Missing Middle of India's Insurance Story

As of 2023-24, 70% of India’s healthcare expenses are borne out-of-pocket, the highest globally. This burden pushes 7% of the population into poverty annually, as reported by Brookings India. For the missing middle—a group comprising gig workers, self-employed individuals, casual laborers, and senior citizens—a single medical emergency can spell financial ruin.

The government’s flagship health insurance scheme, Ayushman Bharat - Pradhan Mantri Jan Arogya Yojana (AB-PMJAY), covers 50% of the population, or approximately 700 million individuals, offering a lifeline to India’s poorest. Meanwhile, around 20% of the population relies on private or social health insurance. Yet, 30% remains excluded entirely from financial health protections—a gap that the pandemic laid bare.

The Human Cost of Exclusion

Consider this: an average Indian middle-class family struggles to afford even basic medical care. A cancer diagnosis or critical surgery can wipe out years of savings. Rural families, accounting for 73% of the population, often travel to urban centers for quality healthcare, only to be met with overburdened government hospitals or exorbitantly priced private care. For the missing middle, access to healthcare isn’t a right; it’s a gamble.

Women bear the brunt of this inequity. With only 34.2% of life insurance policies sold to women in 2022-23, as per IRDAI, many undervalue their own lives, thinking their contributions are less significant. The gender pay gap and low labor force participation exacerbate this disparity, leaving women financially vulnerable and uninsured.

Structural Gaps in Healthcare

India spends only 1.5% of its GDP on healthcare, one of the lowest rates globally. The infrastructure is inadequate, with 1.4 hospital beds per 1,000 people and 1 doctor per 1,445 individuals. This disparity is magnified in rural areas, where 75% of healthcare infrastructure is concentrated in urban centers.

Even government efforts like the Arogya Sanjeevani policy, which offers coverage up to ₹5 lakh, fall short of addressing advanced medical needs like transplants or critical surgeries. Inflation further eats into disposable incomes; food inflation reached 9.24% in September 2024, leaving little room for families to allocate funds toward health insurance premiums.

Proposed Solutions: From Policy to Action

1. Mandating Employer-Sponsored Insurance: Leaders like Tapan Singhel, head of the General Insurance Council, suggest mandating health coverage for all employees, akin to U.S. laws. Employers could fund premiums through Corporate Social Responsibility (CSR) budgets or link them to low-cost government schemes.

2. Expanding Ayushman Bharat: Increasing coverage limits under AB-PMJAY from ₹5 lakh to ₹10 lakh per family could significantly reduce out-of-pocket expenses for the middle class. Proposed expansions aim to include senior citizens and gig workers, but infrastructure and fraud prevention mechanisms must evolve to meet the demand.

3. Encouraging Private Sector Participation: Private hospitals must be incentivized with timely reimbursements and robust support to participate in public schemes. Collaborative models between private insurers and state governments can offer low-cost, comprehensive policies tailored to the missing middle.

4. Leveraging Health Fintech: Platforms like Gmoney and Digisparsh are enabling cashless medical services by financing hospital receivables, ensuring timely care for patients while easing operational burdens on small and mid-sized hospitals.

5. Public Awareness Campaigns: Education on the importance of insurance can dismantle myths, particularly among women and rural populations. Crowdfunding initiatives, already gaining traction, could further democratize access to healthcare.

A Vision for Inclusive Healthcare

Healthcare isn’t just a policy; it’s a promise to safeguard dignity and dreams. Addressing the needs of the missing middle isn’t merely about numbers; it’s about ensuring that no family has to choose between a loved one’s health and financial survival.

India stands at a crossroads. With innovative policy, public-private partnerships, and a commitment to equity, the missing middle can become visible. In doing so, we inch closer to a future where healthcare is not a privilege but a fundamental right—one that upholds the essence of humanity.