Willingness to Pay for Health Insurance Among Rural and Poor Persons: Field Evidence from Seven Micro Health Insurance Units in India

This study, conducted in India in 2005, provides evidence on Willingness to Pay (WTP), gathered through a unidirectional (descending) bidding game among 3024 households in seven locations where micro health insurance units operate. Policymakers in India have turned their attention to health insurance for the poor because of the high cost of health care and a desire to improve the effectiveness of health care financing. They also felt a need to distribute it more equitably as health insurance penetration among people at the Bottom of the Pyramid (BoP) in India is very low. Study findings indicate that rural and BoP segments in India would agree to pay health insurance to the tune of 1.35 percent of median household income per household per year. WTP increases with income and education. Poorer people are willing to part with a higher percentage of their income as health insurance premiums. In conclusion, the study recommends that insurers extend insurance to the entire household rather than to an individual.