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Utilization of health insurance in India is very low and restricted to people of higher income quintiles and organized sector. The rural areas are deprived of significant health insurance coverage. There is a wide gap between the demand and supply of health coverage in India. Although, regression analysis indicates households having any health insurance scheme tend to utilize health care services more compared to those without any health insurance, the hypothesis supporting the above statement comes out partially true in case of the present study. There is weak existence of social health insurance (in case of India, it is only in form of ESIS and CGHS) or universal health insurance and user-friendly private health market in the country. Poor delivery of health insurance makes utilization of health care services more inefficient and thus aggravating other problems. The problems cater around different population groups; hence, it is advisable to develop different financing options for different target groups.