Institute for Social and Economic Change

Working Paper: 317

Healthcare Utilisation Behaviour in India: Socio-Economic Disparities and the Effect of Health Insurance

Amit Kumar Sahoo
S Madheswaran



The purpose of this paper is to probe issues such as inequality in healthcare utilisation, impoverishment due to increasing out-of-pocket (OOP) health expenditure, growing dependence on informal sources of healthcare and strengthening the role of insurance, which has been gaining importance within the healthcare systems in low and middle-income countries, including India. The provision of health insurance (HI) is seen as one of the major agendas for policy makers for ensuring universal health coverage. However, little is known at the aggregate level whether HI leads to a change in the way healthcare facilities are used in India. Hence, this paper will analyse the impact of HI on healthcare utilisation behaviour of individuals using the nationally representative data of the Indian Human Development Survey (IHDS) 2004-05. Logit, Tobit and Multinomial Logit Models have been used to analyse the impact of HI along with socio-economic factors on healthcare utilisation behaviour. We found that in Logistic Regression health insurance does not have any statistically significant impact on utilisation behaviour whereas in Tobit and Multinomial Logit we found it to be significant. Nonetheless, the coefficients of health insurance status in different models show positive signs. This implies that insurance increases the probability of healthcare seeking behaviour. It is also found that insurance increases the probability of healthcare either in the private or in the public sector. However, people tend to use the private sector more than the public sector. However, in India the private sector is largely unregulated and very often it leads to unnecessary care and cost escalation. Therefore, on the policy perspective it will be wise on the part of government to bring in a sound regulatory mechanism to control the private sector to ensure the efficient functioning of the health insurance sector for the benefit of the insured people. The government should also educate the people about the benefits of health insurance and persuade the private sector to educate their insured members holistically about their insurance product.

Working Papers