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    Health insurance pages 1 81 Health insurance pages 1 81 Document Transcript

    • T.Y.B.B.I INDEX PAGE NO Chapter 1 Chapter 2 Chapter 3 Chapter 4 Chapter 5 Chapter 6 Chapter 7 Contextual Framework 1.1 Introductory 1.2 Origin 1.3 Meaning & Definition 1.4 Why Health Insurance Is Must 1.5 Indian Scenario Issues And Concerns 2.1 What Are The Issues And Concerns 2.2 Licensing Of Health Insurance In India 2.3 Health Sector Financing Challenges 3.1 What Are The Opportunities And Challenges 3.2 Need For Priorities Health Insurance System 4.1 Government Based System(CGHS) & (ESIS) 4.2 Employer Managed System 4.3 NGO System 4.4 Market Based System i) GIC Mediclaim Coverage ii) LIC Coverage Mediclaim At Glance 5.1 Mediclaim 5.2 Overseas Mediclaim 6.1 MICRO Health Insurance 6.2 Health Insurance For The Poor 7.1 Healthcare Products 7.2 Third Party Administrators 7.3 Future Issues Relating to Health Insurance 7.4 FAQ 7.5 News Related To Health Insurance Conclusion 1 2 4 6 8 10 12 12 14 15 16 18 18 19 24 27 29 38 44 50 52 53 57 68 76 77 1
    • SHRI CHINAI COLLEGE OF COMMERCE & ECO NAME:___________________________________________________ AGE:___ DESIGNATION: ________________________________ INCOME:______________ SURVEY FOR PROJECT ON HEALTH INSURANCE 1) Are you aware of Health Insurance Scheme? Yes No 2) Do you have Health Insurance Policy? Yes No If Yes then which one ___________________________________________________ _____________________________________________________________________ If No then Why? ________________________________________________________ 3) Which type of Company do you prefer? Yes No 4) What age would like to take or have taken health insurance? 20-40 40-60 5) How much is the Premium Paid _________________________________________ Which Company? _______________________________________________________ 6) How much is the medical cost annually? 40,000-60,000 60,000-80,000 1,00,000 & Above T.Y.B.B.I 2
    • 7) Your Views on Health Insurance Scheme A) Level of satisfaction of the scheme __________________________________ B) Quality service provided ___________________________________________ C) Agent & Customer Relationship ______________________________________ INTRODUCTION India is the first largest country in terms of purchasing power parity and is considered one of the fastest emerging economics in the world. However, its health status remains a major concern. Infant mortality rate of India is as high as 54.6 while it is around 23 for China. Similarly life expectancy at birth for India is around 64.7 while it is in the range of 77.80 for many countries. Insurance generally comprises of life and non-life (general) insurance. Health Insurance in India comes under general insurance. The development of health insurance in India therefore, has to be seen in the backdrop of the development of insurance in general. Healthcare, with global revenue of over Rs. 2.75 trillion is the largest industry in the world. The nation of India with a population of 1000 million experiences a vast inequity that exists sin the healthcare industry with barely 3 percent of the population covered by some form of health insurance, either social or private. Health insurance schemes are increasingly recognized as preferable mechanisms to finance health care provision. The option of insurance seems to be promising alternatives as its pools and transfers risk of unforeseeable health care costs for a pre-determined fixed premium. We do not social security system, appropriate Health Insurance Schemes for different sections of the society particularly underprivileged and the poor is an urgent need of the hour. Insurance penetration being very low and health insurance’s share being minimal in the existing situation, the vast majority of the populations are outside the existing Health Insurance System. With the opening T.Y.B.B.I 3
    • up of the insurance market for private entry and the accompanying hype it is being hoped that in the days to come, the teeming population of India can look for health coverage from an array of insurance providers that too at an affordable price. The present series on health and group insurance therefore attempts to trace the significance of health insurance and its basic tenets in preserving the economic value of the lives of the citizens. ORIGIN OF HEALTH INSURANCE The concept of health insurance was proposed in 1964 by Hugh the Elder chamberlen form the Peter Chamberlen family. In the late 19th century, early health insurance was actually disability insurance, in the sense that it covered only the cost of emergency care for injuries that could led to a disability. This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance. Patients were expected to pay all other healthcare costs out of their own packets, under what is known as the fee for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance. It is not an easy task to regulated health insurance. Some countries including the US had to launch war-like operation to unearth large scale frauds. Malpractices in health Insurance range from excessive billing to exaggerating severity of hospital patient conditions. In India, “Health Insurance is not of recent origin. Concern for loss resulting from accident and illness can be traced to ancient civilizations. In fact, one of the earliest forms of health insurance may have been based on the ancient custom of paying the doctor while in good health and discontinuing payment during periods of illness. This custom existed in South East Asian countries including India. The development of health insurance in existing form in India is T.Y.B.B.I 4
    • based on pattern followed in Europe and America. Health Insurance or medical insurance schemes had developed in India due to industrial relations problems between the employer and the employees. The Corporate Houses used to offer core and non-core benefits to the employees. The insurance policies were granted to large Corporate Houses purely on an accommodation basis. The cover usually offered to the employees was in the nature of hospitalization and domiciliary treatment for dental and non-surgical eye treatment. The benefits used to be for very small amount. There was no scheme for individuals and families. In 1981, the Apex Body of Public Sector Insurance Companies i.e. GIC designed a limited cover for individuals and families for covering their hospitalization needs. This was replaced by a mediclaim policy in the year 1986 under a market agreement to provide insurance benefits to individuals and groups under a group mediclaim policy. The scheme so introduced was modified in 1991 and 1996 in the light of experience and suggestions received from the insuring public and medical fraternity. The benefit provided under the policy was on reimbursement basis on occurrence of a major calamity in the form of accident/sickness to an insured person. The first Mediclaim Insurance Scheme was introduced by GIC in 1986 for people not covered under the above scheme. Prior to 1986, cover against sickness and diseases were provided by extension of Personal Accident Policy. It is interesting to note that even after nearly two decades of health insurance, the population covered by health insurance is only 1% of the total population. The following table demonstrates the progress of health insurance in India: : Year People Covered (lacs)% increase Premiums (Rs. In Crs.) Per Capita Premium (Rs.) T.Y.B.B.I 5
    • 1999-00 48.94 380 777 2000-01 56.23 519 923 2001-02 77.84 742 953 2002-03 88.02 895 994 2003-04 109.95 1024 931 MEANING AND DEFINITION Health insurance insures you and your family against sudden medical expenses. A medical emergency can arise due to sudden illness or injury. With medical expenses rising, a health insurance policy would help you sail through a bad patch. Your medical expenses will be taken care of by the Insurance company provided you pay your premium regularly. World health organization defines health as complete physical, mental and social well being and not merely the absence of disease and injury. As per WHO, a country’s Health Systems comprise of all the organizations, institutions and resources that are devoted to produce health actions New India Assurance Company Limited, stressing on the social security aspect of health insurance, in their written note, stated; “Basically the philosophy behind the concept of Health Insurance is to provide protection against uncertainty of illness /accident by spreading the risk based on the principle that “what is highly unpredictable for an individual is predictable for a group of individuals. Thus, insurance is a system by which Healthcare expenditure of few unfortunate individuals, who suffer from illness/injury, is shared by many fortunate ones who are insured and exposed to the same risk but remain healthy.” T.Y.B.B.I 6
    • Oriental Insurance Company, emphasizing the financial security aspects of health insurance, in their written note, stated; “Health insurance is a financial mechanism that exists to provide protection to individuals and households from hospitalization expenses incurred as a result of unexpected illness or injury. Under the mechanism, the insurer agrees to compensate or guarantees the insured person against loss by specified contingent event and provide financial coverage for which the insured party pays a premium. The case for health insurance rests on three grounds: a) Illness can not be predicted; b) Financial burden of hospitalization is high and cannot be planned; c) The proportion of people requiring hospitalization due to illness or injury in any large population is small thus enabling risk pooling. Pooling of risks, resources, and benefits is the hall mark of any insurance system. Form Scheme Beneficiar ies in lacs Social /Mandatory Schemes The Employees State Insurance Scheme Central Government Health Scheme State Sponsored Schemes (This figure may be enhanced with the recent coverage extended by Assam Government to its undeserving population) 253. 43. 5. Employer based Schemes Railways Health Scheme Defense employees Ex-Serviceman Mining & Plantations (Public Sector) Employers run facilities/reimbursement schemes of private sector/public sector. 80. 66. 75. 40. 60/80. Commercial Schemes Pubic Sector Non-Life Companies Private Sector non-life Companies 100. 8. T.Y.B.B.I 7
    • Health Segment of Life Insurance companies 2.3 Community Schemes Community health schemes by NGOs and others 30. WHY HEALTH INSURANCE IS A MUST? Health insurance has become a necessity today because it plays a major role in health care. This is because one never knows when illnesses may strike. And in such cases hospitalization and medication expenses can be unaffordable. Health insurance can prove to be a source of support by taking care of the financial burden of your family may have to go through. Advancement in science and technology has brought about a revolutionary change in mans life. It has reduced mortality rates and increased his life span but at the same time has given rise to a number of other ills. Increasing pollution levels especially in metros, stress and strain at workplace, cut throat competition taking its toll are some of the harsh realities. Pollution levels in certain areas are unimaginably high and the areas are nothing short of gas chambers. An individual going to his place of work has to spend long hours in queues, inhaling the vehicular emissions of poisonous carbon monoxide gases affecting his health in the long run. Besides accidents on roads are common features. In such instances timely affordable medical help is the need of the hour. But this may be easier said than done. Treatment for major illnesses or accidents can be unaffordable and may leave you poorer by thousands of rupees. It is especially worse when the patient needs specialized care. Expenses are exorbitant and the situation leaves you mentally devastated also burning a deep hole in your pocket. The family balance is affected, all those comforts of life have to be given up and your family has to make up with bare minimum necessities only. T.Y.B.B.I 8
    • Health insurance takes care of you in such circumstances. It will help you tackle such situations with ease by providing you with timely and adequate medical care. The financial burden of footing huge medical bills is taken care of by health insurance. Besides if the accident causes life long disability to the patient, the earning member of the family, the insurance company will come to the rescue. Primary health care - a basic necessity and right of every individual, is today only a distant dream. The government has done precious little in this regard for the masses and hence the private sector has taken up the challenge to exploit the potential of the 92,400 crore healthcare industry. With educational levels going up people are becoming increasingly aware of the need of timely healthcare facilities. But at the same time the high costs of private health care is a major deterrent. The need of the hour is affordable health care for all in order that even the people in remote villages can have access to it. T.Y.B.B.I Insurer 2003-2004 2004-2005 Fire Marin e Moto r Health Fire Marin e Moto r Health Public sect -33.3 -13.32 13.46 28.89 -1.46 2.85 9.30 17.79 New India -10.9 -21.90 8.06 54.92 2.54 -2.31 8.33 27.23 National -1.63 -13.14 29.73 42.36 3.05 34.93 19.02 26.28 United India 4.67 -11.32 3.87 10.85 -6.69 -18.57 -7.79 5.24 Oriental -1.62 -4.01 12.28 7.78 -5.61 10.0 14.80 6.58 Pvt. Sector 63.5 120.85 86.67 130.3 28.7 48.56 70.39 114.21 Total 6.57 -3.92 18.66 35.13 5.39 10.22 16.13 27.91 9
    • INDIAN SCENARIO In India, presently the health insurance exists primarily in the form of Mediclaim policy offered to the individual or to any group, association or corporate bodies. The government spending is less than 25 percent against the average spending of 30-40 percent in other developing countries. There is need for regulation for the self-funded health plans by major employers who may not find insurance as a cost effective alternative. According to WHO figures (2002), total health expenditures represent 6.1% of India’s GDP, but most of this amount, representing 4.8% of GDP is the share of private expenditures and only 1.3% of GDP is public expenditure. Of the 4.8% private expenditure, 98.5% are out-of- pocket spending of users. In other words, 77.5% of total expenditure for health care costs is paid by individuals or households (WHO, 2005) and this huge expenditure does not pass through any pooling mechanism. Access to health care in India is still low and with only less than 1% of GDP allotted to public health, there is lack of adequate health infrastructure. .Penetration of Mediclaim is currently done by state-owned insurance companies, covering only about 2.5 million people i.e. less than 0.50 percent of the country’s population. There are some health insurance schemes issued by four public sector general insurance companies, namely, National Insurance Company Limited (NICL), New India Assurance Company Limited (NIACL), Oriental Insurance Company Limited (OICL) and United India Insurance Company Limited (UIICL). Besides these four companies, Life Insurance Corporation (LIC) of India also offers a few health covers in a limited manner. At present, T.Y.B.B.I 10
    • 82.44% of the entire commercial health insurance business in the country is shared between public companies, while private firms manage the rest 17.56%. The number of beneficiaries under the various forms of health insurance in India is given in the table below Paradoxically, the medical professionals are resisting standardization in treatment coding known as ICD and cost cutting measures for making the medical treatment affordable to the ailing. They tend to forget that that future growth of healthcare in a country like India would depend upon the development of health insurance model. The need for support from the health domain members/players and the ministry of health both at the centre and the state cannot be overemphasized. However given the state of affairs of regulations in the healthcare sector in India, it is doubtful whether full fledged T.Y.B.B.I Insurer Health premium (in Rs Crore)2005 Health premium as a % age of total non-life business 2004-2005 Growth of health premium (2004- 2005)% ICICI Lombard 118.78 13.4 257.0 Bajaj Allianz 70.39 8.3 242.2 Royal Sundaram 30.02 9.1 88.8 IFFCO Tokio 28.37 5.6 73.3 Tata AIG 26.64 5.7 35.3 Cholamdalam 20.12 11.8 Reliance 7.98 4.9 2.4 HDFC Chubb 1.97 1.1 Private Sector 304.27 8.6 148.0 New India 504.28 11.9 43.9 National 364.29 9.5 26.3 United India 294.19 10.0 5.2 Oriental 265.14 8.7 13.9 Public Sector 1427.9 9.8 24.0 Total 1732.17 9.6 36.0 11
    • insurance companies would like to take healthcare risks manageable so that insurers may find it worthwhile to move into the sector in a big way. ISSUES AND CONCERNS All over the world, insurance coverage is being extended through 3 basic models: i) public financing and public delivery as practiced in the UK until its recent reforms, ii) private financing and public delivery as the model practiced in the US, Singapore, and Taiwan and iii) public financing and private delivery as the Bismarck model, idealized national (public or social) health insurance scheme practiced in Canada, Germany, France, Japan and China. Health care insurance is one such alternative that covers the risk of payment for health care. William C Hsiao (1992) of the Harvard University undertook a comparative study of the three models and concluded that "public financing and private delivery" of health care as practiced in Canada is the best among the 3 models in terms of performance, health outcome, public satisfaction and access to health. There is however, a school of thought that doubts the suitability of this model to Indian conditions on the grounds that: i. The size of the population is far more than any of the countries where it is being currently practiced efficiently. ii. The level of the per capita income is far lower than in other countries. iii. The type of federal set up India has is different from the rest. True, these apprehensions cannot simply be shunned off but one redeeming feature of the Indian system is that it has the necessary infrastructure - sizeable public hospitals, not-for-profit voluntary organizations plus highly skilled professionals in different kinds of medical services and decades of experience in managing insurance business. What is therefore needed is a better link-up of T.Y.B.B.I 12
    • these available resources with the ordinary consumer at an affordable price. With the opening up of the insurance market for private entry and the accompanying hype it is being hoped that in the days to come, the teeming population of India can look for health coverage from an array of insurance providers that too at an affordable price. The common negative factors which evolve after looking at various health coverage phase are 1. Quality of service when facilities are owned by the plan giver. ESIS, CGHS is grossly inferior Reimbursement delays – in case out of pocket spending and or rejections of claims 2. Limitations of services –Either monetary restriction on the amount available per year or non-comprehensive care of certain pre-existing & chronic ailments. 3. Inadequate information regarding health, ailment, procedures & treatments, cost and outcome 4. Provider malpractices 5. Coatings for comprehensive total care 6. The Low Level of Medical Penetration in India Health care spend in India is considerably lower than that in other countries.. US UK Mexico Brazil China India Access to health care service providers and availability of physicians is one part of the issue Financing for Life expectancy (avg. # of years) 77.4 78.3 72.6 71.4 72.5 64.0 # of Physicians per 1,000 people 2.7 1.9 1.7 1.2 1.7 0.4 Healthcare spend (USD per capital 5365 3036 336 236 62 32 T.Y.B.B.I 13
    • health care is the other aspect of the issue Healthcare spend (% of GDP) 13.2 8.4 5.5 7.5 5.0 5.3 LICENSING HEALTH INSURANCE IN INDIA Health insurance is one of the most regulated forms of insurance business in those countries where it plays a dominant role in financing of health expenditures. Spiraling healthcare costs and rapid technological advances in the medical field have triggered the need for cost-containment by the health insurers without sacrificing the interest of the policyholders or claimants. The nature of loss in health insurance might result in differences of opinion. All these call for intervention by regulatory authorities to protect the consumers However, under the Insurance Regulatory Development Authority (IRDA) in India, the powers of licensing and regulatory insurance, including health insurance, has been mandated under an act parliament. Despite such a regulatory authority, very little has been done by IRDA to lay down ground rules for hospitals which run health plans and may be required to register themselves as insurers or hospital managed organizations (HMO). It may be pertinent to note that in similar situation, the US federal and state health insurance regulation prescribe elaborate legal framework to ensure quality standards for rate regulation, cost containment, etc. HEALTH SECTOR FINANCING One of the major goals for the future health system in India is to ensure good health for the population through access to high quality services. To achieve this goal, there is a need to enlarge coverage and rationalize the current T.Y.B.B.I 14
    • mechanisms for collective health financing. There are at least six dimensions of the choice of health financing policies: • Identification of beneficiaries • Benefits covered by insurance source(s) of financing • Methods for provider payment institutions that pay providers • Role of public and private sectors in the delivery of service HEALTH INSURANCE AS A HEALTH FINANCING TOOL Attracting additional money for health additional resources may be available through insurance because firstly, consumers are more enthusiastic about paying for health insurance than paying general taxations, the benefits are specific and viable and secondly, consumers are more able and prefer, to pay regular, affordable premiums rather than paying fees for treatment when they are ill. Getting better value for money (or increasing efficiency)  Improving the quality and targeting of healthcare (increasing effectiveness) T.Y.B.B.I ♠Using central/state revenue for health ♠Compulsory premium contributors to health ♠Channeling loans, grants etc. to healthcare ♠Payments to health are providers for service ♠Premium contributions towards health support ♦Tax-based and out-of-pocket expenses are direct expenses related outlays ♦Health Ins. Involves a fund pool for future healthcare Tax funded Social Security Externally funded Public Total health Expenditure Out-of- Pocket Private Health Ins Externally Private 15 The world Health Organization has defined possible approach to financing of health expenditure…
    • 1. A greater explicitness and viability of spending on health services occurs as a result of insurance. 2. The third party institution can specify in contracts the kinds of healthcare that to be provided and can therefore concentrate on providing cost effectiveness 3. Consumers, and their representatives, will demand better quality care because they can see a definite link between their payments and services OPPORTUNITIES AND CHALLENGES The total percentage of population covered under any sort of medical coverage is in single digits which is woefully inadequate. Further, most of these covered persons belong to the organized sector mainly in sectors like Railways, Defence, Central Government, etc. Within this, only a negligible percentage of the persons are covered under private health insurance. If we are seriously looking at a problem is by resorting to alternative avenues like private health insurance. It is usually mentioned that it is difficult to bring the rural, illiterate folk under the umbrella of insurance. When it comes to health insurance, this argument would not hold any credence as many of the so-called educated people themselves do not understand the importance of having such protection. Thus, there is a monumental task of convincing different classes of the society about insurance in general and health insurance in particular. Let us take a look at how health, as a class, has been performing in the Indian insurance market. A commercial health insurance policy has been introduced in the market in the late 1980s; and thus it remains one of the youngest classes to be introduced in the industry. In spite of that, it is third largest class in terms of gross premium(Rs.78,831 lakh) earned for the quarter-ended June 2006, after Motor (2,39,117) and Fire (Rs. 1,63,286). Further, even if one considers the growth percentage of any class, health has grown by about 44% for the one-year period (June 05 to June 06). In absolute terms, it has T.Y.B.B.I 16
    • registered a growth of Rs.25, 303 lakh from Rs. 53,528 lakh. This compares very favorably with the overall performance of the industry which registered a growth of Rs.1,24,906 lakh, from Rs.5,38,084.32 to Rs.6,62,900.78; which is around 23%. In the process, it has overtaken more conventional classes of insurance like marine and engineering. Looking at in isolation, it has a commendable performance. But when one looks at the percentage of the population who actually go for commercial health insurance, particularly in the rural areas; one could easily realize that something grossly wrong with the way private health insurance is being accessed in the country. On the contrary, it is commonplace to observe some member or the other in many families to be hospitalized in a nearby town and in most of these cases; they end up paying huge amounts of hospital hills. Going further, the funding for such casualties is provided by the ubiquitous moneylender; and thus they become unfortunate victims of a debt trap. Looking at the importance of providing healthcare for the masses, any amount of hard work should not be deterrent. In accomplishing this huge task, there is a role for everyone to contribute in whatever manner they can. NEED FOR PRIORITIES Further, there is a huge emphasis on curative care- both in the case of healthcare management of the country as also when it comes to providing commercial health insurance. Over a period of time, we have managed to eradicate some of the killer diseases like smallpox. Further, we have also been able to spread awareness about the maladies of afflictions like polio; and promote the administration of vaccinations against such invalidating conditions T.Y.B.B.I 17
    • by promoting strong campaigns. This augurs well for the health of the country, at least on the area of preventing such diseases. But when compared to some of the other third world countries, we are way behind in tackling diseases like malaria, water-borne infections etc. there is a certain need to achieve better progress in this area; and given the means, it is not impossible altogether; it is just that the right focus and direction is to be targeted. HEALTH CARE PRODUCTS The following are brief descriptions of some of the major health care products available in world markets today.  Capital Disability Policies Disability benefits cover the financial risk to the insured of his/her becoming disabled and are expressed either as occupational disability or the inability to pursue any activity for a living. Benefits are payable in the form of a lump sum or as an income.  Permanent Health Insurance Policies Disability income benefits pay a regular income should the insured experience a loss of income upon becoming fully or partially unable to follow their own or similar occupation. The benefit usually pays an income either until the insured has recovered sufficiently from the temporary disability to return to work, or has died or until normal retirement age. A waiting period is usually imposed prior to the commencement of the benefit payment.  Dread Disease (or Critical Illness Policies) A Dread disease benefit offers a payment (sometimes an accelerated death payment) on a confirmed diagnosis of a dread disease. This benefit is usually valid in the case of a limited number of listed diseases, which often include the T.Y.B.B.I 18
    • following diseases: Heart attack, Stroke, Coronary artery disease requiring surgery, Cancer, Kidney failure, Surgery for a disease of the aorta, Replacement of a heart value, Organ transplant, Coma Other diseases can also be included and the percentage of the sum assured paid for each disease may be related to the severity of the disease.  Long Term Care Policies This policy provides financial security against the risk of needing either home or nursing-home care as an elderly person. Premiums will be paid regularly and will cease either when benefit payments commence or earlier (e.g. at a given age). A group version of this product would enable an employer to provide long term care to retiring employees and their spouses.  Hospital Cash Policies Hospital Cash policies usually provide the insured with a daily cash amount for the duration of an insured’s stay in the hospital. Further benefits are often added in order to cover the additional costs associated with any visit to the hospital. These would often be in the form of a major medical expense policy  Major Medical Expense Policies Major Medical Expense’s policies often complement a hospital cash policy. The policy would cover the costs associated with specified medical procedures. These would include the cost of any surgery or follow-up visits to a Doctor. The actual benefit would normally be based on a pre-determined fee scale for various different procedures. T.Y.B.B.I 19
    • GOVERNMENT/STATE BASED SYSTEMS The best documented and largest system of health care delivery in India is the diverse network of hospitals, primary health Centres, community health centres, dispensaries and speciality facilities financed and managed by the Central and State local Governments. These facilities are officially available to the entire population either free or for nominal charges. Along with some other networks of village health workers, maternal and child health programmes and speciality disease prevention programmes these public facilities carry out a central role in India’s primary health care system short of durgs and essential supplies and that they sometimes suffer from low morale and inadequate motivation. The health facilities made available to the public are managed and operated under the authority of central and state agencies. The state governments mostly own and mange the public sector delivery system and have to bear the costs of operation. But the Central Government plays a major role on the planning, financing and transfer for resources that determine new investment in health facilities and specialized programmes. Much of the funding for health facilities originates from the Union Ministry of Health and Family Welfare and is channeled to the state governments, which retain considerable authority for the spending decisions. Over the years, the Central Government have been the T.Y.B.B.I 20
    • main source of funds for the primary health care facilities, whereas the states bear the major responsibility of recurrent costs, especially the costs of running hospitals. This system has added to the overall inefficiency of public heath facilities. CENTRAL GOVERNMENT HEALTH SCHEME The Central Government Health Scheme (CGHS) was introduced in 1954 as a contributory health scheme to provide comprehensive medical care to the central government employees and their families. It was basically designed to replace the cumbersome and expensive system of reimbursements (Ministry of Health and Family Welfare, Annual Report 1993- 94). Separate dispensaries are maintained for the exclusive use of the central government employees covered by the scheme. Over the years, the coverage has grown substantially with provision for the non-allopathic system of medicines as well as for allopathic. In addition, the CGHS reimburses patients for part of their out of pocket costs on treatment at the government hospitals and some other facilities. The list of beneficiaries includes all categories of current as well as former government employees, members of parliament and so on. The CGHS has been in the recent past, widely criticized from the point of view of quality and accessibility. EMPLOYEES STATE INSURANCE SCHEME Established in 1948, the Employees State Insurance Scheme (ESIS) is an insurance system which provides both the cash and the medical benefits. It is managed by the Employees State Insurance Corporation (ESIC), T.Y.B.B.I 21
    • a wholly government-owned enterprise. It was conceived as a compulsory social security benefit for workers in the formal sector. It benefits 33.4 million workers with income less than Rs.6500/- a month along with their families. Since 1989 the schemes has been expanded, and it now includes all such factories which are ‘not using power’ and employing 20 or more persons. Mines and plantations are explicitly excluded form coverage under the ESIS Act. EMPLOYER-MANAGED SYSTEMS “Employer-managed health facilities” and the “reimbursement of health expenses by employers” are the other means of health insurance in India. Generally, the public sector undertakings and big industrial houses have their own dispensary and hospitals and provide medicines, etc, across the counter, usually within the company premises township. These include defence services, educational institutions, particularly universities also provides medical services to their employees. In addition, there are various medical reimbursement plains offered by employees for private medical expenses in the private sector including commercial banks and autonomous institutions. Also, in some organization we may find a self-insurance system known as medical benefit or medical allowance scheme. Under this scheme, employees incurring medical expenses are required to submit their claims to their employees for reimbursement, and reimbursements are not linked to their individual contribution. Such coverage’s generally vary according to the employee’s salary or designation. Overall, the performance of these systems in India has been satisfactory. NGO SYSTEMS T.Y.B.B.I 22
    • Health facilities are also provided by voluntary and charitable or Non- government organizations (NGOs). Some of the important NGOs are Child In Need Institute (CINI), Self-employed Women’s Association (SEWA), Streehitkarni and Parivar Seva Sanstha. The health care facilities offered by these organizations are a part of their main objectives. Though, these are not exactly health insurance programmes, yet they have potential to generate awareness and associate themselves with the major health insurance. MARKET BASED SYSTEMS A. GIC Mediclaim Coverage’s The GIC holds a major share in the market-based health insurance segment. It introduced the standard “Mediclaim” health insurance scheme in 1986, and become operational in 1987. This product was later on modified in 1997 to allow for premium differentials for various age group meant for both individuals and groups. As on date, the GIC and its subsidiaries offer the following products: A.1 Mediclaim or Hospitalization Benefit Insurance Policy Suitability Anyone in the age group of 5 to 80 years can take the policy. Children in the age group below the age of 5 years can also be covered from the age of 3 months onwards provided one or both of the parents are covered concurrently. Higher limits are permitted of the policy is in renewal for the preceding three years. Suitable for persons of any nationality but treatment should be availed of within the country and the claim is paid in Indian currency/foreign currency. T.Y.B.B.I 23
    • Salient Features • Provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident • Cover extends to pre-hospitalization and post-hospitalization for periods of 30 days and 60 days respectively. • Domiciliary hospitalization is also covered Benefits • Reimbursement of medical expenses • Discount in insurance premium is allowed on family package, cumulative bonus and health check. In case of family package cover, a single member can avail of the entire policy limits. • The premium paid by a cheque upto a maximum of Rs. 10,000 is totally exempt from income tax. Domiciliary Hospitalization The term means that a patient can be treated at home when he is not in a fit condition to be moved to the hospital or where is no accommodation in the specialist hospital provided • The treatment was for a period not less than 3 days. • The sub-limits of sum insured towards domiciliary hospitalization are furnished in the sum insured and premium schedules. Exclusions T.Y.B.B.I 24
    • • The facility is not available if any illness is contracted within 30 days from the commencement of risk except in case of an accident. • Any pre-existing diseases • Treatment for contracts, benign prostatic hypertrophy, hydrocele, congenital internal diseases, fistula in anus, piles sinusitis and related disorders for 1st year of policy • AIDS or conditions of similar kind Requirements A completed proposal form. If the prosper is a ‘Diabetic’, a separate questionnaire completed by the family physician. A.2 BHAVISHYA AROGYA INSURANCE POLICY Suitability Bhavishya Arogya is a life term policy where medical benefits are made available after retirement of the insured. Therefore, by paying premiums during the earning period, one can make a provision for medical benefits after retirement. Persons in the age group- of 25 to 55 years are eligible for this policy. Salient Features  The policy provides hospitalization benefits for lifetime after retirement’s age of the insured.  Premiums can be paid in equated annual installments up to the age of retirement  Premiums can also be remitted in lumpsum on one time basis. Discount is offered for one time payment T.Y.B.B.I 25
    • Benefits The policy comes into force after retirement and provides for hospitalization and domiciliary hospitalization benefits, following an accident or sickness. Other conditions • The minimum sum to be insured is Rs. 50,000 and can be increased in multiples of Rs.10, 000 as a unit, thereafter. • For every Rs. 10,000 increase of sum insured, the premium is loaded by 20% • Maximum sum insured is Rs. 2 lakh. • After commencement of the risk (i.e. after retirement) cumulative bonus @ 5% for every successive claim free year is added upto a maximum of 50%. • In case of death of insured before retirement, refund of premium will be at a pre-determined scale and it is payable to nominee/assignee. • In the event of voluntary cancellation of the policy, the refunds will be75% of the set scales applicable for death claims, provided there is no claim under the policy. Requirements • A completed proposal form • Proof of age is necessary as the payment of premium depends on the age A.3 JAN AROGYA BIMA POLICY  This policy was introduced in the year-1998. It is designed to provide hospitalization insurance to poorer sections of the society.  The coverage is along the lines of the individual mediclaim policy except that cumulative bonus and medical check up benefits are not included. T.Y.B.B.I 26
    •  The sum insured per insured person is restricted to Rs. 5000/-. Premium up to Rs. 10000/- qualifies for tax benefit under Section 80D of the Income Tax Act. Service tax is not applicable to the policy. The premium payable as per the following table Age of the person Up to 45 years 46-55 56-65 66-70 Head of the family 70 100 120 140 Spouse 70 100 120 140 Dependent child up to 25 years 190 250 290 330 For family of 2+1 dependent children 190 250 290 330 For family of 2+2 dependent children 240 300 340 380 The policy is available to individuals and family members by duly completing the proposal form. The age limit is 5 to 70 years.  Children between the age of 3 months and 5 years can be covered provided one or both parents are covered concurrently. Past two years business performance of the insurance com under the sche Jan Arogya Bima Policy Year Company Target Rs. Crore Premium In Rs. Crore Claim Incurred Claim Ratio 2004-05 NICL 1.66 1.54 88.20 OICL 0.98 0.70 70.70 UIICL 0.54 0.86 159.00 NIACL 1.00 0.75 1.03 137.33 TOTAL 3.93 4.13 105.08 2003-04 NICL 0.23 0.33 102.03 OICL 0.57 0.17 29.40 UIICL 0.55 0.87 158.00 NIACL 0.75 0.52 0.68 131.40 TOTAL 1.87 2.05 58.74 Past two year’s business performance of the Bhavishya Arogya Policy Year Company Target Rs. Crore Premium In Rs. Crore Claim Incurred Claim Ratio OICL 0.12 0.01 14 T.Y.B.B.I 27
    • UIICL TOTAL 0.12 0.01 14 OICL 0.08 UIICL 0.021 0.018 87 TOTAL 0.101 0.018 87 B. LIC COVERAGE’S The Life Insurance Cooperation of India introduced a special insurance programme in 1983 which covered medical expenses for only four dreaded diseases. It was withdrawn and introduced subsequently in 1995. At present the modified versions are available in the form of two products viz. Jeevan Asha and Asha Deep I. Jeevan Asha  Features • Open ended scheme • Covers many surgical procedure • Fixed benefits for surgical treatment can be availed twice (subject to conditions) • Exclusive Double/Triple accident benefit. • Option to switch over from existing Jeevan Asha plan  Suitable for The Jeevan Asha II plan is apt for people who whose family history tends to show hereditary lineage of maladies and afflictions that have required major or minor surgery from time to time. Special Features Under the Jeevan Asha plan, the major surgical procedures covered for are: • Nervous system (non-malignant causes) T.Y.B.B.I 28
    • • Respiratory system • Cardiovascular system • Haemic and lymphatic system • Endocrine & Ocular system II. Asha Deep  Features Cover the risk of four major ailments namely, Cancer (malignant), Paralytic stroke resulting in permanent disability, renal failure of either kidneys or Coronary artery diseases where by-pass surgery has been done.  Suitable for: The Asha Deep II (with profits) policy is best suited for people if they anticipant or have a family history of serious diseases like Cancer, Paralysis, Renal failure and Coronary disease.  Special Features During the term of the policy, if the life assured is afflicted by any of the major ailments listed above and the same is established as per rules (in case of Coronary artery disease, the life assured must have undergone the by-pass surgery), the policyholder will be eligible for the following benefits, the policy is in force for the full sum assured. Immediate payment of 50% of the sum assured Payment of an amount equal to 10% of the sum assured, every year commencing from the policy anniversary falling on or after the date of affliction and ending with the policy anniversary preceding the date of maturity or the date of death of the life assured whichever is earlier. T.Y.B.B.I 29
    • Payment of balance 50% of the sum assured and vested bonuses on the date of maturity or on death of life assured, whichever is earlier. The bonuses will be calculated on the full sum assured even though 50% of the sum assured would have been paid earlier A lien for a period of one year will be imposed on all policies on all policies under this plan. If the life assured does not get afflicted by any of the diseases mentioned above, the full sum assured and vested bonuses will be paid on the date of maturity or on death of the life assured, whichever is earlier.  Benefits 1. Survival Benefits 2. Sum Assured and vested Bonus on maturity. Death Benefits Natural: If the life assured is not afflicted by any of the specified ailments, the legal heirs get the full Sum assured + accrued bonus Accidental: Accidental benefits available to the life assured whether afflicted or not afflicted by any of the specified ailments. T.Y.B.B.I 30
    • MEDICLAIM - AT A GLANCE The Policy basically covers reimbursement of expenses of hospitalization and domiciliary hospitalization for illness, diseases or injuries sustained. This Policy is available to persons between the age of 5 and 80 years (children between the age group of 3 months to 5 years can be covered if one or both their parents are also covered concurrently).  Basic Cover  Pre hospitalization Benefits  Post hospitalization Benefits  Sponsored Health Check Ups  Discount in Premium for family cover  Basic Cover The insured person can claim reimbursement for the following expenditures, provided they are reasonable and necessary incurred: • Room expenses • Nursing expenses • Surgeon, anesthetist, consultants, specialists fees • Artificial limbs, cost of organs, O.T charges, medicines and drugs and similar expenses T.Y.B.B.I 31
    • • Note: Under no circumstance will the reimbursement exceed the sum insured. In case of a Family Mediclaim Policy, the claim cannot exceed the sum insured specified against each person in the proposal form • Any relevant medical expense incurred within 30 days prior to hospitalization will also be covered under this policy  Post Hospitalization Benefits Any relevant medical expense incurred within 60 days after hospitalization will be considered for reimbursement under this policy.  Sponsored Health Check Ups A person insured under this scheme is eligible for reimbursement of the cost of a complete medical check up (subject to 1% of average sum insured). This benefit can be availed once at the end of a block of every four underwritten - claim free years. To be eligible for this benefit you must ensure that the policy is renewed within a week from its expiry.  Discount in Premium- for family cover If you take a Mediclaim Policy to cover yourself and one or more of the following persons in your family, you get a 10 % discount in the total premium payable. • Spouse • Dependent children • Dependent parents T.Y.B.B.I 32
    • OVERSEAS MEDICLAIM At a glance you need Videsh Yatra Mitra Policy if you are going abroad on business or holiday. The benefits under policy include: I. General Insurance Plan • Personal Accident Cover • Medical Expenses and Repatriation • Cover Loss of Checked in Baggage • Cover Delay of Checked in Baggage • Cover Loss of Passport • Personal Liability Cover II. Special Insurance Plans for: • Corporate Frequent Traveler’s • Overseas Journey – Business and holiday What's more, while you pay the premium in Indian Rupees, the claims(while abroad) are paid in foreign currency! 1. Personal Accident Cover T.Y.B.B.I 33
    • If the insured person suffers any bodily injury during the overseas trip and such injury, within 12 months of its occurrence, is the sole cause of death, loss of sight or limbs of the insured, the Insurance Company will pay up to US$ 50,000 as compensation. Note: No claim will be satisfied in excess of US$ 2000, on death of the insured person, if he/she was less than 16 years of age at the time of affecting the insurance. 2. Medical Expenses & Repatriation The cover provided by the Insurance Company extends to US$ 500,000 (for worldwide travel including USA & Canada) and US$ 250,000 (for worldwide travel excluding USA & Canada). It is paid to the insured in respect of any permissible and necessary medical expenses that are borne by him outside India on account of any injury or sickness suffered during the period of insurance. If "Mercury" recommends that continued treatment in India is appropriate, then (notwithstanding anything specified above), the insurance is extended to cover medical expenses incurred in India also. These expenses will be paid only towards treatment undergone within 90 days from the date on which the injury or illness first manifested itself. Medical Expenses Covered • Physician's services, hospital and medical services and local ambulance services. • Up to US$ 225 per dental service taken only for immediate relief of toothache. Dental care rendered necessary as a result of an accident that is T.Y.B.B.I 34
    • covered, shall be reimbursed subject to the limit of cover under Personal Accident. • Expenses incurred for emergency medical evacuation including transportation and medical care en route. • If the insured person dies abroad, the expenses incurred for the preparation and air transportation of the remains to India or an equivalent amount for their local burial or cremation. Specific Conditions • Claims will be reimbursed only to the extent they are reasonable and customarily incurred whether in case of medical or dental attention or transportation. • "Mercury" and their Medical Advisors must approve medical evacuation and transportation in advance. • Medical expenses that could have been postponed till the insured returned to India will not be reimbursed. The attending physician and the Medical Advisors shall decide which expenses can be and which can't be delayed. • US$ 100 is the deductible amount and any expense below this amount will have to be borne by the insured person. Further, it also means that from every claim this amount will be deducted before making settlement. • Claims in respect of cosmetic surgery will not be paid unless it is rendered necessary as a result of a covered accident. • Routine physical examinations and any other examinations that are not undertaken as result of impairment of normal health shall not be covered. • Pregnancy and related complications are not covered under this policy. • Where the insured person is unable to present himself or herself for the medical examination (where one is called for by the Insurance Company), the limit of indemnity will be reduced to US$ 10,000. This limit will be utilized T.Y.B.B.I 35
    • only towards physician's services, hospital and medical services and local emergency transportation. Further, the insurance cover will be restricted to cover only illness or diseases contracted abroad and not cover accidents. 3. Covers Loss of Checked in Baggage The insured will receive US$ 1,000 from the Insurance Company in the event of total loss of baggage that has been checked in by an International Airline for an international flight. The insurers however reserve the right to either replace or pay the intrinsic value of the lost article. Specific Conditions: • The Insurance Company will not reimburse partial loss or damage of baggage • No claim will be paid for items whose value exceeds US$ 100, unless the proof of ownership is presented to “Mercury”, in the event of submission of claim. • Valuable items are not covered by the policy since they should at all times be carried by the insured person and not be packet as part of checked in baggage. • Any recovery from the airline under the terms of the Warsaw Convention shall become the property of the insurers. 4. Covers Delay of Checked in Baggage The Insurance Company will pay up to US$ 100 towards necessary purchases, to replace items, in the event of more than 24 hours delay (from the scheduled arrival time) in delivery of checked in baggage. The baggage should have be checked into an International Airline on an international flight from India. Specific Conditions: T.Y.B.B.I 36
    • • The proof of purchase must be provided for all items reimbursed under this cover • Any payment made by the Insurance Company for delay of baggage will be offset against a claim arising for loss of the same baggage. 5. Covers Loss of Passport In the event of loss of passport, the Insurance Company will pay up to US$ 250 towards expenses reasonably and necessarily incurred by the insured person in obtaining a fresh or duplicate passport. US$ 30 is the deductible amount and any expense below this amount will have to be borne by the insured person. Further, it also means that from every claim this amount will be deducted before making settlement. Specific Conditions: • Loss or damage to the passport due to confiscation or detention by customs, police or other authority will not be covered under this policy. • Claims for loss of passport will not be entertained if the theft of passport was not reported to any police authority within 24 hours of discovery. An official report is also to be obtained from them. • No claim shall be paid for loss or theft of the passport if it was left unattended by the insured person. However, if the passport was left in a locked room or apartment and the insured person could not have stored it in a safety deposit box, the claim will be satisfied. 6. Personal Liability Cover T.Y.B.B.I 37
    • The Insurance Company will pay up to US$ 200,000 in case the insured person, in his or her personal capacity, become legally liable to pay third parties for accidental personal or property damage, arising from an incident during the overseas journey. Specific Conditions: • US$ 200 is the deductible amount and any expense below this amount will have to be borne by the insured person himself or herself. Further, it also means that from every claim this amount will be deducted before making settlement. This deductible applies only to third party property damage. • The Insurance Company shall meet no claims arising from Employers or Contractual liability. • No claims arising from liability to any family members, traveling companion, friend or colleague of the insured, shall be met. • Claims arising directly or indirectly from the following shall not be paid.  Animals belonging to the insured person or in their care, custody or control.  Any willful, malicious, or unlawful act.  Pursuit of a trade, business or profession, employment or occupation.  Ownership, possession, or use of vehicles, aircraft, watercraft, parachuting, hand gliding, air ballooning or use of firearms.  Legal costs of any proceedings that result from any criminal or illegal act.  Insanity, use of alcohol, drugs (except as medically described) or drug addiction.  Supply of goods or services. T.Y.B.B.I 38
    •  Any form of ownership or occupation of land or buildings (other than occupation only of any temporary residence) 7. Hijack The Insurance Company will pay up to a sum of US$ 300 (US$ 30 per day). This sum will become payable by the Insurance Company, if the insured is held hostage for more than 24 hours. II. Special Insurance Pan Insurance Plan for Corporate Frequent Traveler This is a one-year cover issued to employees of companies who have to travel abroad frequently Features:  Each trip should not exceed 30 days. This period can be extended by 7 days without any extra charge, if the delay is beyond the control of the insured perso  The Monetary Compensations offered in each case: BENEFIT LIMIT (in US$) REMARKS Medical Expenses 500,000 Deductible: US$ 100 Personal Accident 25,000 - Loss of Checked in Baggage 1,000 - Delay of Checked in Baggage 100 Delay > 12 hrs Loss of Passport 250 Deductible: US$ 30 Personal Liability 200,000 Deductible: US$ 200 T.Y.B.B.I 39
    •  The insured person can be between 18 and 70 years of age. The age limit can be extended to 75 years at the option of the Insurance Company and after such person undergoes a thorough medical check up. The Medical Reports should be authorized by an M.D. in Cardiology and should include, ECG Reading, fasting blood sugar/Urine sugar & Treadmill test in case of medical history Where the insured person is unable to present himself or herself for the medical examination (when one is called for by the Insurance Company), the limit of indemnity will be reduced to US$ 10,000. This limit will be utilized only towards physician's services, hospital and medical services and local emergency transportation. Further, the insurance cover will be restricted to cover only illness or diseases contracted abroad and not cover accidents. The medical certificate is a must for persons above 60 years. Overseas Journey - Business or Holiday This is the ideal Policy for persons traveling abroad on business or holiday. There are two plans that are offered - (i) Worldwide Travel Excluding USA & CANADA and (ii) Worldwide Travel Including USA & CANADA Features: • Any individual between the age group of 6 months to 60 years can be covered. The age limit can be extended to 75 years at the option of the Insurance Company and after such person undergoes a thorough medical check up. The Medical Reports should be authorized by an M.D. in Cardiology and should include, ECG Reading, Fasting blood sugar/Urine sugar, treadmill test in case of medical history T.Y.B.B.I 40
    • • The insurance cover for persons on holiday is a maximum of 30 days and on business is a maximum of 180 days. ECG, urine test and fasting blood sugar reports have to be submitted in case of persons above 40 years for overseas travel including USA & Canada and persons above 60 years for overseas travel excluding USA & Canada.  The Monetary Compensations offered in each case: BENEFIT LIMIT (in US$) REMARKS Medical Expenses Includes USA & Canada Excludes USA & Canada 500,000 250,000 Deductible: US$ 100 Personal Accident 25,000 - Hospital Benefit US$15 per day Max of US$150 Hospitalized for not less than 24hrs Loss of Checked in Baggage 1,000 - Delay of Checked in Baggage 100 Delay> 12 hrs Loss of Passport 250 US$ Deductible: 30 US$ Personal Liability 200,000 Deductible: US$ 200 Hijack US$30 per day Max of US$300 Held hostage for not less than 24hrs Past two year’s performance of National Insurance Co. & New India Assurance Co. under Overseas Mediclaim Policy Year Company Target Rs. Crore Premium In Rs. Crore Claim Incurred Claim Ratio T.Y.B.B.I 41
    • 2004-05 NICL 15.68 7.32 46.68 NIACL 30.00 24.30 22.37 92.05 TOTAL 39.98 29.59 74.25 2003-04 NICL 15.93 8.97 56.25 NIACL 0.75 27.25 20.21 75.20 TOTAL 43.18 29.48 68.27 MICRO HEALTH INSURANCE IN INDIA Health risks and resulting catastrophic financial losses are probably significant threats to the people, particularly persons belonging to lower income groups as these people will be excluded from private health insurance. A health shock leads to direct expenditures for medicine, transport and treatment but also to indirect costs related to loss of wages. Since studies have found a very strong link between health and income poor are the most susceptible to a health shock. Given the problem with public health delivery system, the access to and utilization of these facilities remain problem. Strategy to improve the access by developing insurance system to private providers has been one such area. For low-income people in rural and informal sector market based insurance such as Mediclaim can not meet the requirements because of its high cost. Insurance companies and healthcare providers face high transaction costs and also they do not have local information available with them. This makes their job of providing health insurance to this segment very difficult and schemes which are of local origin have more chance of attracting more members because of high level of trust with them. Several community based organizations in India have focused on developing community based insurance schemes during the last decade. Most of these T.Y.B.B.I 42
    • community based insurance schemes (CBHI) are also known as micro health insurance schemes. Micro insurance is a form of health, life or property insurance, which offers limited protection at a low contribution (hence “micro”). It is aimed at poor sections of the population and designed to help them cover themselves collectively against risks (hence “insurance”). More specifically micro insurance and CBHI are different in term interchangeably. In India, community health insurance started way back in Kolkata in 1952 which was part of a student’s movement. This scheme, which is called the Student’s Health Home (SHH), caters to the schools and universities students of West Bengal. Currently there are more than 20 documented CBHI programmes, of which five were initiated in the past three years community based health insurance schemes is different from normal market based schemes like Mediclaim. Though the basic principle of covering future risks by paying premium in advance is same in all health insurance schemes, CBHI schemes are tailored for local needs and provide health insurance at low cost. CBHI schemes in India can be divided in three broad categories. Table 1 indicates that these three categories are quite distinct from each other in terms of the function of the agency. An agency here can be a NGO, Trust, Hospital or Cooperative etc. their role can vary from performing as intermediary where both treatment and insurance are provided by intermediary itself or where the treatment and insurance are provided by third party. Micro health insurance as mechanism of providing healthcare to the poor, the role of these CBHI schemes will be very crucial. The success of many of these schemes though at a smaller level at present, provides important lessons for the policy makers. One important point to remember here is that CBHI schemes have their own problems which are non-availability of good providers, lack of professional management, financial sustainability issues and non-recognition by T.Y.B.B.I 43
    • IRDA. These problems need to be taken into account while assessing their benefits. Though at present CBHI schemes in India are serving a very small population, it lessons learnt from each of these schemes can be used to design more of such schemes in different parts and at much larger level they can be beneficial. TABLE 1: TYPES OF CBHI SCHEMES IN INDIA Types of CBHI Healthcare Intermediary Health Insurer Healthcare Provider (Examples) SEWA, BAIF, Karuna trust Tribhuvandas Foundation, DHAN, Yeshaswini Sewagram, MGIMS VHS, RAHA Role Plays role of agent Purchase care from providers Purchase insurance from Insurance company Plays role of insurer Provide Insurance Purchase care from independent provider Plays role of both insured & provider Provide health care Running Ins. Scheme Transaction Costs Low-medium Low Low Benefit on provision side Negligible Low Significant Informational Problems Is an Issue May be an Issue Not an Issue Payment Mechanism Mostly Fixed Indemnity Mostly Fixed Indemnity Cashless system mostly Nature of Membership/ Membership/ Geography T.Y.B.B.I 44
    • Pool Geography Based Geography Based Based MICRO HEALTH INSURANCE SCHEMES UNIVERSAL HEALTH INSURANCE SCHEME (UHIS) YESHAVINI CO-OPERATIVE FARMERS HEALTH SCHEME (KARNATAKA)  Marketed through public insurance companies  Covers only Hospitalization expenses (upto Rs. 15,000)  Premium  Individual: Rs 165/subsidy Rs. 200  Family upto 5 members: Rs. 240/subsidy Rs. 300  Coverage (2005): 1,10,000  Targets people in the age Group (3 months to 65 years)  Exclusion: Pre-existing diseases, delivery, pregnancy-related illness  Marketed through the cooperative movement  Covers only surgical procedures upto Rs. 100,000 per year  Premium: Rs. 120 per/person/per year(Rs.90 for children under 18)  Cashless services  Hospital network(169)  In-house model (No Insurance company)  Coverage (2006); 1,830,000  TPA (Family health Plan)  Second largest in the world T.Y.B.B.I 45
    • INDORE MUNICIPAL CORPORATION HEALTH INSURANCE SCHEME (MADHYA PRADESH) NAANI FOUNDATION SCHOOL HEALTH PROGRAMME (ANDHRA PRADESH)  Public Department (IMC)  Targets Senior Citizens (60 to 80 years old)  Covers Hospitalization costs upto Rs.20,000  Premium: Rs. 475/Per Person/Per year.  TPA (MD India):Partner-Agent Model  Hospital Network: 14 Private hospitals  Coverage (2006); 49,419  NGO/Private Trust  Targets young children (6 to 14 years-old) enlisted in public schools (Hyderabad City)  Premium: Rs. 120 per child per year  Services provided by nodal health clinics + base hospital + referrals  Coverage (2006); 60,000. T.Y.B.B.I 46
    • OVERALL PERFORMANCE The spread of Health Insurance and the performance of individual Insurance Companies can be best assessed through the total number of persons covered under the various health insurance schemes. A table showing the total number of persons covered under the various health policies of each of these companies for the past two years is given below. 2003-04 NAME OF THE POLICY NICL OICL UIICL NAICL Individual Mediclaim 602000 2317090 Group Mediclaim 589000 539585 Overseas Mediclaim 57076 Mediclaim 3122536 2223436 Jan Arogya 260230 58398 73000 75966 Bhavishya Arogya 955 Universal Health Insurance Scheme 78140 298796 561264 236490 Total 3460905 2580630 1826219 3226207 Individual Mediclaim 626000 2705322 Group Mediclaim 593000 994460 T.Y.B.B.I SCHEMES NO OF BENEFIC. TYPE OF SCHEME TYPE OF COVERA GE TYPE OF BENEFIT TYPE OF SUBSIDY YESHASVINI 1,83,000 IN- HOUSE TER CASHL. DIRECT DHARAMST. 400,000 P. AGENT SEC. CASHL. SEWA 174,000 P. AGENT SEC. REIMB. INDIRECT KARUNA 118,000 P. AGENT PER/SEC. REIMB. IND/DIRECT PREM 108,000 In- House SEC. CASHL/ REIMB. INDIRECT NAANI 60,000 In- House PER+SEC +TER CASHL. IND/DIRECT AROGYA 60,000 P. AGENT SEC. CASHL. INDIRECT INDORE 49,000 P. AGENT SEC. CASHL. DIRECT ASHWINI 12,000 P. AGENT PER/SEC. CASHL. IND/DIRECT 47
    • 2004-05 Overseas Mediclaim 55890 Mediclaim 7560666 2864532 Jan Arogya 171603 101556 70000 67391 Bhavishya Arogya 1108 Universal Health Insurance Scheme 27709 107858 280644 15641 Total 7759078 3073946 1570752 3838704 THIRD PARTY ADMINISTRATORS. Its an institution which facilitate a system of cash-less settlement of medical bills for the insured under health insurance has been introduced in India as recently as 2001. The first set of companies was given licenses in March, 2002. Today, there are 25 licensed Third Party Administrators (TPAs). Covered medical expenses are paid by the TPAs directly to the hospital. Administrator It acts a link between the insurer and the hospital. TPAs basically are professional organizations servicing health insurance policies sold by insurance companies by way of facilitating cash less treatment to insured individuals through institutional arrangements with insurance companies and networked service providers i.e. hospitals and nursing homes, etc. The TPAs are registered with and licensed by the IRDA and regulated by IRDA regulations, 2001 as amended from time to time. They will provide quality health care and services at affordable costs, which hitherto was unheard of. The role of TPAs will particularly be beneficial to those sections of society for whom quality healthcare has always remained a dream. By processing claims with due diligence, TPAs are expected to control claims costs for the insurers. In the long run, TPAs are expected to bring in greater T.Y.B.B.I 48
    • professionalism in the health insurance industry, which would augure well for the growth of this segment of insurance business. TPAs are licensed by the Insurance Regulatory and Development Authority. The criteria for licensing are  Only a company with a share capital and registered under the Companies Act, 1956 can function as a TPA.  Company shall not engage itself in any other business.  The minimum paid up capital shall be Rupees One Crore in equity shares. HEALTH INSURANCE FOR THE POOR. Myths and Realties Based on a survey is seven locations, we finds that most Indians are willing to pay 1.35 percent of income or more for health insurance and most people prefer a holistic benefit package at basic coverage over high coverage of only rare events. The needs of the poor, and their demand for health insurance, depend on local conditions. In a country where only about 3 percent of the populations are affiliated to health insurance, most Indians must pay the vast majority of their healthcare costs out-of-pocket. This burden is particularly high for those who cumulate both poverty and illness. Health insurance could be one of the most suitable solutions for this negative nexus. However, for the time being there is very little supply of health insurance for the poor. The largest comparative household survey conducted in 2005 in seven locations where micro health insurance units are in operations; the survey included both insured and uninsured persons. The seven locations are: Tamil Nadu (one urban and one rural location); Karnataka (one rural and one tribal rural location); Maharashtra (one rural and one urban location); and Bihar (mostly rural location). The survey conducted focus group discussions (FGD), T.Y.B.B.I 49
    • key-informant-interviews, and special sessions in which persons applied a decision-making simulation. The total size of the sample has been 4,931 households. The household survey, as well as the FGD and the analysis have been conducted under the EU/ECCP project ‘Strengthening micro health insurance units for the poor in India’. The survey offers the evidence to show the commonly held opinions are in fact myths. Myth No 1: the poor are unwilling to for health insurance and the lower their income, the less they are willing to pay for health. The reality: The evidence shows that most people are willing the pay more than 1 percent of their income for health insurance. The study shows that the majority of the sampled populations were willing to pay about Rs 559 per household per year. The poorest are willing to pay a higher percentage of household income than less- poor households. This confirms that the poor prioritize access to some healthcare, and that this basic level is quite stable. The policy insight: The declared WTP levels are T.Y.B.B.I 50
    • much higher than what has been assumed as feasible hitherto. Consequently, the demand for pro-poor and pro-rural health insurance at realistic premiums exceeds the supply available at present. Myth No 2: High costs of hospitalization and surgery pose the greatest financial risk for poor households. The reality: Hospitalizations are rare and very expensive. Drug consumption occurs much more frequently, and sometimes can cost as much as hospitalization, while in other cases would be much cheaper. Indeed, there is no significant difference between the aggregate costs of hospitalization. Policy insight: Health insurers and policy makers that aim to grant to poor households effective financial protection against the cost of illness would wish to ensure that the benefit packages should include drugs, tests and consultations; in addition to hospitalization. Myth No 3: The larger the poor household, the less attention to health and therefore the more sickness to health and therefore the more sickness among its members. So the large households pose a higher risk to the insurer. The reality: Larger households reported fewer illness episodes. As shown in T.Y.B.B.I 51
    • Figure 4, there is a steep drop in illness Episodes when household size increases from one to four persons, and is stable thereafter. Therefore, larger households represent a lower risk to insurers. (Sample size was 3;531 households, representing 17,323 persons; conducted in five locations in Tamil Nadu, Maharashtra and Bihar. The prevalence of illness in households for three months is 0.292. Myth No 4: Low income and low assets are indicators of higher risk of illness The reality: Higher income is associated with more reported illness episodes. The poorest-of-the-poor subgroup does not represent a higher risk for health insurers than the more affluent subgroups. Females are more likely to be ill than males, and the under five age-groups as well as +55 years; age-group is very vulnerable Policy insight: Intra-household information sharing, resource-and-asset shoring and demographic balancing within can lower prevalence of illness in households. Additionally, en bloc affiliation of households can lower the risk of adverse selection. Ignoring household features when calculating the premiums could result in premiums that are unjustified by the insured risk. Myth No 5: Poor people, who are often illiterate and innumerate, are unable to makejudicious T.Y.B.B.I 52
    • rationing decisions regarding the composition of a health insurance benefit packages. The reality: A decision tool called Choosing Healthplans All Together (CHAT) has been used with 24 groups (composed of 302 individuals) in Karnataka and Maharashtra to elicit their choices of healthcare benefits under severe budgetary rationing. Participants could choose from among 10 benefits types, and for each benefit type they could choose basic, medium or high coverage level. Participants chose first the benefits that cost most; these included: outpatient (OP); inpatient (IP); tests and imaging (T); and drugs (D); Table 1 lists the frequency of choices made. The frequency of the choice stated by the participants reflects a clear preference for a broad benefits package, even at basic level of coverage. Additionally, participants selected benefits that cost less, and interestingly these choices, shown in Figure6, provide protection to the weaker segments of the group (such as pregnant women or persons with disabilities). Policy implications: The results of this analysis demonstrate that the poor can participate actively in the design of the health insurance packages, and that they make judicious choices. The CHAT tool enables us to identify clients’ perceived priorities. T.Y.B.B.I 53
    • Myth No 6: The poor are essentially quite similar to each other: with similar needs a low ability to pay, low levels of education and a low demand for insurance. Therefore, uniform (“one size fits all”) insurance products are suitable for the poor. The reality: The healthcare needs of the poor are strongly context-dependant. This is evidenced by the difference in incidence of illness episodes in different locations and by the different cost associated with an illness episode in different locations. The demand for health insurance, evidenced by willingness to pay for it, is also strongly location- dependent. The evidence in figures 7, 8, and 9 show the difference in prevalence of illness in households; the different levels of insurable cost of illness episodes. Policy insight: Communication differs from each other significantly in their needs and priorities. For an insurance product to be attractive to such diverse market, it must respond to context-specific needs, costs, and willingness to pay levels. The Optimal adjustment between medical needs, their costs and willingness to pay must also take into account the perceived priorities of the prospective clients T.Y.B.B.I 54
    • and such perceptions may also be location-specific. Therefore, a “one-size-fits-all” insurance product is unsuited to the poor clientele and to the reality of India. FURTHER ISSUES RELATING TO HEALTH INSURANCE POLICIES  The Legislative Environment A fine balance between government imposed regulation and self regulation by the industry needs to be found. It a particular industry is “over” regulated it stifles innovation and development. On the other hand “under” regulation can result in unwanted practices and “fly by night” operations.  Socio-Economic Environment The socio-economic environment has a significant impact on the type of health insurance policy that consumes will look to buy. If will also have an impact on the claims patterns of consumers. For instance, in a relatively poor society, product demand will be for products that cover day-to-day basic medical care. This will tend to be products which have high frequency of claims where the average claim sizes are relatively low.  Post Retirement Benefits Another challenge for the insurance industry is how to deal with post retirement medical benefits. One possible way of dealing with these is to use some form of endowment product ( where premiums are paid during the working life of the insured) to provide a lump sum at retirement date which can be used to pr-fund medical expenses (or a future Medical Expense Policy). T.Y.B.B.I 55
    •  IT Systems The measurement and manipulation of data is of essential importance in operating an effective health care management system. There is a vast quantity of data that must be stored and manipulated for the various aspects of health care management. In addition this data should be readily available and easily updateable. In short the system should be robust!  Investment Strategy Due to the frequency and level of the contribution received for most health insurance products, providers have large amounts of funds that need to be invested in appropriate vehicles. Certain countries (e.g. South Africa) have also introduced reserving requirements, which will result in significant reserves building-up over time for health Insurance products. This has introduced the additional complication of matching assets and liabilities. This is an area where actuarial judgement is essential.  Cross Subsidies The issue of cross-subsidies is another item which needs to be carefully considered by any insurer. There often tends to be cross-subsidies in health insurance policies and in particular in medical expenses policy. Even when legislation does not force cross-subsidies, it is quite common for there to be cross-subsidies in health Insurance products. The insurance company needs to examine the level of the cross-subsidies and ensure that the style of their products is such that anti-selection will not result in abuse of these cross- subsidies. T.Y.B.B.I 56
    •  Risk Management The success of any health insurance policy is crucially dependent on appropriate management of the underlying risks which can be best attained by  AIDS The challenges that faces health insurers is how to deal with AIDS claims, and what product can be designed that meet the needs of AIDS suffers. This is a challenge that has not, in any market, to my knowledge, been fully addressed. In some Southern African countries, insurance companies are offering certain anti-retroviral treatments in order to extend the expected life span of their policy holders. This is one area where health Care Management can be used to delay the payment of insured benefits (normally Life Insurance) and also add the expected life of the insured, thus benefiting all parities concerned. T.Y.B.B.I  Setting of appropriate premiums  Measurement and control of expenses  Appropriate use of reinsurance avoidance of anti-selection  Investment strategy and subsequent measurement  Effective underwriting effective claim control  Appropriate reserving  Internal operational control 57
    •  Medical Savings Account: One example of a new product introduced to relieve the risk of rising costs is the introduction of medical Savings Account (MSA) as a component of a Medical Expense Policy. The account holder, at each ill health incident, has to take a conscious decision whether or not to draw on savings and deplete his wealth. MSA’s can be encouraged fiscally by providing savers with tax breaks not available to savers for other purposes. The funds in an MSA could be used to pay health premiums, deductibles or other medical bills not covered by insurance. An MSA minimizes moral hazard. There are two main kinds. One is a short term scheme which can be used at the discretion of the account holder for day-to-day expenses; the other is long term, where the savings are intended to build up to a substantial sum for either major expenditures or for old age.  Capitated Arrangements: A further innovation in some progressive markets, including the South African market is the use of a capitation arrangement for Medical expense Policies. A capitation arrangement involves identifying certain service providers usually doctors who will provide given services to their patients. The services provided are usually doctor’s consultations. The doctor is paid a fixed fee per policyholder under its care. The doctor is then responsible for providing whatever care is necessary to that patient. By linking up a provider network through a capitation arrangement the risk of over servicing and hence higher T.Y.B.B.I 58
    • costs is placed in the hands of the doctors. It will then be up to the doctor to ensure that members receive appropriate service which will costs the doctor and not the insurer more. Frequently Asked Question (FAQ) 1. What is a health insurance policy? A health insurance policy is a contract between an insurer and an individual or a group, in which the insurer agrees to provide specified health insurance at an agreed-upon price the premium. Depending on the policy, the premium may be payable either in a lump sum or in installments. Health insurance usually provides either direct payment or reimbursement for expenses associated with illnesses and injuries. The cost and range of protection provided by the health insurance will depend on the insurance provider and the particular policy purchased. These days, most companies give the benefit of health insurance to the employees. However, in case your employer does not offer a health insurance plan, it is advisable to opt for a health insurance scheme. 2. Why do you need health insurance? Health insurance has become a necessity in today’s world considering the rise in the cost of medical care and treatment and the huge population of the country. The escalating cost of medical treatment today is beyond the reach of the common man. Even if an individual is healthy and has never had any major problem, it is not possible to predict what may happen in the future. There is a growing public awareness for better health care and desire to have better health care from private medical providers. In case of a medical emergency, cost of hospital room, doctor’s fees medicines and related health services all add up to a huge sum. In such times, health insurance provides the much needed financial relief. T.Y.B.B.I 59
    • 3. What are the criteria for deciding on the best health cover? Choosing a health cover for yourself must be done after careful analysis of your needs. In case you need a wide cover as also Income tax benefits the mediclaim policy with a family package cover could be a suitable option for you. You may also decide on the major ailments policy with annual, five and ten year cover options offering you a reasonable amount of premium savings. Those going for a wide coverage as also long term cover about five or ten years can opt for the term hospitalization policy. This gives benefits that are not available under the normal mediclaim policy. Another convenience this policy offers is the non-requirement of every year renewal of the policy. If you plan to go for a less costly health cover with tax benefit and limited coverage for you could choose the Jan Arogya cover. For those closer to the retirement age the long-term retirement benefit plan would be the ideal cover. 4. Who can avail this facility? Health insurance can be availed by people aged between five and seventy five. The health insurance scheme could either be a personal scheme or a group scheme sponsored by your employer. 5. What does it cover? In anticipation of unexpected events that create the need for medical goods and services, the health insurance does not cover certain ailments. It does not cover ailments in the first year after the policy is taken. It covers hospitalization charges for: • Heart attacks • Strokes • Prolonged illnesses T.Y.B.B.I 60
    • • Loss of limb, eye, or other parts of the body due to accident • Injuries • Maternity expenses • Medicines 6. What are the main health policies or schemes offered by Indian insurance companies? Some of the existing health insurance schemes currently available are individual, family, group insurance schemes, and senior citizens insurance schemes, long-term health care and insurance cover for specific diseases. Choose the one that suits you best and insure your health. The insurance policies offered by GIC are • Mediclaim Policy • Personal Accident-Individual • Personal Accident-Family/Group Accident Insurance J • an Arogya Bima Policy • Bhavishya Arogya Policy( Insurance for senior citizens) • Traffic Accident Policy • Overseas Mediclaim Policy The Life Insurance Corporation (LIC) offers: • The Asha Deep Plan: It provides covers for cancer, paralytic stroke, renal failure and coronary artery disease. • Jeevan Asha: The Jeevan Asha policy is the other healthcare product offered by LIC 7. What you need to know? T.Y.B.B.I 61
    • You should understand the policy, and become familiar with common health insurance provisions, including limitations, exclusions, and riders. It is very important to know what your policy covers and what you have to pay yourself. Health Insurance policies generally cover boarding, nursing and diagnostic expenses, which include room rent charged at the hospital or nursing home, fees of the surgeon, anesthetist, doctor, etc. Some policies even offer fixed cash amount for each day you stay at any hospital for treatment. If you have a persistent health problem and then decide to take insurance, it might not be covered. Expense on hospitalization, incurred in the first 30 days after taking a policy is also not entitled, except in case of an injury from accident. Treatment of certain diseases is not covered during the first year of your policy. The list of diseases may vary form one health policy to another. 8. Why does Indian insurance need Foreign Players? Competition improves quality of service. In India, LIC and GIC are well- established names. Only companies of equal strength and track record can effectively compete with them. Foreign players will provide expertise. Some foreign companies entering the Indian insurance sector and their Indian partners are as below: Indian Partner Foreign Partner Specialization Present Status Aditya Birla Group Sun life, Canada Life Received License Kotak Mahindra Finance Old Mutual, South Africa Life Received License HDFC Standard Life, U.K. Life Received License Reliance No foreign Alliance Non-Life, Health Received License for Non-Life ICICI Prudential, U.K. Life, Health Received License Max India New York Life, U.S.A Life Received T.Y.B.B.I 62
    • License Tata Group AIG, U.S.A Life and Non Life Received License 9. What changes are likely to occur with privatization? Currently, insurance for health care is tied up with only emergency situations. With privatization it is hoped that health care will come within the reach of a large proportion of the population. An insurance model must be created with the ‘Total Health’ perspective to not only give access to quality healthcare but also incorporate preventive health care into the main system. Hospitals, different service centres and diagnostic centres needs to be accredited. In India, approximately 80% of the total health expenditure comes from self- paid category as against government’s contribution of 20-30%. A majority of private hospitals are expensive for a normal middle class family. The opening up of the insurance sector to private players is expected to give a shot in the arm of the healthcare industry. General Insurance Company has never aggressively marketed health insurance. Moreover, GIC takes upto 6months to process a claim and reimburses customers after they have paid for treatment out of their own pockets. 10. What are the pros and cons of privatization of health insurance? T.Y.B.B.I 63
    • FAQ on Mediclaim 1. What is Mediclaim Insurance? Mediclaim insurance consist of the reimbursement of hospitalization and/or domiciliary hospitalization expenses for any illness/diseases or injury sustained by the insured individual. 2. What is meant by ‘Hospitalization’? Any instance when and where the insured individual is hospitalized for a minimum period of 24 hours can be termed as ‘Hospitalization’. 3. What is ‘Domiciliary Hospitalization? “Domiciliary Hospitalization” is any instance when and where the insured individual requires medical treatment for more than three days for an illness/ disease/ injury that in the normal course would require hospitalization and is conducted at his or her home within India due to T.Y.B.B.I PROS CONS Flexibility in health insurance products and prices Supplier induced demand which would lead to increase in cost of care Comprehensive and cost effective packages Risk Selection practices where the disabled, poor, elderly would be ignored Medical plans will be tailored as per the requirement of an individual based on pre-negotiated rates Exclusion of pre-existing conditions and diseases Fewer age, disease and benefits restrictions Monopoly of profit oriented insurance cartel with poor quality products. 64
    •  The condition of the patient being such that he cannot be moved to the hospital  Lack of hospital accommodation 4. What is meant by Pre- hospitalization and Post-hospitalization expenses? The relevant medical expenses incurred during 30 days prior to hospitalization are known as ‘Pre-hospitalization expenses’ Medical expenses incurred for 60 days after hospitalization are known as ‘Post-hospitalization expenses’ 5. Under Mediclaim, is the limit of insurance per sickness or annual? Mediclaim covers room, boarding charges, nursing expenses, surgeon, anesthetist /doctor’s fees, blood, oxygen, operation theatre charges, X-ray, other tests pertaining to sickness, etc. 6. What is family discount under Mediclaim? Under Mediclaim, when the husband or the wife and children or dependant parents are covered under same policy, a discount of 10 percent is given on the total premium by way of family discount. 7. What are the factors which determine the premium payable under Mediclaim? Under Mediclaim, the age and the amount of cover are the factors that decide the premium. 8. What are the factors which determine the premium payable under Mediclaim? Under Mediclaim, the age and the amount of cover are the factors that decide the premium. T.Y.B.B.I 65
    • 9. What are the minimum and maximum amounts for which a Mediclaim policy can be taken? Under Mediclaim, the minimum amount that can be insured for is Rs.15, 000 and the maximum amount is Rs. 5, 00,000. In any case, the amount for which the insurance company may grant increase is at their own discretion 10. Are all diseases and injury covers by Mediclaim? There are certain diseases and injury that are not covered by this policy. They fall under basically three categories. The injury or diseases that are not covered in the first year of operation of the policy are: Cataract, Benign porstatic hypertrophy, Hysterectomy for menorrhagia or fibromyoma, Hernia, hydrocele, Congenital internal diseases, Fistula in anus, Piles, Sinusitis and related disorder Note: The disease listed above are only excluded from cover only for the first year of the policy and not afterwards. The injuries and diseases or medical conditions not covered at all under Mediclaim are: • Cost of spectacles, contact lenses, hearing aids • Dental treatment, surgery unless it requires hospitalization • Convalescence or rest cure congenital external diseases Sterility Venereal diseases Condition directly or indirectly related to AIDS Pregnancy Circumcision, unless it is necessary under certain circumstances alone. 11. Can the Mediclaim the insurance contract be cancelled midway? The policy can be cancelled at any time during the course of its operation. In such cases, the insurance company will refund the premium paid (on the basis of the table provided below) only if no claim bas been up to the date of cancellation. T.Y.B.B.I 66
    • Date of cancellation Amount to be refunded within 1 month ¾ of the annual rate Within 3 months ½ of the annual rate After 6 months No refund 12. What is the difference between Mediclaim & Critical Illness policies? A Mediclaim policy is a reimbursement of the medical expenses where as Critical Illness insurance is a benefit policy. 13. What is a benefit policy? Under a benefit policy on happening of an event, the insurance company pays the policyholder a lump sum amount. Whether the client spends the amount received on the medical treatment or not rests on his or her own discretion. 14. Are all the illness is under the Critical Illness policy? The Critical Illness policy covers only five major illnesses • Cancer • Kidney failure • Organ transplant • Multiple Sclerosis and Coronary artery surgery (20 percent of Sum Insured) 15. Is there a minimum annual income requirement under Critical Illness Insurance? If the client is an income tax payer and his annual income is worth a minimum of Rs.2 lakhs, he can opt for Critical Illness insurance. 16. What is the amount of Insurance offered by a Critical Illness policy? T.Y.B.B.I 67
    • Under a Critical Illness policy, the amount of insurance has to be selected by the client. It is at 4 levels- Rs. 5 lakhs, Rs. 10 lakhs, Rs.20 lakhs and Rs. 25 lakhs. 17. Explain the procedure to apply for cover under overseas mediclaim? Certain documentation has to be provided in detail to avail of cover under the Overseas Mediclaim policy. The necessary papers are • Visa details along with visa validity. • Country of visit & Passport details. • Name and address of sponsor plus a certificate giving details of employment, studies and the duration. • Period of desired cover. • Medical examination certificate. 18. What is the rate of premium calculated under the Critical Illness Policy? Under Critical Illness insurance, the premium depends upon the age and the sex of the person.. For instance, a 35-year old male will be charged a premium of Rs.1.53 per thousand whereas for a female of the same age, it is Rs.2.28 per thousand. For a 65-year male it is Rs21.86 per thousand while a female of the same age will be charged Rs.15.25 per thousand. 19. How file to be claim under Mediclaim insurance policy? Preliminary notice of hospitalization must be given to the insuring company within 7 days of the starting date of the hospitalization procedure. Final claim form must be submitted with the entire relevant document • Hospital receipts/ bills/ cash memos with medical and pathological reports T.Y.B.B.I 68
    • • Prescriptions for medicines purchased from chemists within 30 days of discharge from the hospital What Do The Policies Offer MEDICAL POLICY CRITICAL ILLNESS RIDER Medical expenses incurred prior to the hospitalization A fixed sum insured is paid on diagnosis of illness covered under the policy Cashless hospitalization for all the expenses incurred in the hospital Money can be used to avail better treatment options, in any country Post-hospitalization expenses Family cover Expenses incurred on ambulance services Whole family covered under one policy Optional benefits Each member eligible for overall cover Expenses incurred for general health examination Pre-existing diseases covered Daily hospital allowance No health check-up till the age of 45 20. Explain the procedure to apply for cover under personal accident insurance • Immediately give notice of the accident to the insurance company. • File a First Information Report (FIR) with the local police station • Submit the claim form with all the relevant supporting documents/medical bills/reports. • In event of a fatality, in addition to the FIR and the relevant supporting documents, additional documents are also needed.  Death certificate  Post-mortem report wherever applicable  Coroner’s report or Inquest/police report  Letter of probate/will/ letter of administration/ succession certificate  Affidavit from claimant that he/she is/ are the legal heirs of the deceased T.Y.B.B.I 69
    •  No-objection affidavit from other relatives of the deceased towards payment to be made to the claimant INFORMATION ON HEALTH INSURANCE The domestic health insurance market is set for a transformation with foreign players setting their sights on it. Deutsche Krankenversicherung AG (DKV), a Munich Re group's health insurance firm, is entering the under-explored health insurance market through a joint venture with Apollo Hospitals Enterprise. US-based United Health Group, too, is keen on India debut but prefers to wait till the foreign holding limit in the country is raised to 49 per cent from the current 26 per cent. Apollo Hospitals informed the Bombay Stock Exchange that its board of directors authorized Chairman Prathap C Reddy to sign a JV agreement with DKV on Wednesday. DKV is the leader in the European health insurance market. T.Y.B.B.I 70
    • United Health Group International, a division of United Health Group and the largest and most diverse healthcare services company in the US, intends to set up a standalone health insurance firm in India. We are informally looking for partners. The minimum capital requirement of Rs 100 crore (Rs 1 billion) is too high, and if regulatory changes lower it to Rs 50 crore (Rs 500 million), it will be more sustainable. Leonardi said, "The regulatory challenges in health are the costs involved in setting up a health insurance company. Health insurance is not regulated as a separate line of business. There needs to be clarity in minimum benefits. B D Banerjee, insurance ombudsman for Maharashtra and Goa, said, "Health insurance products offered by insurers lack versatility with certain exclusions and limits, pre-existing diseases are excluded from coverage. There is no major plan for preventive treatment and cost of insurance is prohibitive for the average middle class." Reliance General launches health plan BS Reporter/Mumbai December 28,2006 Reliance General Insurance has launched Reliance Health wise- a health insurance policy covering hospitalization expenses, day –care treatment and critical illness along with a cover against hospitalization expenses incurred by a donor in case of major organ transplant. Available in three plans- Standard, Silver and Gold – the premium for a couple for a cover of Rs 1 lakh would be Rs 820 (Standard Plan), Rs 900 (Silver) and Rs 1,000 (Gold). Depending on the plan opted by the policy holder, Reliance Health wise Policy will offer variable features. Pre-existing diseases are covered from third year onwards in Gold and Silver plans. In case the insured person contracts any of the nine critical illnesses T.Y.B.B.I 71
    • mentioned in the policy, the sum insured under the policy is doubled to meet hospitalization expenses. If a person wishes to cover his entire family, he can choose the Family Floater Option. In case of an emergency, the sum insured is made available to each member. This is unlike policies where the total cover may be, say Rs 4 lakh, but is spread as Rs 1 lakh on four members and no individual member can avail benefit beyond Rs 1 lakh. Other benefits present in the policy are daily hospitalization allowance for a maximum period of seven days, nursing allowance for a maximum period of five days, reimbursement of charges towards local road ambulance services, recovery benefit of Rs 10,000 in case of hospitalization for more than ten consecutive days, allowance towards expenses of an accompanying person at the hospital/nursing home for a maximum of five days and reimbursement of cost of health check-up at the end of a block of four years, provided there were no claims reported. IMPLEMENTATION OF “HEALTH INSURANCE SCHEME (HIS)” FOR HANDLOOM WEAVERS The Government of India was implementing a Health Package Scheme since the year 1992-93 as a welfare measure for the benefit of handloom weavers. Now in its place, the Government of India has introduced a Health Insurance Scheme for Handloom Weavers from the Current Financial Year i.e. 2005-06 in collaboration with ICICI Lombard General Insurance Company Ltd. The Health Insurance Scheme aims at financially enabling the weaver community to access the best of healthcare facilities in the country. The scheme is to cover not only the weaver but his wife and two children, cover all pre-existing diseases as well as and keeping substantial provision for OPD. T.Y.B.B.I 72
    • FUNDING PATTERN Release of funds: 1. The Central Govt. share of premium will be released to the ICICI Lombard directly for coverage of weavers under the scheme in installments. 2. Service Tax of 10.2% over the annual insurance premium of Rs.1000/- will be borne by the Government of India 3. In the event the claims ratio including all related costs is below 70%, with the view to incentives the scheme, the surplus shall be rolled over to the next policy period. ESIC to enhance benefits for employees New Delhi , Dec. 23 The Employees' State Insurance Corporation (ESIC), which earned the highest revenue ever this year, has decided to enhance its scale of benefits to employees, but at no additional cost to employers. The ESIC will ask the Government to increase expenditure on medical benefits from Rs 900 per insured person family per annum to Rs 1,000. T.Y.B.B.I Contribution by the : Govt. of India Contribution by the : Handloom weaver Total premium Rs.800/- per annum Rs.200/- per annum Rs.1000/- per annum 73
    • The corporation has also decided to increase the exemption limit from paying employees contribution from Rs 50 to Rs 70, thus exempting 5.7-lakh employees from paying their contribution. Benefits Enhancement The organization also wants to increase sickness benefits, disablement benefits and the existing limit for reimbursement of funeral expenses, estimating a total liability of Rs 61 crore from these enhancements of benefits. The announcement was made at the ESIC's annual meeting, chaired by the Minister of State for Labour and Employment, Mr Oscar Fernandes, to approve its annual report. Announcing a revenue income of Rs 2,410.61 crore for the year 2005-2006 in a press release, the ESIC stated that the scheme had been implemented in 10 new centres and 90 new geographical areas, covering additional 1.48-lakh employees this year. The corporation has been able to distribute 31.44 lakh cash benefit payments to the tune of Rs 273.73 crore over the year. Health insurance premium may vary from one location to another Radhika Menon Geography, a key differentiator for pricing products: IRDA Mumbai , March 30 Can the health insurance premium paid by a Mumbai resident be more than that paid by a Chennai resident, on the strength of the geographical location, other things being equal? A report on `Innovations in health insurance policies' T.Y.B.B.I 74
    • by the Insurance Regulatory and Development Authority (IRDA), recently submitted to the Finance Ministry as well as insurance companies, says it can. According to the report, geography would be one of the key differentiator for prices of products since healthcare costs vary in different parts of the country. "The healthcare costs in Chennai, for example, are lesser than the costs incurred in Mumbai. This should be used as a differentiator for prices for products being offered in various parts of the country," said the report. Thus, there could be restrictions in terms of where the treatment can be availed. `Pool' concept The IRDA constituted committee has also strongly recommended the concept of a `pool', which will be maintained by the regulator for covering pre-existing illnesses like congenital ailments and conditions like AIDS. The funding of the pool would be from the contributions of insurance companies, voluntary contributions from corporates, grants from Central and State governments and aid from international bodies such as World Bank and WHO Star Health policy targets Gulf NRIs `With strict control over expenses, it would be possible for Star to make profits on the product'. Chennai , Jan. 12 The country's only standalone health insurance company, Star Health Insurance, has launched a new product that has several unique features. First, it will cover pre-existing diseases. Second, it will provide cover for `parents' regardless of their age. Third, there is no waiting period for commencement of coverage. Fourth, it will pay for doctors' consultation fees too, including out- patient consultation. T.Y.B.B.I 75
    • But where is the catch? Mr V. Jagannathan, Chairman and Managing Director of the company, told Business Line on Friday that to avail himself of the cover, the patient will have to be admitted into one of the "designated hospitals". If the patient goes to other hospitals, Star's liability will be capped at 50 per cent of the final admissible claim, subject to a maximum of 50 per cent of the sum insured. Mr Jagannathan believes there would be a good demand for this product, which is for now open to NRIs in West Asia. Star intends to extend the policy to resident Indians also, but over time. There are 4 million Indians in West Asia, many of whom are concerned over the health (expenses) of their parents, for whom no insurance company would offer coverage. For a sum assured of Rs 1 lakh, the gross premium is Rs 1,751 (including tax). Star charges Rs 438 additionally for including one child and Rs 875 for one more adult. How will it work for Star? Mr Jagannathan says that with strict control over expenses, it would be possible for Star to make profits on the product. ICICI Lombard plans biometric health cards Radhika Menon Launch in Manipal for group insurance policy holders The Features Authorizes transactions based on the customer’s fingerprints treatment at hospitals without having to make advance cash payment Covers head of family, 3 dependents It's now the turn of insurance companies, after banks, to introduce biometric cards in rural and semi-rural areas. ICICI Lombard General Insurance Company plans to offer family biometric cards to group health insurance T.Y.B.B.I 76
    • policyholders. The card will enable policyholders to get hospital treatment without making any advance cash payment. Biometric cards authorise transactions based on the customers' fingerprints. To begin with, ICICI Lombard will launch these cards for health insurance policyholders in Manipal, Karnataka. This family card will cover the head of the family and three other dependants, said Mr Pranav Prashad, Head, Rural and Agriculture business, ICICI Lombard. The insurer plans to introduce these cards to 7,000-10,000 policyholders by month-end. ICICI Lombard has tied up with Financial Information Network & Operations Pvt Ltd (FINO) to create this card. ICICI Bank, the parent company, has a 20 per cent stake in the newly launched FINO- a company that provides financial institutions with technological solutions to reach the underserved in the country. ICICI Lombard's family card will contain a smart chip, which carries biometric information, personal details as well as the photograph of the policyholder and three dependants. Mr Rishi Gupta, CFO, FINO, said the `smart card' would also load the sum insured that the policyholder is entitled to. So, when the customer presents the card at the hospital, the balance in the card can be immediately ascertained. Tie-up with hospitals ICICI Lombard will tie up with neighborhood hospitals so that hand-held machines that read these cards can be installed. Mr Prashad said the card would reduce administrative hassles for the customer and would eventually drive down distribution costs. If the experiment works in Manipal, it may extend this service to other rural health and motor insurance policyholders. ICICI Lombard would have to tie up with garages in the case of motor insurance. T.Y.B.B.I 77
    • In rural areas Collecting biometric information in rural areas is, however, ridden with its own set of problems. "The fingerprints of people in the rural areas are not very clear as they perform intense manual labour. So, we take the impression of all the fingers and choose the best two prints of each hand," he said. The card has the capacity to load as many as 15 applications and FINO is in talks with several other finance providers and government agencies. So, besides cash withdrawal, deposits and insurance premium payments, the urban and rural poor may also use this card at the neighborhood kirana store and the post office. Among banks, ICICI Bank has introduced biometric cards and Citibank has set up biometric ATMs. Several PSU banks are also on the verge of introducing similar technology for micro-finance customers. CONCLUSION The Government of India, in one of its economic survey reports, has proclaimed that human development is the ultimate goal of India's developmental plans. It is also being realized that sound long-term development of social sectors, such as education, and health is crucial to sustain economic growth in an increasingly integrated world economy. The government can intervene in the health insurance market in two ways: by directly providing subsidizing insurance or by regulation. These two forms of intervention do not lead to identical results. Provision of partial public insurance, even supplemented by the possibility of opting out, can lead to second beat equilibrium. Regulation of the private insurance market by imposition of a standard contract or by restricting premium rates, on the other hand, can exacerbate the problem of adverse selection and lead to chronic market instability. T.Y.B.B.I 78
    • There is yet another criticism about the Indian health delivery system: urban bias in the allocation of resources. As of 90-91, 66.96 percent of the resources spent on health care had gone to the urban sector which accounts for 25.7 percent of the total population, while only 33.04 percent of the resources had gone to the rural sector, which accounts for 74.30 percent of the total population. The per capita expenditure on health care of the urban sector was said to be around Rs.152 as against Rs.26 of the rural sector. The Government being the central player in the health care delivery, the system is suffering from financial constraints and inefficiency in allocating whatever resources available. It is slowly being realized that sole reliance on the public health care system is no longer desirable. RECOMMENDATION  STAND-ALONE HEALTH INSURANCE COMPANY Stand-alone health insurance companies in the Public Sector with model performance can encourage the Private Sector to perform accordingly keeping in view the issue of affordability of large sections of the needy population and thus help create a conducive environment for spread of health insurance business.  Universal Health insurance scheme The subsidy was subsequently enhanced in 2004 and the scheme was confined to the BPL segment of the population only, and in spite of it, the scheme failed to make much head way. An exercise to identify BPL families should be initiated immediately and the entire exercise be completed within a T.Y.B.B.I 79
    • specific time-frame and the scheme should also be made applicable to lower middle class and the people who are just above the Poverty Line.  LACK OF COORDINATION The Employee’s State Insurance Schemes, the Central Government Health Scheme and other Commercial Health Insurance schemes are being operated by three different Ministries viz. the Ministry of Labour, Ministry of Health & Family Welfare and Ministry of Finance respectively and there is no coordination amongst the three Ministries. A pilot health insurance scheme involving the Ministry of Health and Family Welfare, Ministry of Finance, IRDA and Public Sector Insurance Companies should be evolved and launched within a specific time-frame.  LACK OF AWARENESS The level of public awareness about the need, availability and benefits of health insurance in the country is still very low despite the fact that public sector general insurance companies have been operating in the field of health insurance for nearly two decades, beginning from 1986. There is need to create awareness about availability and benefits of health insurance schemes especially in rural areas through a multi-pronged strategy involving the public insurance companies, the central Government, the state Governments and the Panchayati Raj Institutions as well as Non-governmental organizations so that more and more people come forward to adopt Health Insurance schemes.  LACK OF PRODUCT VARIETY There is a serious lack of variety of health insurance products in terms of flexibility to cater to the specific needs of different segments of the population. T.Y.B.B.I 80
    • There is an imperative need to introduce long term health insurance products, covering out-patient care, maternity care, pre-existing diseases, suitable products for the aged, abandoned women, widows, physically and mentally challenged, children and the rural poor.  LACK OF ADEQUATE HEALTH INFRASTRUCTURE The two factors that discourage a majority of potential customers from buying health insurance cover are (i) Lack of adequate health care infrastructure, especially in rural areas where 75% of the country’s population lives, and (ii) The consequent inaccessibility to health care for a majority of the population It feels that strengthening of the existing infrastructure for providing health care to the rural masses is of paramount importance. The Governments of all States and Union Territories may be requested to allot land for development of health infrastructure in rural areas at concessional rates to private bodies/Self- help Groups/cooperatives etc. Soft loans from Life Insurance Corporation of India, Banks and other financial institutions should be made available to these bodies for creation of rural health infrastructure.  CLAIMS MANAGEMENT & THIRD PARTY ADMINISTRATOR SYSTEM Third Party Administrators in the Country have been following unethical practices in collusion with health service providers and insurance companies in settlement of claims. They also lack the competence and necessary infrastructure to fulfill the role and functions expected of them. They also note that complaints relating to claim settlements have increased considerably after the introduction of the TPA System and the increase in cost of premium as also claim costs. a sub-committee of IRDA’s Internal Working Group on Health T.Y.B.B.I 81
    • Insurance has, inter-alia, recommended that the insurance companies should take certain concrete steps to provide clear guidelines to enable TPAs to effectively manage and settle claims.  LACK OF PROFITABILITY The most health insurance schemes offered by public sector insurance companies are loss-making primarily due to their inability to insure the younger people who are relatively free from major diseases. Besides this, the absence of proper re-insurance facility for health insurance is also adversely affecting the confidence of insurance companies to underwrite health covers on a large scale. the Government and the regulator, after due consultation, prescribe viable targets of health coverage to the insurance companies, both in the public and private sector, and introduce incentives linked to their performance in fulfilling those targets.  POVERTY AND NEED FOR SUBSIDY The premium of health insurance schemes is beyond the economic capacity of people living below the poverty line as well as for a large section of the population living just above the poverty line. The only way to ensure health insurance cover for the poor is through subsidy to be provided by the Government to make the premium affordable for the poor. The only subsidized scheme at present is the Universal Health Insurance Scheme launched in 2003 and it has been confined exclusively to the BPL segments in 2004 with enhanced subsidy. A system of differential subsidy for the poor and the BPL segments may be introduced across the board for health insurance schemes and service tax for providing health insurance may be abolished to increase its affordability. T.Y.B.B.I 82
    •  LACK OF DATA The lack of adequate data on morbidity, demographic groups and diseases etc., is a major hindrance in formulating and designing new products in health insurance and thus affect the development and progress of health insurance in the country. A road map should be drawn for establishing a data repository and should be evaluated and examined for expeditious implementation.  POLICY RELATED REFORM INITIATIVES: 1. Decide on regulator for the health care and its financing 2. Private the infrastructure. The government has pumped in billions of rupees into the infrastructure, which is resultantly very ineffective and non- performing 3. Allow the financing agencies and insurance companies to dictate the performance of health facilities and the constituents.  MARKET AND PRACTICE REFORM INITIATIVES: 1. Permit entry of new players and managed healthcare organizations into the health insurance market and introduce risk based capital norms for these entities 2. Introduce rating and credentialing of the providers to encourage standardization of services from various providers. 3. Creation of standards for diseases and treatment procedures to develop a common understanding and database as well as to introduce cost containment measures 4. Creation of an information bank on insurance, diseases, and treatment involving creation of a centralized data warehouse besides the enforcement of standardized billing, claims forms and proposal forms. T.Y.B.B.I 83
    • 5. Portability across players and schemes especially with respect to the pre- existing diseases condition 6. Encourage community initiatives in healthcare financing to complement formal social security schemes that cover regularly employed or self employed, especially in the rural communities. Appropriate Regulation 1. Permit entry of new players and managed healthcare organizations into the health insurance market by reducing minimum capital norms, adopting solvency margins and reinsurance requirements appropriate to this class of business. 2. Consolidation and improvement in cost effectiveness including withdrawal of public subsidies and reform of the ESIS and CGHS schemes. 3. Regulation of private healthcare including creation and enforcement of licensing procedures, and standardization of fees structure T.Y.B.B.I 84
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