A new data analysis from the National Institute for Micro, Small, and Medium Enterprises (NI-MSME) reveals a concerning statistic: less than 10% of Micro, Small, and Medium Enterprises (MSMEs) in India offer group health insurance to their employees. This statistic underscores a significant gap in the healthcare coverage of workers in one of the most critical sectors of India’s economy.
The Uninsured Workforce in India
The data highlights that most MSME employees, especially those in the informal and unorganised segments, remain uninsured. This is particularly alarming as MSMEs contribute to a large portion of India’s overall workforce. Despite this, workers in these enterprises often lack basic health protections, leaving them vulnerable to high medical costs, which can delay treatment or leave them without care altogether.
In India, group health insurance is frequently the first and only form of health protection available to salaried workers. For MSME employees, many of whom cannot afford individual health plans, group health coverage could make the difference between receiving timely medical treatment and postponing care due to financial constraints.
Key Benefits of Group Health Insurance
Group health insurance plans offer several advantages that make them accessible to employees in the MSME sector:
No Medical Checkups: Employees are often not required to undergo medical exams before enrollment.
Instant Enrollment: Quick and easy registration into the plan.
Maternity Coverage: Health plans often cover maternity expenses, which can be a critical benefit for women employees.
Mental Health Support: Many plans offer mental health benefits, which are increasingly recognized as essential for overall well-being.
These benefits are often difficult to access through individual health insurance plans, making group health insurance an invaluable option for employees in MSMEs.
Disparities Across Sectors
The adoption of group health insurance is highest in urban Tier 1 service sectors, such as IT and financial services, where workers are more likely to be formally employed by larger companies. These sectors benefit from better access to health insurance plans due to greater financial resources and established company structures.
However, in manufacturing, construction, and retail, where employees face higher physical risks, group health insurance coverage is notably low. These sectors, often employing workers in more vulnerable and hazardous working conditions, show a troubling lack of coverage. Furthermore, micro and small enterprises are the least likely to provide any form of health insurance benefits for their staff.
The Push for Universal Health Coverage
As India continues its push toward universal health coverage and insurance inclusion, MSMEs represent a key frontier in extending health protection to the broader population. These small businesses have largely been underserved by the existing insurance infrastructure.
Given the vital role MSMEs play in India’s economic landscape, policymakers, insurers, and industry leaders are increasingly turning their attention to this underserved segment. There is a growing recognition that health protection should no longer be seen as a benefit exclusive to large companies, but as a basic workplace right for all employees, regardless of the size of their employer.
To address this gap, several steps can be taken:
Policy Support: Government initiatives and subsidized health insurance schemes tailored for MSMEs could help overcome financial barriers.
Increased Awareness: Raising awareness about the benefits of group health insurance and facilitating easy enrollment processes for MSMEs could encourage more businesses to participate.
Partnerships with Insurers: MSMEs could benefit from collaborative efforts between insurers and industry associations to design affordable group health plans that cater to their unique needs.
By addressing these challenges, India can ensure that workers in MSMEs — one of the nation’s largest and most vital sectors — are no longer left without the health protection they deserve.
Related topics:
