Effectiveness of micro health insurance on financial protection: Evidence from India

Iatrogenic poverty caused by inadequate public expenditure on health, lack of social health insurance and low penetration of private health insurance can be mitigated by micro health insurance (MHI) schemes that provide financial protection. The empirical evidence on the impact of MHI on financial protection is limited in India. This paper elucidates the effect of Sampoorna Suraksha Programme (SSP), a MHI scheme in Karnataka on financial protection. Cross-sectional study was undertaken in Karnataka and the data was gathered from 416 insured, 366 newly insured and 364 uninsured households. The impact of SSP on out of pocket expenses (OOPE), catastrophic health expenditure (CHE), non-medical consumption expenditure, hardship financing and labour supply was analysed using linear and logistic regression methods. Results of the study demonstrate that insured members incurred lower OOPE, CHE and hardship finance. There was no effect on consumption expenditure and no direct impact on labour supply measured in terms of withdrawal from workforce and substitution of labour. We advocate a larger role of MHI in health financing in India since it curtails impoverishment of households in informal sector by reducing OOPE and hardship financing.