Health insurance: Where’s the data?

The healthcare sector is witnessing a tremendous shift in India. With an increased income and health consciousness among a majority of the classes, price liberalization and the introduction of private healthcare financing are driving the change. However, eternal optimism has prevented most Indians from opting for health insurance.

India needs to take a cue from the western world by making insurance. In Australia, health insurance is mandated for people earning more than $100,000 per annum and the government provides healthcare free for all.

Currently, in India, health insurance is provided mostly by companies that employ citizens. As a result, not more than 15% of Indians have insurance.

The lacuna

Currently, India has a healthcare payment system that is an amalgamation between the American and German systems. The American system of healthcare is a private, for-profit system. Premiums are collected from the insured for certain diseases. The amount of premium is based on actuarial risk with a possibility of refusals as well. The choice of providers is governed by health management organisations.

Co-payments are high, and there is a competition between different insurers. Regulation of the schemes is largely governed by good business practice with minimal interference from the government. This system is groaning under the weight of exorbitant costs and is even the subject of reform. About 70% of the population such schemes.

Pricing anomalies prevail because insurance companies lack the data they need to
assess health risks accurately. In addition, today’s insurance products work on an indemnity basis—they look at health only as a series of payable events. It covers hospitalisation costs, which could be catastrophic as it sets the precedent to tertiary level healthcare and encourages in-patient treatment.

In the absence of specific costing mechanisms, there is difficulty in calculating the premium, and the easiest and most illogical way wins.

Need for innovations

While the amount of government spending on healthcare and health insurance is gaining impetus, there is a need for the private sector to focus on encouraging citizens to purchase health insurance by recognising the value of preventive rather than emergency care.

With increasing healthcare costs, close network products are expected to be more effective in driving wellness and health care, which aligns with the government’s vision of universal health care.

Health saving and Outpatient Department (OPD) are two other opportunities where India has a good opportunity over the coming years, considering the rising costs of health care. In India’s rural areas, however, expanded government coverage is required to care for large numbers of poor citizens. Educational efforts are required to explain the benefits of health coverage to those who have never benefited from it.

Most people avail insurance by comparing premiums, and not looking at the fine print. As a general rule, most insurers, even in the USA and Australia, exclude maternity services for one year from insurance and dental for two years.

In India, people take insurance to cover expenses just prior to hospital admissions, leading to unnecessary conflict. There is also a frequent equation of ‘life insurance policies’ with health insurance.

There is a tremendous lack of knowledge in the country about the steps one has to take to secure our healthcare costs. Hospitals need to invest in counselling services, many do not have the expertise to explain the meaning of exclusions and claims to patients before admission.

There is no initiative within the industry to take responsibility to develop knowledge and awareness of health insurance among the public even if this is the need of the hour.

(The writer is the founder, chairman, Neonatologist at Cloudnine Group of Hospitals)