The research is designed to examine the communication practices of Community Based Health Insurance system and identify factors that are affecting membership sustainability in Dera District of South Gondar Zone as case study. This qualitative case study used in-depth interview, Focus Group Discussion (FGD), and document analysis for data collection. The study was framed based on Social learning and diffusion of innovation theories as theoretical framework. The multi-track and SBCC models, which have a significant impact on social and behavioral change of the public, were used as a model for analysis. The finding of this study clearly shows that there is a public awareness activity by using different communication channels, like interpersonal, community oriented and mass media. But to guide the communication work, there is no defined communication strategy and individuals who engaged in the communication work are unskilled (nonprofessional and adequate training was not given), hence the communication intervention is made only for the sake of information dissemination. As a result most of the respondents from the community have no clear idea about CBHI parameters, like objectives, benefit packages, role and responsibilities, rights and obligations, etc. In associated with gap the community develops different perceptions towards CBHI. This implies that the communication intervention is failed to meet its target. Such type of gap could make the sustainability issue of CBHI under question. The root cause for sustainability problem may be different but regarding communication intervention, absence of communication strategy, lack of expertise in communication, mandatory enrollment, non-participatory approach, maltreatment of clients in health facility, and misconceptions of clients about CBHI system are identified as a factor. To alleviate such gap a defined CBHI communication strategy should be in place and all interventions should be guided by the strategy and adequate professionals should be assigned to practice it.