New Delhi: Only about 10% of the poorest one-fifth of Indians in rural (10.2%) and urban India (9.8%) had any form of private or government health insurance, show data from India’s largest national survey on social consumption, conducted between July 2017 and June 2018.

The poor are routinely forced to dip into their savings, borrow, delay treatment or receive poor quality care, experts said.

Overall, few Indians--14.1% in rural areas and 19.1% in urban areas--had any form of health coverage, found the report by the National Survey Office (NSO) of the Ministry of Statistics and Programme Implementation. This leaves the vast majority of Indians exposed to health-related financial shocks.

The survey included the Rashtriya Swasthya Bima Yojana (RSBY, National Health Insurance Scheme), which was the precursor of the PMJAY, the Central Government Health Scheme for government employees, the Employee State Insurance Scheme for formal sector employees and state governments’ health protection programmes.

Health costs keep people poor, and push those just above the poverty line back into poverty. In 2011-12, out-of-pocket health expenses drove 55 million Indians into poverty--more than the population of South Korea (51.1 million)--as IndiaSpend reported in July 2018. Some 38 million Indians were impoverished by expenditure on medicines alone.

India’s catastrophic expenditure is high--one sixth (17.33%) of India’s population spends more than 10%, and 3.9% of the population spends more than 25% of their income on health costs, found a 2017 World Bank report. Indians are the sixth highest private healthcare spenders among low and middle income countries, IndiaSpend reported in May 2017.

Rural poverty grew by 4 percentage points between 2011-12 and 2017-18--pushing 30 million people below the poverty line--according to one estimate based on the same NSO household consumption survey in Livemint on December 3, 2019.

The impact of rising health costs on poverty cannot be estimated because the government has withheld the latest nationwide consumer expenditure report and the raw data due to “quality issues”, as per a report in Business Standard on November 16, 2019. This consumption survey was India’s 75th and was conducted in 113,823 urban and rural households covering every district in the country.

Government health insurance

In 2017-2018, before the central government’s Pradhan Mantri Jan Arogya Yojana (PMJAY, Prime Minister’s Health Protection Scheme) was launched, only 12.9% of those in rural and 8.9% in urban areas were covered under any central government insurance scheme, the NSO report said. Only 9.9% of the poorest (belonging to the 1st quintile) in rural areas and 7.5% in urban areas had any government-sponsored health protection, the survey found.

The coverage is low because this survey was done before the launch of PMJAY, since the performance of services and coverage were poor under RSBY, said Shaktivel Selvaraj, director of health economics, financing and policy at the Public Health Foundation of India, a think-tank based in New Delhi. “This was one of the reasons why PMJAY was launched.”

The PMJAY, launched in September 2019, provides health insurance coverage of Rs 5 lakh to 100 million ‘poor and vulnerable’ families identified by the socio-economic caste census (SECC) of 2011.

By December 1, 2019, about 67 million had been given e-cards qualifying them for free treatment, and the treatment of 6.4 million patients had been paid for by PMJAY, data on its website said. “With PMJAY, the bottom 40% of the population now has health insurance. This is a big leap towards Universal Health Coverage that PMJAY has made,” Indu Bhushan, chief executive officer of PMJAY, told IndiaSpend. But “the 2011 [SECC] database is old so we have to ensure that those people [who are left out] are clearly identified and are made a part of the scheme,” he said.

The next NSO will show to what extent PMJAY has reduced out-of-pocket expenditure on health, Selvaraj said. Merely increasing insurance coverage is not enough as not all those who are enrolled know about the scheme or its benefits, not all the poor are covered, and not everyone has access to healthcare, he said.

Persistent low health insurance coverage

Health coverage decreased by 0.7 percentage points for the poorest Indians in rural areas and increased by 1.2 percentage points for the poorest in urban India as compared to 2014, when the previous health consumption survey was conducted.

Fewer than a quarter (21.9%) of the richest rural Indians and 33% of the richest urban Indians had health expenditure coverage in 2017-18--the highest proportion of any wealth group--the report said. This is an increase of three percentage points in rural areas and 0.4 percentage points in urban areas between 2014 and 2017.

Health insurance coverage in India is poor because the private health insurance industry is still at a nascent stage in India, the pool of people who are able and willing to pay for insurance is low, and insurance premiums are high, said Amir Ullah Khan, a health economist and professor at the Marri Channa Reddy Institute for Human Resource Development of the Telangana government.

Further because Indians, especially those in rural India, have limited access to healthcare services such as doctors and hospitals, they are less likely to buy health insurance, he said.

Lack of money impacts health

As a result of low insurance coverage, in 2016-17, about 79.5% of those in rural areas and 83.7% in urban areas paid for medical expenses from their savings, the NSO report said. This grew from 67.8% in rural areas and 74.9% in urban areas in 2014.

As more people used their savings, borrowing to support medical expenses fell from 24.9% in 2014 to 13.4% in 2017 in rural areas, and from 18.2% to 8.5% in urban areas, data show.

Over half of hospitalisations in India (51.9% in rural and 61.4% in urban) are in private hospitals. The average medical expenditure per hospitalisation in a private hospital (Rs 31,845) is seven times that of a government hospital (Rs 4,452), the NSO report said.

Given this, the poor are less likely to avail of hospitalisation. The wealthiest 20% families formed the highest share of hospitalisations--31.9% in rural and 22.4% in urban areas, the data show. Families in the poorest 20% of the population made up the fewest cases of hospitalisation (12.9% in rural and 16.2% in urban), which could be because of an inability to fund medical expenses because of low household savings.

The biggest result of paying for healthcare from their own pockets is poverty, said Khan. “Also since they can’t afford to pay for healthcare, the poor postpone seeking treatment which, in case of diseases like tuberculosis, cancer, etc. turn serious and more expensive to treat,” he said.

The rich are also more likely to have health insurance, data show. The rich have greater access to finance and hospitals, and the cost of more than one-fifth of all hospitalisations by the richest group (21.8%) in urban areas are reimbursed, said Selvaraj.

In rural areas, too, the poor remain deprived of access to government health support: The richest 40% of the population used government health programmes more than the poorest 40%, NSO data show.

Government And Private Health Insurance By Wealth Group
Sector Wealth Group Percentage of persons
Not Covered Covered by
Govt- Sponsored Insurance Scheme Insurance If Employed By Govt./ PSU Employer Supported Health Protection (Excluding Govt./PSU) Households’ Private Health Insurance Other
Rural 1st quintile 89.8 9.9 0.2 0.1 0 0
2nd quintile 90.6 9 0.2 0.1 0 0.1
3rd quintile 87.1 12.1 0.4 0.1 0.1 0.1
4th quintile 84 15.1 0.3 0.2 0.2 0.1
5th quintile 78.1 18.4 1.6 0.8 0.8 0.3
All 85.9 12.9 0.6 0.3 0.2 0.1
Urban 1st quintile 90.2 7.5 0.6 0.9 0.6 0.1
2nd quintile 86 10.7 1.2 1.5 0.5 0.2
3rd quintile 81.8 11.6 2.6 2.1 1.6 0.1
4th quintile 79.6 9 4.2 3 4 0
5th quintile 67 5.5 8 7 12 0
All 80.9 8.9 3.3 3 4 0

Source: National Sample Survey, 2017-18

This story was first published here on Healthcheck.

(Yadavar is a special correspondent with IndiaSpend/HealthCheck.)

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Swagata Yadavar

    Swagata Yadavar is an award-winning independent journalist based in New Delhi. She writes on public policy, healthcare and gender related themes. Previously, she worked with ThePrint, IndiaSpend and The Week. Her bylines appear in Cancer World, Al Jazeera, Business Insider, Article 14, Scroll, Behenbox among others.