Does Health Insurance Reduce Catastrophic Health Expenditure in India? A Systematic Review

Abstract

Catastrophic health expenditure (CHE) remains a critical indicator of financial protection in low and middle-income countries (LMICs). India, with one of the highest out-of- pocket expenditure (OOPE) in health expenditure burdens, has implemented a series of government-sponsored health insurance schemes, including the world’s largest health insurance scheme, Rashtriya Swasthya Bima Yojana (RSBY) in 2008, later merged to Pradhan Mantri Jan Arogya Yojana (PM-JAY) in 2018. This paper examines the extent to which these schemes, along with other privately provided health insurance schemes, have reduced CHE through a systematic literature review covering the period from 2000 to 2025. The systematic literature review was conducted following the PRISMA 2020 guidelines, by searching PubMed, SCOPUS, Web of Science, EconLit, and IndMED databases. Studies published during the period of 2000 to 2025, evaluating health insurance in India, and measuring CHE, met the inclusion criteria. A total of 53 studies met the inclusion criteria. Quality appraisal was performed using the Mixed Methods Appraisal Tool (MMAT).  The evidence base shows a moderate, heterogeneous association between health insurance enrolment and reduced CHE. Government-sponsored schemes (RSBY, PM-JAY) demonstrate statistically significant reductions in inpatient CHE (pooled effect: 15–31% reduction), but persistent outpatient expenditure gaps remain the principal driver of CHE among enrolled households. The protective impact of insurance is significantly reduced by rural-urban inequality, a lack of awareness, informal payments, and bottlenecks in supply-side. The shortcomings of the health insurance in India include partial financial coverage, high premiums and a bias towards inpatient services. Universal financial protection requires extending coverage to outpatient care, strengthening primary healthcare supply, and eliminating informal payments. Significant research gaps persist regarding long-term financial protection, indirect costs, and the equity impact of insurance across social groups.