Changing Health Insurance Scenario

Today Healthcare is one of the most progressive and the largest service sector in India, defined by ground breaking innovations, flexible business models, new tech-trends and high investments. HealthInsurance thus cannot be far behind, further up bolstered by increase in public awareness, rising state-level participation, growth of health infrastructure, expanding choices of insurance products, etc. All these have not only increased the coverage of insurance sector multifold but also ensured its reach to the masses residing in remote areas.

Since the liberalization of the insurance industry India has been promoting private players to enter the health insurance sector. This was followed by another landmark decision of establishing Third Party Administrators (TPAs) to facilitate speedier expansion by providing an administrative– intermediary structure to the insurance industry. Expenditures that cover outpatient treatment, including medicines for all serving and retired CGHS beneficiaries and inpatient/diagnostic services availed by retired beneficiaries, has thus grown between 12% and 25% per year over the past several years. 

Social Security for medical emergencies dates far back in the Indian community. For e.g. villagers used to collect donation to support a household with a sick patient even earlier. Only the form has been improvised keeping in mind the changing social patterns.

Use of Internet and Mobile for service sectors including insurance is seen as a fast-emerging trend in India. This is supported by exponential growth in the country’s information and communications technology (ICT) sector, and plummeting telecom costs. Gone are the days when time and hassles involved to conclude a deal were herculean. Today everything is at the click of a mouse or an icon. One can compare quotes from various insurers from the cosy comforts of his home. Claim settlement is also more transparent with growing public awareness and reduced documentation.

Agents have thus taken a backseat, allowing Brokers to cater to the varied but specific needs of the clients. Dental and diabetes treatment, doctor consultation, maternity benefits, etc. are also seen to be included in customised policies. Senior citizens have finally been awarded special care and attention with specific policies to their needs.

The single largest change in the previous year was Portability of policies from one insurer to the other without losing the accrued benefits. This has jolted the reluctant insurance companies and kept them on their feet lest they lose their valued insured. Several other schemes and changes are under deliberations and are hoped to see the light of the day soon.

Realizing the increasing need for growth of health insurance, Govt. is also escalating its projects. For instance, the Rashtriya Swasthya Bima Yojana (RSBY) has been extended to cover unorganised sector workers in hazardous mining and associated industries, like slate and slate pencil, dolomite, mica and asbestos. The Yojana has emerged as an effective instrument for providing a basic health cover to poor and marginal workers. Presently it is being extended to MGNREGA beneficiaries, beedi workers and others.

However, there are lot of challenges ahead. Global experience and economic theory show proof of widening inequity, over utilization, adverse selection, upsurge in inappropriate care, inadequate risk selection, etc. thus increasing overall cost of care and insurance. Also, such highly competitive, voluntary markets will lead to high administrative costs, unviable risk pools, undercutting and unrealistic pricing, eventually paving the way for market instability and bankruptcies. Despite its expanding reach, the penetration of health insurance in India has been low. It is estimated that only about 3% to 5% of Indians are covered under any form of health insurance.