New Delhi: While health insurance is picking up in India, only 17 out of 1,000 people hospitalised are getting reimbursement, a report Monday said.

"Although hospitalisation is the basis for all health insurance, only 1.7 percent of admissions are reimbursed and the average reimbursement is only Rs.258 (or a mere 3.6 percent of the average hospitalisation cost of Rs.6,225)," the report by USAID (US Agency for International Development) said.

Despite higher cost, a majority of both rural and urban Indians prefer private care. "The primary reason for this preference is the perceived inferior quality of public care," it said.

The situation in rural India is precarious with only seven out of 1,000 people hospitalised getting reimbursement. A rural Indian gets just Rs.78 reimbursed per hospitalisation, while an urban Indian gets an average of Rs.677.

"Government employment is the principal basis for reimbursement for the rural population," the study said, adding, "Indian households spend three times as much on out-patient care as they do on hospitalisation."

The government is the most important source of reimbursement for hospital expenses. The US-headquartered USAID is an international philanthropic body trying to provide better health to economically weaker people across the world.