Demand for Health Insurance in India: Evidence from NSS 75th Round Data

Abstract

The demand for health insurance has two tiers: first, whether the individual participates in health insurance programme or not; if yes, second, how much coverage they purchases. The demand for health insurance has been studied either by estimating the probability of participation in health insurance programme or by estimating the amount spent for the health insurance. Simultaneous estimation of the two tiers of the demand for health insurance is uncommon in literature. Against this end, the probability of enrolment and the premium paid, a proxy for coverage, for health insurance have been estimated simultaneously using National Sample Survey data (2017–2018) from India. Empirical findings indicate that both the decision to participate and the premium paid per year vary across per capita household income quintile. There exist significant differences in the demand for health insurance across the genders, working classes, regions and different social and religious communities. Age and education level significantly affect the decision to participate and spending amount for purchasing health insurance. The individuals having chronic illness have a higher rate of enrolment, but they spend less on insurance premiums. Health condition of the individual is more important compared to income to determine the demand for health insurance in India.