Insurance companies contracted independently with participating hospitals and reimbursed them using administrative prices that were determined by the state.

India’s RSBY program is similar to health insurance schemes that have emerged in other low- and middleincome countries in two important ways. First, by the time RSBY was implemented, it was clear from the experience of other countries as well as pilot insurance schemes within India that the demand for unsubsidized insurance among poor households was very low. Therefore, India’s government subsidized the premium from the very beginning using funds collected through a variety of direct and indirect taxes. This reliance on taxes rather than premiums to fund health insurance is now common in most LMICs. For instance, in Colombia, Law 100 of 1993 led to universal health insurance financed through mandatory payroll contributions in a contributory regime and general taxation in a subsidized regime, with the beneficiaries in the latter identified through a proxy-means test (Escobar et al. 2010). Ghana’s health insurance scheme is financed through a combination of value-added (70 percent) and social security taxes (23 percent), with premiums accounting for another 5 percent (Blanchet, Fink, and Osei-Akoto 2012). In Vietnam, the government tried at first to collect funds through premiums, but has since moved to financing based on general taxation or mandatory contributions (Somanathan et al. 2014). Kenya, where the National Health Insurance Fund established in 1966 was designed to provide coverage for formal sector workers financed by mandatory contributions, is now moving towards expanding coverage through a health insurance subsidy program for the poor (Barasa et al. 2018). In fact, across LMICs, voluntary purchases of private health insurance in 2012 covered less than 1 percent of the population in 49 of 138 countries and 1-5 percent in another 39 countries (Drechsler and Jütting 2005; Pettigrew and Mathauer 2016).<sup>5</sup> Second, the RSBY was not new insurance. Instead, it was layered on top of existing access to free or highly subsidized care through public clinics themselves financed through general taxation. This new layer was designed to improve health care by reducing the cost of using private facilities, where quality was believed

> 5 The ubiquity of public subsidies for financing raises the important question of whether coverage differs by household characteristics. Household wealth and education are two widely-used markers of socioeconomic status in low- and middleincome countries, the former measured by an index of asset ownership and the latter by completion of different levels of schooling. We estimated correlations of insurance coverage and wealth, as well as insurance coverage and education for 61 countries using the latest available round of DHS data and plot these coefficients in Appendix Figure A1 with data and details available in the line index. In most countries, health insurance coverage is regressive, with higher coverage for those with greater education and more wealth.  This pattern reflects both household demand for insurance and policy choices. In some countries, particularly those in Latin America, health insurance has always been available for government employees and was then extended to those in the formal sector with mandatory contributions, which explains the regressive pattern. In contrast, India’s health insurance scheme is targeted to those below the poverty line, and the correlation of coverage with education and wealth is close to zero in the DHS data.

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