India is the fifth largest economy in the world in terms of its purchasing power and is fastly emerging as big economy at global level However, its health status has not improved much. Health insurance in India is in nascent stage but growing very fas:-. surance was introduced in India in 1987 when Med claim was introduced by Government owned insurance companies However, its performance has not been very encouraging. Government of India opened up insurance sector in 2000 for private companies to bring in competition. Very few private insurers ventured in health sector. People do not buy health insurance and total pool remains small making the health insurance schemes less viable. To understand this phenomenon to need to understand the factors which affect health insurance purchase decision. The objective of this paper is to analyze factor determining the demand for private health insurance in India. The study uses two-stage model to examine this issue First, we determine the factors, which affect the insurance purchase decisions, and at second level we focus on studying factor which affect the amount of insurance purchase using Heckman two-stage estimation procedure. The data of this is based on survey and collection of primary data from five districts in Haryana, i.e Rohtak, Hisar, Gurgaon Kurukshetra and Sonipat. The results indicate that income and healthcare expenditure are significant determinants of health insurance purchase. Age, coverage of illnesses and knowledge about insurance were also found to be affecting health insurance purchase decision positively. For the decision regarding amount of health insurance purchase, income was found to be having significant but non-linear relationship.
Private Health Insurance, Heckman two stage model, Health expenditure
