Awareness among people about health insurance in India

India’s larger portion of the population lies in the rural area and which is exposed vulnerable to
risks such as illness, injury, accident and death because of their social and economic situation.
Health insurance could be a way of removing the financial barriers and improving accessibility
to quality medical care by the poor and also an effective social security mechanism. But the rural
people still lags behind than the urban people in the matter awareness and subscription of health
insurance.
India is the fifth largest country that spends only 5.1% of its GDP on health. It has been
estimated that the health care market is around Rs.1,408 billion which includes health care
services, medical and diagnostic equipment and supplies (ICRA industry report on healthcare,
2005).
The Demographics situation is very unique in India. It is not only a heterogeneous mix but also
more than 65% of population lying in urban areas.
Today’s Health Insurance is in nascent stage in India due to which the performance of the private
health insurance has not been encouraging for the public when mediclaim policy was introduced
by the government owned insurance companies and now it is growing very fast.
Lack of adequate housing and sanitary facilities, along with other factors, including factors
relating factors relating to work, habits, lifestyles, lack of nutritious food, etc. result in the poor
falling prey to many diseases and disability. Apart from diseases related to lack of sanitation like
diarrhea, malaria, dengue, and work related diseases and disabilities like asthma, lack of
nutritious food causing malnutrition, non-communicable diseases (NCDs) like diabetes, heart
problems, cancer etc. are as much prevalent among the poor as the rich. In many cases, the poor
just do not know it, and even if they are in discomfort, the expensive hospitalization and
prescriptions deter them from seeking medical attention.
The stage of development of health insurance in India may be described as at an
embryonic stage, with the poor unaware of it, and thus not taking advantage of the
same. Some of the reasons for this state of unawareness among the poor are:
1. Illiteracy- Education is a key factor in influencing the decision to opt for insurance.
Absence of the same makes the poor unaware of the advantages of health insurance.
2. Lack of information is also a major factor. Financial literacy, and information, both are
lacking in the poor.
3. At the very onset, the decision to avail insurance is influenced by factors like agents,
friends and relatives. With the maximum population of the poor in rural areas, the friends
and relatives of the poor are also in a similar situation and thus are not qualified to give
advice; and the agents of insurance companies find it difficult to reach the most remote
corners to counsel them and thus the rural market remains untapped.
4. A family below poverty line, which is already struggling to put food on the table, has a
different set of priorities, and misinformation that they have to pay the entire amount of
premium also keeps them away from insurance policies.
 5. Already under the burden of loans, the poor do not understand the merits of the credit
policy, and believe it will further make them indebited.
Healthcare costs in India today are not only high but also rising. The rise in healthcare demand
has increased the cost of healthcare system to the extent that specialized care is beyond the reach
of common Indian man. Curative services favors the non-poor as for every Rs. 1 spent on the
poorest 20% population, Rs. 3 is spent on the richest quintile. Hospitalized Indians spend on an
average 58% of their total annual expenditure. Over 40% of hospitalized Indians borrow heavily
or sell assets to cover expenses. Over 25% of hospitalized Indians fall below poverty line
because of hospital expenses. A study carried out by FICCI and Consultancy Company Ernst and
Young (E and Y) reports that, over the next 10 years, healthcare spending in India will double.
To cope up with the rising healthcare costs, health insurance is a good option. Only 10% Indians
have some form of health insurance, mostly inadequate. This low proportion might be due to the
lack of awareness about health insurance. The present survey was carried out with the aim to
study awareness, attitude, and practice regarding health insurance in the population residing the
rural areas. The study was carried out in five villages of rural field practice area of a medical
college in Pune, Maharashtra. The pre-tested questionnaire was used to collect the information
related to awareness, attitude, and practices about health insurance from the head of family. A
total of 70 families were randomly selected for the study. Of these, 46 (65.71%) were joint
families and the remaining 24 (34.28) were nuclear families. Only 11 (15.71%) families had
heard about health insurance, while 59 (84.29%) had never heard about it. Among those who had
heard, the source information was mainly an insurance agent (63.63%). Only 2 (18.18%) had
information about government health insurance schemes. After discussion about the need of
health insurance, 60 (85.71%) commented that it is important to have a health insurance for the
individuals as well as families. Majority had given preference to family health insurance 57
(81.42%); 22 (31.42%) opined that health insurance is a governments responsibility and it should
be given to all; and only 6 (8.57%) actually had a health insurance policy.
The studies carried out about the health insurance awareness are few in number, and majority of
them were carried out in the urban areas. A study on the awareness of health insurance carried
out at Jaipur city of Rajasthan state in India showed that 43.4% were aware of health insurance.
A study conducted in the general population of Mangalore city showed that 64% of the
respondents were aware of health insurance. A study carried out among the inpatients at a
tertiary care hospital in coastal Karnataka found that only 38% were aware of health insurance.
In the present study, only 11% were aware about health insurance and only 6% actually had any
health insurance policy; this might be due to the fact that this study was carried out in the general
population residing in the rural areas.
 awareness among different states

38%
43.40% Jaipur
Mangalore
Karnataka

64%

To conclude, the awareness regarding health insurance in rural population is very low. There is
an urgent need to educate the rural population about the importance of health insurance.
Nationwide surveys are necessary to know the real status regarding health insurance awareness.
It has been found that there is a significant association between awareness level and selected
demographic variables.

So, to improve the condition of insurance in India, the companies need to achieve a fresh
capital in insurance sector. The private insurance companies have opened by the government
of India in year 2000 with the hope of health insurance progress and very few private insurers
have venture in health insurance. But, it is being difficult to make inroads for them in health
insurance. Health insurance is emerging to be an important financing tool in meeting health
care needs of the poor. In rural area special efforts are essential to foster the awareness about
the health insurance. Government is striving alone in this regard and Private Sector Insurance
companies are ignoring the rural mass where a huge opportunity lies for them. Mere creation
of awareness does not conclude the objective also there is a need to induce the people to
subscribe for health insurance schemes.

Table 1. Popularity of health insurers

popularity Frequency Frequency

(N= 60) In %
A) Government 26 86.7
policy
B) Private policy 4 13.3
C) co-operative 0 0
policy