Demand for Health Insurance in India: An Analysis with Triple Hurdle Model

This study analyses the demand for health insurance in India integrating three underlying stochastic decisions: participation in health insurance schemes, purchasing positive premium health insurance and the amount of premium paid. A triple hurdle model has been formulated and estimated using National Sample Survey data (2017-18) from India. Empirical analysis reveals that probability of enrolment in health insurance significantly varies with occupational statuses, education levels, religions and castes. Compared to regular salaried group other occupational groups are significantly less likely to participate in health insurance schemes. Compared to Hindus, Muslims are under insured. Higher per capita household income increases the likelihood to join positive premium health insurance. Low income is identified as a hurdle to increase the coverage in health insurance. Compared to insured men, insured women are less likely to purchase positive premium insurance schemes. Among the insured people probability of joining the positive premium health insurance is lower for Scheduled Castes (SC) and Scheduled Tribes (ST) in contrast to that for the general castes people. Low education level causes low probability to participate in health insurance. Therefore, awareness generation regarding health insurance among the identified groups in the study should get priority for ensuring Universal Health Coverage in India. Although, the central government recently has eased the income hurdle for purchasing health insurance by reducing income tax burden, it would be more encouraging if the governments waive the GST on health insurance premium.