Working Paper No.: WP 162 The ‘missing middle’: How to provide

Disclaimer: The findings, interpretations, and conclusions expressed in the paper are those of the authors and do not necessarily reflect the views of the Governing Body or Management of NCAER. [...] Regarding this group, this paper explores the following questions: what is the composition of the missing middle, and what are potential benefits of extending coverage to members of this group? What policy alternatives are available to provide improved financial protection against health shocks to the missing middle, and how do the potential solutions stack up, based on the international and India. [...] While it was recognised at the time of the launch of the scheme that member contributions would be insufficient to cover the costs of benefits, and government subsidies would be required, not everybody in the government saw the rising use of services and costs of the scheme Page | 11 The ‘missing middle’: How to provide 350 million Indians with health coverage? as desirable. [...] Without a strategy to continually identify economic status over time, the choice appears to be between high levels of subsidy to enrol the missing middle, as in Thailand, which gets around the selection and equity issue altogether, or to adopt a longer-term strategy to wait for the formal sector to become large as a share of the economy, perhaps with voluntarily added coverage in the interim. [...] A study of the roll out of RSBY program in Karnataka that involved private insurers in enrolment, found that 85% of the eligible households in 4 sampled districts were aware of the scheme, and 68% were enrolled within one year of the roll out of the program (Rajasekhar et al 2011).