Monday 28 April 2014

Health Insurance – A Perspective

With escalating costs, healthcare has become a high priced commodity. In the changing economic scenario, health insurance is no longer a luxury, but indeed a necessity.  More and more households are opting for health insurance cover to tide over the unexpected hospitalization expenses. Nowadays, it is a common practice for employers to provide group health insurance coverage to their employees.

Indian Scenario

Indian Healthcare Industry contributes significantly to the country’s gross domestic product (GDP). In recent years, the concept of health insurance is receiving increasing prominence in India.  According to current research, health insurance market constitutes the second largest non-life insurance sector in India and has registered phenomenal growth in 2008-09 and 2009-10. Health insurance industry is one the fastest growing businesses and the premium mark is expected to cross a compound annual growth rate (CAGR) of 25% by 2013-14.

Health Insurance

Health insurance is a product that protects the insured person against the risk of incurring medical expenses and provides with specified sums to cover the treatment costs. In India, most health insurance policies cover only hospitalization expenditure. 

Need for Health Insurance Cover

Most of the Indians receive healthcare through state owned primary care centers, as well as secondary and tertiary hospitals.  Nevertheless, only 6% of GDP is spent on healthcare. Poor state of government-owned healthcare facilities and the fewer number of hospitals per 1000 population as compared to global average have led to the exponential growth of private secondary and tertiary care hospitals, which constitutes nearly 80% of the country’s health infrastructure. This, among others has contributed to the escalation of healthcare costs. In addition, massive population growth is straining the already over stretched health infrastructure. Socioeconomic changes such as ongoing migration of people from rural to urban areas in search of livelihood, sedentary life style, globalization and stress have contributed to the increased incidence of life style diseases such as diabetes and hypertension. Given this background, the need for health insurance is more prominent than ever, considering that merely 10% of Indian population has health insurance coverage.

Advantages and Disadvantages of Health Insurance Policy

Health insurance policy covers the risk of unexpected expenditure resulting from medical treatment. Most insurance providers offer cashless facility of claim settlement when the insured person gets admitted in the hospitals belonging to their preferred provider network, the details of which are made available while purchasing a health insurance policy. There are various health insurance products in the market, offering consumers with a wide range of choice to suit their specific requirement.  Some insurance providers offer discount on the premium amount for the succeeding year, if no claim has been made in the previous year on the policy.

More often than not, health insurance policies cover only hospitalization expenditure, and the cost of outpatient treatment is not generally covered. Moreover, most policies exclude the pre-existing diseases for varying periods of time when the policy is in force, and this makes it wiser to purchase the insurance cover at an early age. One of the exceptions is Star Health – Senior Citizen Red Carpet Policy, which offers coverage of all pre-existing diseases from the first year of policy. In addition, hospitals tend to charge health insurance policy holders at rates higher than the reasonable treatment cost, requiring the insured person to spend additional sums from his pocket. 

Public and Community Health Insurance Schemes

The Government of India has increased the plan allocation for the healthcare expenditure from US$ 4.97 billion in 2010-11 to US$ 5.96 billion in 2011-12. Furthermore, the Ministry of Health & Family Welfare has proposed to increase the domestic healthcare funding by at least 2 per cent of the GDP in the 12th Plan period. Taking into cognizance the need for greater population health risk coverage, the central and state governments in India have launched innovative health insurance schemes to help the poor. Rashtriya Swasthya Bima Yojana (RSBY) was introduced by the Government of India for BPL (below poverty line) population in the unorganized sector in April 2007. Recently the government has approved extension of RSBY to cover registered domestic workers, which is likely to cover 47.50 lakh workers. Some of the popular insurance schemes run by the state governments include Aarogyashri in Andra Pradesh, Chief Minister’s Health Insurance Scheme in Tamil Nadu and Yashaswini Insurance scheme in Karnataka.

In addition, several community-based health insurance schemes are run successfully by NGOs across the country and a few of them are listed below.
·         Self Employed Women's Association, Ahmedabad, Gujarat (1992)
·         Goalpara, Shantiniketan, Rural West Bengal (1984)
·         Voluntary Health Services (VHS), Medical Aid Plan, Chennai, Tamil Nadu(1963)
·         Social Work and Research Centre (SWRC), Ajmer, Rajasthan ( 1972)
·         Sewagram Kasturba Hospital, Wardha, Maharashtra (1972)

Leading Health Insurance Providers in India

Though successful, existing health insurance schemes do not cover all sections of the society, thus leaving the field open to private players. Currently we have public sector general insurance companies and private insurance companies offering health insurance products. Of these Star Health Insurance is the only stand alone health insurance company. Leading health insurance providers in India include,
·         National Insurance company
·         ICICI Lombard Insurance
·         TATA AIG Insurance
·         Bajaj Allianz Insurance
·         Oriental Insurance Company Ltd
·         Max Bupa Health Insurance
·         Apollo Munich Health Insurance

Popular Health Insurance Products

Some of the most innovative and popular health insurance products are,
·         STAR Health – Medi  Classic, FamilyHealth Optima, Senior Citizen Red Carpet
·         National Insurance – Varishta Mediclaim
·         New India Assurance – Mediclaim policy
·         United India – Family Medicare
·         Oriental – Individual Mediclaim Policy
·         Max Bupa – Heart Beat Gold, Silver and Platinum
·         Bajaj Alliance – Health Guard
·         Apollo  Munich – Easy Health Individual -Standard Plan
Future of health insurance in India

Indian health insurance industry is on the verge of an exponential growth. Key factors driving this industry include escalating healthcare costs with resultant need to purchase private health cover to supplement public schemes;   sub-optimal quality of public health services;  booming population growth; increasing incidence of lifestyle related diseases; greater awareness and affordability among the educated middle class;  and deficiencies in pension schemes.

In conclusion, from the consumer stand point, it would be only prudent to purchase health insurance cover for the individual as well as the family earlier the better!

2-Aug-2011: "Health Insurance - A Perspective" was published on Healthcare Excellence

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