’s, process claims, reimburse in a timely fashion, accredit
and develop provider networks, negotiate rates etc.
Secondly, the SHIC will have to be a financing instrument
and not a provider. This then means that own hospitals and
dispensaries by the ESIS, CGHS and PSUs will need to be
converted into Trust hospitals available for their members at
dedicated times and for general public at other times. The
advantage of this measure will be two: a) that the SHIC will
be able to accrue more for the corpus as the administrative
costs now pass onto the hospitals units which become self
Financing and Delivery of Health Care Services in India 291
SECTION IV Health insurance in India
financing, mobilizing its money from insurance policies/
user fees; and b) the general public as well as the employees
and members of ESIS, CGHS and PSUs all get a wider access
and choice of hospitals. At present the CGHS dispensaries have
an average of 14 OP patients per day and the ESIS hospitals
have an average occupancy rate of 50%, with some having
even as low as 10%. Likewise, in several remote areas where
public infrastructure is weak the PSUs have excellent medical
facilities with capacity to serve the local populations. Thus
over 2000 facilities under ESIS, CGHS and PSUs can be opened
up to the general public with an incremental amount of
additional budget. This would also increase access and fea-
sibility of insurance reaching the poor.
Economy of scale that comes from a large risk pool is an
important consideration for covering hospitalization. By lay-
ing down a minimum level of say 75-80% population cov-
erage at the village panchayat level, or a risk pool of 10-
15,000 members as the eligibility criteria for receiving gov-
ernment subsidies, it could be ensured to have a more rep-
resentative membership – the healthy and the better pay-
ing sections along with sick and poor. And in order to achieve
the willingness to pay and optimal participation, substan-
tial subsidies targeted to the poor, a need based standard-
ized benefit package and linkage to provider networks
need to be incorporated as the three core elements of the
design.
The flip side of the SHIC model is that it may entail high
administrative costs due to the several layers of intermedia-
tion. The SHIC will also need to be run on professional lines
with highly skilled and trained persons, which will again increase
costs. The issue then is whether such a structure will be suit-
able and affordable and other alternatives to reduce admin-
istrative costs need to be examined. In the absence of any
experience it is incumbent to try out on pilot basis some of
the financing systems.
To monitor and regulate this huge initiative, there will also
be an urgent need to have an independent health regulator
and a body of laws that address various issues related to health
insurance markets and the serious distortions that the cur-
rent trends are creating and will be difficult to remove later.
In the absence of such a roadmap for reform and clarity of
vision, the goal of having a Universal Health Insurance will
not be realized. This goal was first articulated in 1954 by the
then Prime Minister Jawaharlal Nehru. It is indeed a tragedy
that even after five decades such an important goal contin-
ues to be an aspiration.
Conclusion
The present system of financing and payment systems raise
several important concerns on the suitability of the structure
to meet current day problems and future challenges. The
292 Financing and Delivery of Health Care Services in India
large size of out of pocket expenditures provides an opportu-
nity to pool these resources and facilitate spreading risk from
households to government and employers on a shared basis
which will be a more equitable financial arrangement. The
dimension of equity is of particular concern as the inelastici-
ties of demand for acute care, are resulting in over 33 lakh
persons being pushed below poverty line, every year. In short
the social benefits of instituting social insurance as a finan-
cial instrument to replace user fees, outweighs the possible
risks of moral hazard and increased costs, typical outcomes of
prepaid insurance. How to minimize these two market fail-
ures are of concern and need to be addressed by developing
a well thought out strategy taking international evidence
into account so we build on existing knowledge and learn from
others’ experiences. It is argued that it is not advisable for
governments to intervene in health insurance markets in a
piecemeal manner—insurance for pensioners by the Depart-
ment of Personnel; for weavers by the Department of Tex-
tiles, for fishermen by the Department of Agriculture, for farm-
ers by the Department of Cooperatives, poor women by the
Department of Rural Development etc., as such attempts frag-
ment risk pools. In other words, resorting to insurance as a
financing instrument must be an act of a deliberate strategy
that addresses the market failures in order to ensure that
inequities do not widen and the poor are not marginalized—
two typical outcomes of private, fragmented insurance sys-
tems.
In conclusion it is reiterated that given the fiscal con-
straints for government to provide universal access to free
health care, insurance can be an important means of mobi-
lizing resources, providing risk protection and achieving
improved health outcomes. The critical need is to experi-
ment with the wide range of financing instruments available
in different scenarios and have adequate flexibility in the
design features, the structures and processes, institutional
mechanisms and regulatory frameworks, so that a viable bal-
ance can be achieved for minimizing market distortions so
that the outcomes do not make the cure worse than the dis-
ease (Enthoven 1983, 1993). Unregulated markets are inef-
ficient and inequitable, requiring governments to intervene
to ensure no segmentation in the system (Bloom, 2001). For
this, the burden of building partnerships and managing change
is on the government, which in turn needs to base its strat-
egy on sound research.
Acknowledgements
I gratefully acknowledge the assistance of Dr Somil Nagpal
for the analysis of the CGHS and Dr Alaka Singha, WHO, Geneva.
I am most indebted to Dr. William Hsiao, Harvard School of
Public Health, USA for so generously sharing his experiences
of China.
 Health insurance in India SECTION IV

Annexure 1
Number of workforce by employment category, income status and industry classification (1999-2000)

Industry Rural Urban All areas

High Middle Low High Middle Low High Middle Low Total

1. Organized Sector 0.14 1.80 0.87 2.81

1.a. Government 0.14 1.09 0.72 1.94
1.b.1 Agriculture 0.00 0.03 0.05 0.09
1.b.2 Manufacturing, etc. 0.03 0.34 0.17 0.54
1.b.3. Services, etc. 0.04 0.18 0.07 0.25
2. Unorganized Sector 2.23 10.15 12.68 0.90 3.06 4.62 3.12 13.21 17.30 33.62
2.1. Regular salaried 0.40 0.87 0.43 0.40 1.68 1.35 0.80 2.55 1.78 5.13
2.1.a. Agriculture 0.04 0.11 0.19 0.01 0.01 0.01 0.05 0.12 0.20 0.37
2.1.b. Manufacturing, etc. 0.11 0.18 0.11 0.15 0.51 0.40 0.26 0.69 0.51 1.46
2.1.c. Services, etc. 0.28 0.47 0.21 0.37 1.14 0.82 0.65 1.61 1.03 3.30
2.2. Self-employed 1.19 6.56 6.23 0.19 1.31 2.12 1.38 7.87 8.35 17.60
2.2.a. Agriculture 0.96 5.18 4.85 0.03 0.08 0.29 0.99 5.26 5.14 11.39
2.2.b. Manufacturing, etc. 0.10 0.55 0.64 0.09 0.31 0.58 0.19 0.86 1.22 2.27
2.2.c. Services, etc. 0.22 0.80 0.67 0.16 0.94 1.14 0.39 1.74 1.81 3.94
2.3. Casual employed 0.38 3.05 5.95 0.06 0.31 1.16 0.44 3.35 7.10 10.90
2.3.a. Agriculture 0.34 2.11 4.94 0.00 0.06 0.21 0.34 2.17 5.15 7.66
2.3.b. Manufacturing, etc. 0.17 0.52 0.77 0.00 0.20 0.60 0.17 0.72 1.36 2.26
2.3.c. Services, etc. 0.01 0.20 0.30 0.00 0.12 0.35 0.01 0.32 0.65 0.98
(1+2) Total Workforce 2.23 10.15 12.68 0.90 3.06 4.62 3.27 15.01 18.16 36.44
Note: The number of workforce has been measured by the current daily status (CDS). Figures are reconciled using Table 51 of the NSS Report No. 458 and tables extracted from unit-level record data of the 55th Round along
with a table from Economic Survey (2003-04). Data on break-up of urban-rural organized employment are not available. High, middle and low denote the household monthly per capita expenditure class.
Source: Unit Level Records of Employment and Unemployment Survey, 55th Round, National Sample Survey (NSS), 1999-2000

Financing and Delivery of Health Care Services in India 293

SECTION IV Health insurance in India
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