Health financing in India is typically characterised by lack of financial protection. Financial protection can be achieved through progressive health financial arrangements which need to have three critical elements-risk pooling, pre-payment and cross subsidisation. Since there is an uncertainty of individual health care needs and there are risks and high costs of care associated with falling ill, if households are left to manage health care expenses, the consequences become severe - people forgo or delay care, die of avoidable deaths or face financial hardships associated with care seeking. Risk pooling and prepayments are effective means to protect people from disastrous financial consequences of illness, while cross-subsidisation brings in progressivity in financial arrangements.