Middle-Income Indians Still Struggle To Access Health Insurance, Says Niti Aayog Member

A persistent coverage gap continues to plague India’s health insurance landscape, and new findings indicate that the problem remains unresolved. The issue resurfaced sharply when VK Paul, member (health, nutrition, and education), NITI Aayog, highlighted that the country’s “missing middle” remains largely outside of the safety net of affordable health insurance.

For a long time now, officials and experts have pointed out the same gap: this group sits in an awkward space, earning too much to get the benefits of government schemes, yet not earning enough to buy private health insurance without feeling the pinch; and because of that, they have continued to fall through the system unnoticed. But the latest assessment signals that the gap may be widening as healthcare costs rise faster than incomes.

A Segment Priced Out Of Protection

At an event at Ahmedabad University’s Public Health School, Dr. Paul revisited concerns raised earlier in the NITI Aayog discussion paper Health Insurance for India’s Missing Middle. Roughly 30 per cent of the population, about 40 crore people, fall into this vulnerable zone. They are the salaried and self-employed families with modest but steady incomes, households that can manage daily expenses but cannot absorb a sudden medical emergency.

Paul said that the financial mismatch between monthly household income and annual insurance requirements remains stark. Many families spend around Rs 16,000-17,000 a month on essentials. But when they attempt to buy health insurance plans offering coverage similar to Ayushman Bharat, they encounter annual premiums ranging from Rs 24,000-66,000. He added that expecting a family to pay the equivalent of a full month’s income simply for insurance protection is unrealistic, The Indian Express quoted him as saying.

According to Paul, this affordability wall has kept millions uninsured and dependent on out-of-pocket spending, still one of the biggest drivers of financial stress among middle-income households. Despite rising awareness post-pandemic, premiums have climbed steeply, and product structures remain misaligned with the financial realities of the missing-middle demographic.

Industry View: Underinsurance Still A Silent Risk

The industry echoes this concern. Insurers maintain that product innovation has increased in recent years, but a sizeable part of the middle class continues to purchase inadequate coverage, often compromising on sum insured simply to keep premiums manageable.

Siddharth Singhal, business head – health insurance, Policybazaar, recently underscored this issue: “By paying just five to seven per cent extra premium, consumers can cover consumables like gloves, masks, and other medical aids, but this does not solve the fundamental problem of underinsurance. Too many families buy low covers just to keep premiums affordable, and that leaves them exposed during major medical events.”

His observation illustrates a deeper fault line: even when households do buy insurance, the coverage frequently fails to match the cost of modern medical care. As a result, the missing middle is hit twice, first by high premiums and then by inadequate financial protection.

What Needs To Change

The situation calls for rethinking health-insurance design. If insurers genuinely want to reach this segment, the answer lies in plans that people can actually pay for, without cutting out the very benefits they depend on during a medical emergency. That may mean breaking policies into smaller, easier-to-buy pieces, thus allowing families to pay in instalments, or building group-based covers that lower the overall cost.

In essence, the product has to fit the pocket, and the insurance industry and policymakers will have to work together to make that happen. With medical costs climbing faster than incomes, the strain on middle-income households is only getting heavier.