Public spending on health in India is lower than 1% of GNI, and overall spending is about 5.2%, with the majority (private) expenditure occurring mainly in urban areas. Yet, the rural population, which gets a lower share of public health expenditure than city dwellers, represents 73% of the total population, and every fourth Indian hospitalized falls into poverty due to the related costs (Worldbank 2001). Consequently, India registered lower DALE (Disability-Adjusted Life Expectancy) levels than other Asian countries with comparable per capita spending levels. The government has recognized this growing gap, and decided to raise public health spending to 2% of GNI by 2010, launched the Universal Health Insurance Scheme, and otherwise would like to encourage access to more risk pooling and health insurance, to protect the rural poor against catastrophic health expenditures.
A tool to finance access to health care: Micro Health Insurance Units
Micro health insurance units (MIUs) hold much promise in this new policy. Few formal insurers are willing to sell insurance in the informal sector, notably because of insufficient information on needs and on ability to pay; and few poor people are willing to trust formal insurers, because of unfavorable cultural framing but also because of limited supply of care in rural areas and the perceived high cost of insurance. A different system is required, which will be simpler, more affordable and likely to remain available to the poor in the long term.
MIUs are local organizations that are often created and operated at community level. Their success is contingent on attracting a large proportion of the local population, and in order to do so MIUs need to design products that the poor require and want. The information on needs, on attitudes to risk, and on ability and willingness to pay is critically missing. With our research we want to help filling this gap.