India: Knocking the poor back on their feet with microinsurance

Financial Inclusion

India: Knocking the poor back on their feet with microinsurance

India is subsidizing more than 100 million small-value insurance policies in an effort to help people treat health problems without falling into poverty. Photo: <a href="http://www.flickr.com/photos/nadya/4789818776/in/photostream/">Nadya Peek(flickr)</a>
India is subsidizing more than 100 million small-value insurance policies in an effort to help people treat health problems without falling into poverty. Photo: Nadya Peek(flickr)

Hospitalization can save a life--at the cost, sometimes, of throwing it permanently off track. Two very different countries, India and the United States, recently chose a similar solution: subsidized insurance.

Here's U.S. Rep. Donna Edwards of Maryland at last week's Democratic National Convention, defending U.S. President Barack Obama's law that tries to increase health care access for poor Americans by subsidizing private health insurance:

No one should end up in an emergency room facing financial ruin and the loss of middle-class life … just because they can't afford a doctor's visit and a $20 batch of antibiotics.

And here's a statistic about middle-class Indians from researcher Raf Rademacher, cited in a United Nations Development Programme report on Indian microinsurance:

Twenty-five percent of the patients who enter hospital above the poverty line fall below the poverty line after hospitalization because of their health-care costs.

In the last five years, India has become a massive laboratory for the notion that subsidized private health insurance can ease poverty. In chapter 20 of the 2012 Microinsurance Compendium, Rupalee Ruchismita and Craig Churchill report that the number of Indians covered by government-subsidized health microinsurance quadrupled betwen 2007 and 2010, to as many as 302 milllion.

The problems of poverty are vastly different in India and the United States, and the solutions will be, too. But no matter where you live, a stroke of bad medical luck is very likely to knock you and your family off the path to prosperity.

If it could, every nation would prevent these household-sized catastrophes from perforating its middle class. In the future, nations that figure out how may owe their success to the colossal experiment underway in India.

RESOURCES: The International Labor Organization's Microinsurance Innovation Facility

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