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A need for permanent subsidies for health insurance to contribute towards universal health coverage

Emerging Insight #:


Date of Release:

  July 24, 2015


  Business viability, Business models, Policy and regulation, Subsidies, Health


  A study on the sustainability of health microinsurance

Results of a review of the sustainability of health microinsurance in South Asia

The Facility and Milliman recently carried out a review of the sustainability of health microinsurance schemes in South Asia, where such schemes are most common. Although the schemes surveyed in the paper offered a variety of benefits and providers ranged from commercial insurers to not-for-profit organizations, all made use of subsidies to achieve sustainability.

The subsidies took different forms:

  • Unprofitable with losses subsidized: Profits from affiliated commercial activities of the health microinsurance provider directly subsidized the scheme’s losses
  • Profitable with explicit subsidy: A government or donor organization paid for some, or all, of the insured’s health microinsurance premium
  • Profitable with implicit subsidies: An unrelated organization (in the case of ARY, a philanthropic arm of a biopharmaceutical enterprise) partnered with the health microinsurance provider in order to reduce or eliminate its expenses for services such as enrolment support, discounted prescription drugs, and so on

The scheme in the study which achieved the most impressive scale and appeared to have the greatest chance of long-term sustainability is the Tata AIG – RSBY scheme, which is subsidized on an ongoing basis by the Indian government. 

These findings stress that, if health microinsurance schemes are to provide part of the answer to achieving universal health coverage, subsidies may be vital. Governments have the greatest ability to generate the revenue needed for such large scale subsidies, in order to provide sustainable universal health coverage for their citizens.

Read the full paper “Is health microinsurance sustainable? An analysis of five South Asian schemes”:

Or find out more about how to use subsidies for inclusive health and agriculture insurance: