It's Time to Rethink Health Insurance for India's 'Missing Middle'. Here's How

Retail health insurance is structurally flawed; inflation and premiums increase burden

- KAMESH GOYAL

India has made progress in expanding healthcare access, especially for economically weaker sections through schemes like Ayushman Bharat. Yet, a large segment remains inadequately protected—the uninsured and underinsured middle class.

Roughly 80–100 million Indian households fall into this "missing middle". They are too affluent for subsidised schemes but can't afford adequate private insurance. As healthcare costs rise, they are increasingly vulnerable to financial distress during medical emergencies. Today's retail health insurance model is structurally flawed. The ₹5–10 lakh cover most families buy appears sufficient but loses value as medical inflation averages 10–12% annually. In a decade, the real value of this cover erodes. Premiums also rise sharply with age.

For those above 55 or 60, premiums can exceed 20% of the sum insured—an unsustainable cost when health risks are highest. Pre-existing conditions like diabetes and hypertension further raise barriers to new coverage. High distribution costs inflate premiums. Insurers lack bargaining power with hospitals, leading to inflated treatment costs, higher claims and rising premiums.