1
“ It is not pieces of gold &
silver but health that is the
real wealth ”
Mahatma Gandhi
2
Economic growth is an indicator of a country’s well being
and development
• Empirical evidence suggests that a significant portion of
economic growth is contributed by human capital – the
elements of which are level of education and health of the
people
3
Health Scenario in India
• India with a population of 1.2 billion possesses around 16.6% of the global
population and 20% of the global disease burden.
• Health care expenditure in India is around 5% of GDPI as compared to
8.4%in UK, 7.5% IN Brazil In USA and Japan the Govt.spending on Health is
around 80%. MORE THAN 70% OF HEALTHCARE EXPENDITURE IN INDIA
TODAY IS MET OUT OF INDIVIDUALS’ POCKETS.
• Given the implication that a healthy and productive population has on
economic development, there is need to step up health care funding
mechanism
4
History of Health Insurance
• Medical Insurance was first offered in the United States in
1850 and insured injuries arising from railroad and
steamboat accidents.
• In India the formal health insurance started with the ESIS
(Employees State Insurance Scheme) under the ESIS Act
1948 and with the CGHS (Central Govt Health Scheme)
1954.
• In 1981, a limited cover was devised for individuals and
families. This was structured formally in 1986 when 4
subsidiaries of GIC launched the Mediclaim policy (HDH)
both for individuals and Groups
5
Milestones for Mediclaim since 1986 :
Changes introduced from 1991
• Removal of Sub limits
• Introduction of Family Floater Concept
• Critical Ilness Cover
• Tailormade Policies for Corporates
• Hike in Premium and Sum Insured
6
The next phase ( 2000 – 2005 )
 Opening up of the Insurance Sector
 Introduction of TPAS
 Govt Health Insurance Schemes
7
Latest Trends - 2005 onwards
A)
PRODUCT MODIFICATION :
-
Three products for different age groups
Family Package Cover
Pre-existing Disease Cover
Disease Specific Policy
Senior Citizens Policy
B) CO-BRANDED PRODUCTS WITH BANKS
8
Latest Trends - 2005 onwards
C)
Stand Alone HEALTH INSURANCE COS.
D) Life Insurance Companies providing Health Cover
E) Govt Schemes :
•
•
•
•
•
-
Weavers & Artisans Cover
Universal Health Ins. Cover
Rajiv Aarogyashri – AP Govt.
Yeshasvini Scheme – Farmers in Karnataka
Rashtriya Swasthya Bima Yojona ( RSBY)
9
Tax Benefits : As it stands today
• Under Section 80D, Premium upto Rs 15,000 paid for Self + spouse +
dependent children qualifies for Tax Benefit. (This amount is likely to be
increased to Rs 50,000 through DTC in 2012.)
• Additional premium paid upto Rs 15,000/= for parents’ health insurance
also qualifies and in case of Sr Citizens parents, premium paid upto Rs
20,000 qualifies for tax deduction.
• As per Section 80 DD a fixed total of Rs 50,000 qualifies as deduction
irrespective of amount incurred towards expenditure / investment for
medical treatment of handicapped dependent and in case of severe
disability this is increased to Rs 75,000
• As per Section 80 DDB, deduction of upto Rs 40,000 ( For Sr citizens Rs
60,000/) is allowed for medical treatment of specified diseases certified
by Govt hospitals.
10
Health Insurance Claims settlement process:
• Cashless :
For availing cashless treatment (only at authorized network hospitals), the TPA
has to be notified in advance (for planned hospitalization) or within the
stipulated time limits (for emergencies). The claim amount needs to be
approved by the TPA, and the hospital settles the amount with the TPA/
Insurer. Typically there will be exclusions and such amount will have to be
settled directly at the hospital.
• Reimbursement :
Reimbursement facility can be availed at both the network and non-network
hospitals. Here the insured avails the treatment and settles the hospital
bills directly at the hospital
• Self administered portfolio :
Insured may opt to purchase Health Insurance policy without TPA in which
case the settlement would be on reimbursement basis by the insuring
Office concerned.
11
Role of Third Party Administrator (TPA)
• TPAs licensed by IRDA are the intermediary between Insured and
Insurance Company and responsible for providing value added services to
policy holders including all aspects of claim arising out of health insurance
policies.
• The work of the TPA starts once the Policy is issued.
• TPAs have helped insurance companies provide better service to their
policyholders through their efficiency in claim settlement .
• There are at present 29 IRDA registered TPAs
•
12
Functions of Third Party Administrator (TPA)
1) TPA issues ID cards to all their policyholders in order to validate their identity at
the time of Claim.
2) In case of a claim, policyholder will have to inform TPA on their 24 hr toll free
line . In case of a network hospital the TPA issues authorization letter to the
hospital for admission of policyholder and also pays for treatment. At the time of
discharge all the bills are sent to TPA for processing the claim.
In case of Emergency hospitalization in a hospital outside the network, cashless
facility cannot be extended and claim is reimbursed after submission of
documents .
3) After making the payment to the hospital, the TPA sends all necessary
documents of claims to insurance company and the Insurance company then
reimburses TPA.
•
•
•
•
.
13
The Preferred Provider Network (PPN)
The Preferred Provider Network (PPN) of hospitals is an initiative of the 4
Public Sector General Insurance Companies (PSGICs) taken in July 2010 to
introduce
• Discipline on the pricing of hospital services charges;
• Pre-negotiated rates for medical procedures and
• overall standardisation of hospital facilities.
The Agreement is entered into with Hospitals which are then listed under the
PPN Network. Presently the PPN Facility operates in Delhi, Mumbai,
Chennai and Bangalore and will be extended to four more cities, viz.
Hyderabad, Kolkata, Ahmedabad and Chandigarh from 1 July 2011.
•
• .
•
14
Insurer
Regulator
Health Insurance Council
Health
Insurance
TPA
Health Care
Provider
Hospitals
Doctors
Diagnostics
Insured
Employer
Employee
Government
Scheme
Individual
Families
15
Financing Health care:
In India healthcare is financed through a combination of sources like :-
1)
2)
3)
4)
5)
Household and Individual out of pocket payments
Central & State Government tax revenue
Mandatory Social & Voluntary Health Insurance like ESI, CGHS,
Micro Insurance
Other Employees / Mutual Schemes not using public or private Insurance
companies
16
Necessity of Health Insurance: Life style diseases
 Every one needs medical care. Of all the risks facing a household, health risk
probably poses the greatest threat to lives & livelihoods.
 Sedentary life style, hectic schedules, long working hours and eating habits
are leading to silent diseases and causing rise in number of people suffering
from obesity, diabetes and cardiovascular diseases.
 As per Government of India Report 2006, the morbidity rate for males is
8.3% (Rural) and 9.1% (Urban) and for females 9.3% (Rural) and 10.8%
(Urban).
 2.5 million hospitalization in 2005 due to road accident. Projected 3 million
by 2010 and 3.5 million by 2015 – National Medical Journal 2008
17
Necessity of Health Insurance: Mediflation
 High escalation in medical costs due to advancement & high tech
intervention in health, diagnostic & therapeutic procedures, prescription
drugs leading to Mediflation.
 The explosion of knowledge in genetic engineering & Bio technology, Nanotechnology, Medical Informatics & Gene therapy will further escalate health
care costs beyond the reach of most people in future.
 Medical Tourism :As more and more patients from Europe, the US and
other affluent nations with high medicare costs look for effective options, a
blend of top-class medical expertise at attractive prices is helping a growing
number of Indian corporate hospitals lure foreign patients. Costs would
escalate for the Indian insured.
18
Necessity of Health Insurance: Mediflation
• Expenses towards medical expenses is the second highest cause
of rural indebtedness after agriculture. Major portion of the
country’s poor (over 45%) had to borrow / sell assets to meet
costs of care.
• This huge out of pocket expenditure does not pass through any
pooling mechanism and thus needs to be channeled through
Health Insurance.
19
Health Insurance Figures
According to figures upto Feb 2011, the total health insurance premiums
written by non-life companies and standalone health insurance
companies grew by 22.95 %.
The health insurance market continues to be dominated by the four
state-owned general insurers, which together accounted for almost
58.39 per cent of the premiums.
March 11 figures reveal that National Insurance Company, led the Health
Portfolio pie with 1492 crores registering a sharp Growth of 46.47 % cent
this fiscal with an exceptional Accretion of 473 crores.
ICICI Lombard, Bajaj Allianz General and HDFC ERGO are the top players
amongst private non life insurers.
20
Rashtriya Bima Yojana Policy Health Insurance for the Poor
•RSBY has been launched by Ministry of Labour and Employment, Govt of India to
provide health insurance coverage for Below Poverty Line (BPL) families.
•RSBY started rolling from 1st April 2008.
•The objective of RSBY is to provide protection to BPL households from financial
liabilities arising out of health shocks that involve hospitalization.
•Beneficiaries under RSBY are entitled to hospitalization coverage up to Rs.
30,000/- for most of the diseases that require hospitalization. Government has
even fixed the package rates for the hospitals for a large number of interventions.
•Pre-existing conditions are covered from day one and there is no age limit.
Coverage extends to five members of the family which includes the head of
household, spouse and up to three dependents.
•Beneficiaries need to pay only Rs. 30/- as registration fee while Central and State
Government pays the premium to the insurer selected by the State Government on
the basis of a competitive bidding.
21
Unique Features of RSBY
• Empowering the Beneficiary :
Freedom of choice to BPL Policy holder to choose hospitals and be treated as a
significant provider of revenue
• Business
Model
for
all
Stakeholders
:
Insurers/Hospitals/
Intermediaries/Govt.: Incentives have been built for all stakeholders .
Conducive both in terms of expansion of the scheme as well as for its
sustainability.
• IT intensive :
Every beneficiary family is issued a biometric enabled smart card containing
their photographs and fingerprints. All hospitals empanelled under RSBY are
IT Enabled and connected to the server at the district level.
22
Unique Features of RSBY
• Safe and Foolproof
The use of the biometric cared and a key management system makes this
scheme safe and foolproof.
• Portability
A beneficiary will be able to use his/her smart card in any RSBY empanelled
hospital across India. This is of great help to migrant workers
• Cashless and Paperless transaction
No payment is to be made by the beneficiary and participating providers may
send online claims to the insurer and get paid electronically.
• Robust Monitoring and Evaluation:
An elaborate data management system is being put in place which can track
any transaction across India and provide periodic analytical reports . This
should allow for mid course improvements in the Scheme.
23
Financing for RSBY
• The majority of the financing, about 75 percent, is provided by the
Government of India (GOI), while the remainder is paid by the respective
state government. Government of India’s contribution is 90 percent in case
of North-eastern states and Jammu and Kashmir and respective state
Governments need to pay only 10% of the premium.
• Beneficiaries need to pay only Rs. 30 as the registration fee. This amount
shall be used for incurring administrative expenses under the scheme.
24
RSBY Facts
• More than 376 districts in 29 states in India are covered under this scheme
• There are 8096 private and public hospitals empanelled as Health Care
Providers
• As of April 2011 the number of Active smart cards issued is
2,33,46,929 .
• National Insurance, Oriental Insurance and United India Insurance are the 3
major non life insurance players with ICICI leading the private non life
insurer group.
25
Rising Claims Ratio :
• RSBY, has been witnessing an increase in its Claim ratio.
• Several states have reportedly exceeded 100 percent mark, a pointer to be
concerned with future premium rate setting. The number of Hospitalisation
cases reported as on April 11 is 16,82,391
•
rate of hospitals is extremely low.
26
Health Insurance : Future
Initiatives for Holistic Health care
• Portability of Mediclaim in India w.e.f. 1st July 2011.
This is to ensure that a customer continues to enjoy benefits under the Health
Policy even if he wishes to change his insurance provider.
• Traditional Healthcare practices to be brought under Mediclaim fold.
A panel has been set up by the General Insurance council to examine the
merits of reccognizing Ayurveda, Unani, Siddha and Homeopathy
forms of Healthcare. These alternative practices though recognised
by GOI have yet to be brought under the Mediclaim list.
• Clinical Establishment Registration and Regulation Act
This law passed last year aims to regulate standards at private hospitals
and check overcharging, unnecessary tests, negligence and other
malpractices. Since health is a state subject the State Assemblies
need to pass a resolution before the central law can apply in that
State
27
Health Insurance : Future
IRDA Initiatives
IRDA is working on a set of comprehensive health insurance guidelines
which would cover :
• Standard Treatment Guidelines (‘STGs’) for common causes of
hospitalisation like diarrhoea, asthma, cataract surgery and typhoid. FICCI has
recommended 22 STGs to the regulator.
• A list of items as part of common exclusions under non-medical expenses
may include costs for diabetic chart, external durable devices like walking aids
and cervical collar, eye kits and X-ray films.
• Standard definitions of 11 critical illnesses such as cancer, first heart attack,
open heart replacement and major organ/bone marrow transplant. Insurers
would be required to cover these under their critical illness plans.
• A common form for claim settlement including claim settlement protocol.
28
Health Insurance : Future
IRDA Initiatives
Health Insurance Councils :
• IRDA is working on setting up of Health Councils through provision of
Section 14(f) of the IRDA Act.
• This proposed common health body is envisaged to help in ensuring
harmonized growth of business and also in reducing differences arising
between stakeholders like TPAs , Insurers, Hospitals and the public.
• In addition to other functions, the council will also set up mechanisms to
enforce strict vigilance on attempts to defraud the insurance system
and take effective and concrete action thereupon.
29
Health Insurance : Future
Govt. Initiatives
• The National Aids Control Organisation (NACO) has pressed for inclusive
and universal healthcare for people living with HIV+. The Karnataka
government has launched a health insurance scheme to benefit about 12,000
HIV-positive children in collaboration with Star Health.
• The Government is actively considering the scope for a public-funded
health insurance scheme covering all citizens as part of the 12th Five
Year Plan, with premium rates linked to the beneficiary’s income levels. The
ambitious scheme is planned to cover both hospitalisation expenses and
treatment expenses at listed hospitals.
30
Health Insurance : Future
Govt. Initiatives
• The Employees' State Insurance Corporation (ESIC), which provides
health insurance to all workers whose monthly gross pay is up to
Rs15,000, is gearing to improve its services.
• All the beneficiaries will soon be issued a smart card to avail treatment
at any ESI hospital or affiliated healthcare provider across the country.
• The initiative, spearheaded with the help of the software company,
Wipro, is to inter connect the 2,200 ESI institutions across the country
and launch an online portal.
31
Health Insurance : Future
Corporate Health Care Plans
Preventive Health Care : Wellness initiatives.
• The goal of these programmes is to make the workplace environment
healthier, to improve the health of individual employees , to reduce
healthcare costs and increase employee value. As part of the
healthcare policy, organizations offer various benefits including
Health insurances, mental health counselling , physical health camps,
wellness camps etc
Corporate Health Check Ups :
• Earlier confined only to MNc or those industries with Health hazards
such as paints, pesticides or manufacturing companies, today there is
an increase in Corporate sponsored Health testing. Some employers
make this annual check up compulsory for all above 40 as commonly
hypertension, diabetes and deranged lipid profiles have begun to be
diagnosed
32
Health Insurance : Future
Scope for Employment in Health Care related Industry
Considering that only 10% of the India population of more than
1 billion is insured under Health policies, the arena of Healthcare
offers a large universe for employment
•Specialisation in subjects like Hospital Administration, Risk Management,
Actuarial Sciences will be the need of the day .
•Insurance Companies, Health Specialists, Health Tourism centres, TPAs ,
Hospitals will be the potential employers.
33
Mediclaim : its shortcomings
• Mediclaim, the traditional health insurance product accounting for
more than 80% of total health insurance market in India, is short-term
in nature and covers only inpatient costs. More than 70% of the total
health spend ( Rs.1700 crores – WHO-2007 estimates) is for outpatient
cost and there are very few, products to cover these costs in India
today.
• Further, Mediclaim falls under the category of ‘protection’ products
where there is no payment from the insurer if no claim is made. Many
Indian people see less value in protection products like Mediclaim as
compared to savings products like endowment policies.
• There is need for long term health products to enable customers to
provide for their health and long-term care costs, particularly after
retirement
34
Health Insurance : Way Forward
• Global experience both in highly industrialised countries as
well as in low and middle income economies clearly
demonstrate the importance of achieving universal coverage
through either a purely tax based regime or social health
mechanism or both.
• Medical savings accounts or Health Savings Accounts : Much like
Pension Funds, Health Savings accounts have been successful
adapted in Singapore, USA, China and South Africa where the Govt .
Extends tax concessions for savings on this account.
35
Health Insurance : Way Forward ?
•
•
•
•
•
• Health Savings Account Issues and applicability
An HSA is a tax exempt savings account similar to an Individual pension
account but earmarked for medical expenses.
Deposits in the account are tax exempt and can be easily withdrawn to
pay for routine medical bills.
HSA works in conjunction with a special High deductible health
insurance policy resulting in the provision of comprehensive health
insurance coverage at the lowest possible net cost
Health Savings Account, enables an insured to save his money, which
he may use to meet the expenses when he falls sick .
USA, China, Singapore and South Africa have adopted the HSA model
for their citizens .
36
Utilization of funds in an HSA
The balance in health savings accounts may only be used to pay
medical expenses at any time during the account holders’ lifetime such as :
• Medicines and drugs
• Diagnostic expenses
• Dental expenses
• Co-pays or deductibles as part of the medical insurance cover
• Other miscellaneous medical expenses not covered under
medical insurance like medical cost for pre-existing diseases,
maternity related expenses.
• Specialist consultations fees
• Long-term care expenses
37
HSA – The Indian Context
• ‘Bhavishya Arogya’ was the first HSA type product introduced in the
Indian market in 1990. The coverage under the policy was similar to Mediclaim,
i.e. hospitalisation benefits, but with the difference that the utilisation of benefits
was deferred up to the retirement age ( vesting age) between 55 and 60 years.
• Introduction of HAS in the Indian market will help deepen health
insurance penetration.
• HSAs with ensuing tax benefits are likely to encourage people to start saving
early for their old age health expenses since they would have an incentive to
accumulate HSA balances. An early entry into the health insurance system
would help address the systemic and contentious issue of pre-existing
condition exclusions.
•
38
HSA – The Indian Context
• Rationalizing and reducing healthcare expenses :
With HSA providing greater discretion to individuals on their total healthcare
spending, it is expected that patients would seek greater transparency and
efficiency in the medical services accorded to them by healthcare
providers eventually rationalizing and reducing healthcare expenses.
• HSAs would provide greater emphasis to the insurance industry towards
reviewing the need for providing high risk, catastrophic policies which will
encourage individuals to self-insure for routine medical care. The
corresponding reduction in premium costs would allow more individuals,
households and employers to purchase health insurance, thus deepening health
insurance penetration.
39
HSA – The Indian Context
• Learning from the Singapore and China model of HSA suggests that
controlling healthcare demand should be achieved simultaneously with
Government initiatives to implement health sector reforms.
The reforms should include :
• development of standard treatment guidelines (STGs),
• accreditation of different layers of healthcare providers,
• adoption of DRG (Diagnosis Related Group) and ICD (International
Classification of Diseases) coding and quite importantly,
• the revival of the Indian Medical Council of its original charter for enforcing
ethics and professionalism in the medical profession.
40
Challenges which hinder Growth of
Health care services in India :
• Low awareness of health insurance
• Affordability
• Lack of standardization of healthcare providers and Proper data for
informed decisions
• Limited understanding of the features of policy.
• Consumers skeptical about tedious claim administration.
• High loss ratio of health insurance particularly group
41
Ushering in Change
 Increasing consumer awareness
 Standardization and accredition of health care providers
 Enhancement of health care infrastructure
 Building of Health Insurance repository
42
Enablers of growth
 Technology
 Innovation around products
 Pricing & Channels of Distribution
 Positive contribution of the Key stakeholders - Govt., IRDA, Insurers,
Healthcare Providers, Distribution channels, Health Centers, Media.
43
IN CONCLUSION
India has a great opportunity to spearhead a viable and
competitive health insurance sector and encourage the
development of a sound high quality health delivery
system .
What is required is a good understanding of the actuarial
and other risks in the business , a long term vision for
those entering it, simple product design , supportive
regulation and sustained customer education.
44
An Arab proverb says
“ He who has health has hope. And he who
has hope, has every thing”
We say
“ He who has a Health policy has hope. And he
who has hope has every thing”
45
THANK YOU
46