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Paper short abstract

Framed by capability and financialization of health perspectives, this study using NSSO 2017–18 shows India’s uninsured populations faces high catastrophic spending and financial distress, worsened by private-sector reliance. Findings call for stronger public investment and private sector regulation

Paper long abstract

India’s ‘missing middle’- individuals ineligible for government funded insurance yet lacking adequate financial protection remain a policy blind spot and understudied in national debates. Grounded in the capability approach and literature on financialization of health, this study conceptualises catastrophic health expenditures and financial distress as both a constraint on household capabilities and a symptom of broader health system dysfunctions. Using a nationally representative data from the National Sample Survey on Social Consumption: Health (NSSO 2017–18), the study examines risk of CHE and financial distress for the this uninsured group.

The analysis employs linear probability models with state fixed effects and propensity score matching to address observable selection into private healthcare. Results show that non-communicable diseases (NCDs) and injuries considerably raise the risk of CHE and distress financing among the missing middle. Reliance on private providers further intensifies vulnerability, reflecting the cumulative effects of limited public investment, expanding corporate consolidation, and weak regulatory oversight in the health sector.

These findings challenge prevailing assumptions that the missing middle can self-finance healthcare through market-based mechanisms. Even relatively moderate-income households face substantial financial strain when confronting chronic or acute health needs in a predominantly private, increasingly financialized system. The evidence underscores the need to strengthen public sector capacity and introduce stronger regulatory safeguards for private healthcare. Addressing these gaps is essential for advancing meaningful financial protection and achieving universal health coverage in India.