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Pathways to Reimagining Commercial Health Insurance

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As part of the Dvara Research Working Paper series, we are publishing our latest paper titled “Pathways to Reimagining Commercial Health Insurance

Despite the progress India has made in citizen health outcomes, as evidenced by improvements in standard indicators such as infant and maternal mortality, disease burden in India continues to be disproportionately high, and malnutrition and other risk factors for disease and injury are widespread. The rising costs of healthcare add to the problem, furthering the financial burden on households in a system that’s primarily funded by out-of-pocket spending.  In this paper, we explore how India’s growing commercial health insurance (CHI) segment can be used to deliver adequate financial protection and good health outcomes. We layout key issues in demand- and supply-sides of the insurance market that need to be addressed for CHI to set the pathway to universal health coverage (UHC).

On the demand-side, we identify a consumer who strays far from the rational actor paradigm and, therefore, one whose needs require a fundamentally different approach than the one that commercial health insurance in India has so far taken. Indemnity insurance contracts are the norm in India, and we argue that such contracts deliver neither good financial protection nor good health outcomes. It is no wonder, then, that despite the rapid growth of the commercial health insurance market in recent years (20% annually over 2014-2020), OOP expenditures remain as high as 63% of total health expenditures in 2015, and about 7% of the population slide into poverty annually due to the crushing burden of high healthcare costs (based on data from 2007-2010). We layout precisely the different stages involved in bringing a consumer to the insurance market and the conditions under which consumers are likely to purchase insurance.

On the supply-side, we describe the many concerns that a new entrant into the commercial health insurance market must grapple with. These are primarily – the entry decision (what are the conditions of profitability?), elements of contract design (what factors drive the design of a benefits package and the pricing of insurance?), and aspects of purchaser-provider integration (why is such integration warranted?).

We conclude with a set of hypotheses that brings the two sides of the market together to shed light on possible pathways for reform in the commercial health insurance sector in India. Despite the many challenges this sector faces in India, we believe that there is room for optimism, and with the right amount of regulatory foresight, even room for radical transformation.

The full paper is available here.

Cite this item


Ashraf, H., Ghosh, I., Kumar, N., Nambiar, A., & Prasad, S. (2021). Pathways to Reimagining Commercial Health Insurance. Retrieved from Dvara Research Blog.


Ashraf, Hasna, Indradeep Ghosh, Nishanth Kumar, Anjali Nambiar, and Sowmini Prasad. 2021. “Pathways to Reimagining Commercial Health Insurance.” Dvara Research Blog.


Ashraf, Hasna, et al. “Pathways to Reimagining Commercial Health Insurance.” 2021. Dvara Research Blog.

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