The study examined relationships between various demographic factors and insurance coverage, revealing how social and economic inequalities shape access.
Published Aug 21, 2025 | 7:00 AM ⚊ Updated Aug 21, 2025 | 7:00 AM
(Representational image/Creative Commons)
Synopsis: A recent study said India continues to grapple with a significant healthcare coverage gap that leaves two out of three citizens paying medical bills from their own pockets. The coverage gaps, driven by these multiple barriers, translate into severe financial consequences for Indian families.
Despite operating the world’s largest public insurance programme and implementing government schemes for over a decade, India continues to grapple with a significant healthcare coverage gap that leaves two out of three citizens paying medical bills from their own pockets.
A recent study published in The Lancet Regional Health – Southeast Asia revealed that only 29.8 percent of women and 33.3 percent of men aged between 15 and 49 in India have any form of health insurance, exposing them to the financial shock of illness.
This leaves the majority of India’s working-age population vulnerable to devastating medical expenses.
The research, which analysed data from demographic and health surveys across the Southeast Asia Region, offers one of the most detailed pictures yet of how far India has to go to achieve universal health coverage.
While roughly one in three Indian adults in the studied age group has health insurance, which is higher than in countries like Bangladesh and Myanmar, the coverage still leaves the majority uninsured.
The persistent gap stems from several interconnected challenges. “In India, while schemes like AB-PMJAY (Ayushman Bharat Pradhan Mantri Jan Arogya Yojana) offer SHI (Social Health Insurance) to economically weaker sections, a significant portion of the middle-income population remains uninsured,” the study stated, highlighting how coverage gaps affect different economic segments.
Cultural barriers compound these challenges. “In many South Asian communities, traditional beliefs and lack of trust in formal financial systems can hinder insurance adoption,” the researchers found. “Evidence suggests that in rural areas of India, Nepal and Bangladesh, people relied on community-based informal support systems over formal insurance, reflecting cultural preferences that affect enrolment rates.”
The informal employment sector presents additional obstacles. “In India, for example, informal workers often prioritise immediate financial needs over health insurance, limiting their participation in health insurance schemes that do not account for their economic realities,” the authors explained. “This reliance on informal employment also creates challenges for premium-based models of health insurance coverage.”
India’s health insurance expansion has been anchored by two major government initiatives, though their reach remains limited by various factors. The Rashtriya Swasthya Bima Yojana (RSBY), launched in 2008, targeted Below Poverty Line (BPL) families, giving them hospitalisation coverage.
Though limited in scope and plagued with implementation issues, it laid the foundation for large-scale publicly funded health insurance.
Building on this foundation, AB-PMJAY was launched in 2018 as the world’s largest publicly funded health assurance scheme. It provides up to ₹5 lakh coverage per family per year for secondary and tertiary care hospitalisation, aimed at over 500 million people.
However, systemic issues limit their effectiveness. The study notes that the functioning of health systems influences insurance uptake, as “effective health insurance is reliant on the availability of healthcare services.”
Additionally, “International evidence has shown that enrolling, retaining, and collecting premiums from informal sector workers remains a major challenge.”
The study highlighted that these initiatives have been instrumental in improving financial protection for economically vulnerable groups, but gaps remain, especially for the middle-income population, which often falls outside government schemes but cannot afford private insurance.
The coverage gaps, driven by these multiple barriers, translate into severe financial consequences for Indian families. In India, out-of-pocket expenditure accounts for nearly 50 percent of total health spending, reaching 49.8 perent to be exact.
This is among the highest in the world, and far above what is considered sustainable for achieving Universal Health Coverage.
The average per capita out-of-pocket expenditure in India is $36.9, which might sound small compared to rich countries, but relative to incomes, it pushes millions into poverty.
The study highlighted that in 2019, 5.68 crore people globally were pushed below the extreme poverty line due to health costs, and more than 3.9 crore of them were in the WHO South-East Asia Region, with India being a major contributor.
The underlying cause of these coverage challenges lies in chronic underinvestment. India spends only 3.3 percent of its GDP on health, which is one of the lowest in the WHO South-East Asia Region and well below the global average of 7.33 percent recorded in 2021.
The WHO benchmark suggests that countries need to allocate at least 5–7.5% of GDP to health in order to move meaningfully toward Universal Health Coverage.
Public health spending in India did rise slightly during the Covid-19 pandemic, but it is still less than half of what’s required. Because of this underinvestment, households in India continue to bear a heavy burden through out-of-pocket expenditure.
The study examined relationships between various demographic factors and insurance coverage, revealing how social and economic inequalities shape access. “We found that older age, higher education levels, and greater media exposure were positively correlated with insurance coverage for both men and women,” the authors reported.
These patterns reflect deeper structural issues. “Individuals in the higher age group are more likely to be employed and therefore covered under various employer-sponsored or private insurance schemes. Education plays a crucial role in increasing awareness and understanding of insurance benefits, leading to higher coverage rates. Studies consistently show that higher education levels improve knowledge, making individuals more likely to enrol in health insurance schemes.”
Economic status emerged as the strongest determinant, with wealthier individuals, particularly men, exhibiting higher coverage levels, consistent with literature reinforcing the link between socioeconomic status and insurance enrolment.
The study revealed how gender compounds existing barriers to health insurance access. “Studies suggest that health financing mechanisms often lack attention to gender or other exclusion markers, such as race, caste, ethnicity, and religion, in both their design and impact,” the authors noted.
Cultural and social structures create additional obstacles for women. “Further, deep-rooted societal values favouring men and gender-based discrimination in terms of access to healthcare services and finances in the region are also cited as the key contributors to the disparity. A qualitative study in Tamil Nadu reveals that the head of the household, mainly male, plays an important part in healthcare decisions of women in the family, even if they are engaged in economic activities.”
The study noted variations in insurance models across the region, highlighting systemic limitations.
“In countries like India, SHI is capped by an upper financial limit, while others, like the Maldives and Nepal, provide benefits that include both inpatient and outpatient services. Further, a few countries incorporate co-payment models for services beyond the amount and population coverage.”
Private health insurance “generally plays a supplementary role, primarily benefiting higher-income individuals who use it to access private hospitals or cover services beyond the basic package offered by social security schemes.”
“Similarly, India has also made significant strides through initiatives like the Rashtriya Swasthya Bima Yojana (RSBY) and the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), although gaps remain in coverage for middle-income groups,” the researchers concluded.
(Edited by Muhammed Fazil.)
