Nature of Health Insurance Demand in India

In the wake of the recent COVID-19 pandemic, across the globe, the weaknesses of healthcare systems have been exp­osed and generated much debate. While public hospitals are trying hard to accommodate the pandemic-affected patients, their limited beds and staff strength make it a nearly impossible task. On the other hand, there were numerous cases of denial of admission, on one or the other pretext, to patients by private hospitals due to the fear of pandemic and spread within the facilities (Yamunan 2020). To overcome the pandemic-related income and employment difficulties, the ­recent instructions by the Insurance Regulatory and Development Authority of India have permitted the insurance companies to include COVID-19 treatment costs within the ambit of existing policies. The recently initiated Pradhan Mantri Jan Arogya Yojana (PMJAY or Ayushman Bharat) has also done the same, and now includes all costs of COVID-19 treatment in it.¹ Thus, the utility of insurance mechanism to help overcome financial problems caused by the pandemic has increased considerably. Even prior to the pandemic, the PMJAY and other state-­sponsored health insurance schemes received wide acceptance both in rural and urban ­areas. This was largely due to public–private cooperation between government-sponsored health insurance and reimbursement by public limited government insurance companies (GIC and its subsidiaries), and treatment to such insured population by private sector hospitals. Thus, health insurance plays an important role in safeguarding ­affected patients against fin­ancial crunch, and provi­des an easier possibility of treatment within the private sector.

The contribution of our paper is to ascertain the following: first, whether the presence of the PMJAY and the availability of other state-sponsored schemes in recent years have increased the utilisation of these insurance schemes and if, simultaneously, the other private health insurance usage has increased or changed in pattern due to the invigorated insurance market situation. We also attempt to explore socio-economic variables through logit analysis in order to provide possible clues pertai­ning to public or private health scheme insurance utilisation. Second, to find out the differences in the responses by a low-income and a high-income state—both of which belong to coastal areas of India. However, our exercise is limited to ins­u­r­ance utilisation as per the National Family Health Survey-4 (NFHS) conducted in 2015–16.