Why Members Dropout? An Evaluation of Factors Affecting Renewal in Micro Health Insurance

Abstract

Micro health insurance (MHI) is an important mechanism to fight iatrogenic poverty in India. Its sustainability and viability depends, to a greater extent on the renewal of membership. This article evaluates the factors that influence renewal decisions in Sampoorna Suraksha Programme (SSP) in Karnataka. This study shows income class and chronic illness in the family to determine the renewability. The findings indicate adverse selection since low-income low-risk and high-income low-risk families dropout. From the social welfare point of view, renewal from high-risk low-income families is welcome; yet this should not jeopardize resource mobilization of SSP. Sustainable and viable operations of SSP depends on continued membership of insured population that can be achieved through external financial assistance for the poorest, wider network of hospitals and increased awareness on health insurance. Dropout rate in any MHI scheme should be kept very low to achieve deeper penetration and wider coverage especially in India where large percentage of population falls outside the insurance ambit.