Achieving ‘Health for all’ by Widening the Net with Innovative Products
ACHIEVING ‘HEALTH FOR ALL’ BY WIDENING
THE NET WITH INNOVATIVE PRODUCTS AND BETTER
RISK MANAGEMENT - HEALTH INSURANCE
Murali R. K. Iyer
Research Associate,
National Insurance Academy, Pune
Introduction - Healthcare scenario in India
The World Health Organization or the WHO defines health as the complete physical, mental,
social, and spiritual well being of a person and not merely the absence of disease. India’s
population is now 1.15 billion approximately and accounts for nearly 17% of the world’s
population. India is a developing country, which is witnessing an epidemiological transition
with a huge burden of communicable, non-communicable diseases, and chronic diseases,
which partly is because of its geographical location to the tropics. The latest trend is that we
are seeing many lifestyle diseases on the rise and this is indeed an issue of great concern.
Diabetes alone accounts for 32 million (not surprisingly India is known as the Diabetic
capital of the world) not to talk of the increasing incidences of CVD (latest estimates reveal
that by 2010, India will account for 60% of the world’s cardiac patient population) and the
consumption of Tobacco resulting in Cancer, etc. and if this trend continues – the consequences
would be all, but healthy. 40 % of the health problems are induced by ‘Tobacco’. Another
giant killer is looming large on the subcontinent in the form of HIV and we are just behind
Africa in this regard. As if these weren’t enough, we have the highest number of blind
people in the world with an estimated 9 million, with 270,000 among them being children
and an estimated 20-lakh new cases of cataract are reported every year. There is obviously
an urgent need to address all these health related issues. In the words of the father of our
nation Mahatma Gandhi “ It is the health that is real wealth and not pieces of gold and
silver”.
As illustrated in Fig.1, ‘Health’ is not mainly an issue of doctors, social services, Hospitals,
and Insurance; it is an issue of social justice. It is felt that ‘Preventive Healthcare’, creation
of health awareness amongst the population, designing innovative health insurance products
for the masses will help to provide the much needed boost for financing these initiatives.
The first revolution witnessed in our country was the ‘Green Revolution’ along with the
‘White Revolution’ where food & milk deficit was converted to surplus. We saw the second
revolution in the form of ‘Telecom Revolution’ where affordable communication has reached
the common man and linked the remotest corners of our country. As an Industry the Healthcare
sector is a large employment generator with almost a $ 3 trillion turnover if the ‘Third
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Achieving ‘Health for all’ by Widening the Net with Innovative Products
Revolution’ could be billed as the ‘Health Revolution’ then we will really be able to march
towards the status of a ‘Global Superpower’ in the years to come. This paper evaluates the
emerging and very crucial role of Insurers who will facilitate health service providers by
narrowing the existing gaps in health care service delivery by bringing in innovative products,
and widen the net by increasing the percentage of those covered under health insurance.
Fig. 1
URBAN – RURAL HEALTH SCENARIO – INDICATORS
The turn of the millennium witnessed a significant change with the age of the population
progressing on the higher side. The urban population has access to better medical facilities
as compared to the rural areas. 74% of the rural population of our country has access to only
25% of the medical facilities. But on the flip side it was observed that over the last 2-3
decades, the percentage of the urban population opting for treatment in Government Hospitals
dropped from 69% to 39%. Only 45% to 50 % of our children are immunized and most of
the rural areas still do not have access to basic medical facilities such as immunization,
antenatal check-ups for pregnant women etc. However the silver lining is that we have been
able to eradicate small pox and we have succeeded in eliminating leprosy & polio and hope
to eradicate these diseases by the turn of this decade.
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Health is a crucial factor in developing the Human Development Index of a country.
Productivity and economic growth of a nation depends on the health of its people. Health is
a major social investment and has a world wide social goal. Development Indicators of
some selected developing countries are shown in Table 1. On analysis it can be observed that
wherever the thrust on public expenditure on Health and Education, is more the results are
evident in the form of higher life expectancy, healthy population, lower IMR & MMR. The
gap between available healthcare and its affordability is also widening. Another estimate
states that our country will have to add 80,000 beds annually to meet the demands of the
growing population. India requires doing an estimated 25-lakh surgeries in a year but it is
able to do only 65,000. The Health Care Industry is a service industry highly people intensive
– for a turnover of Rs. 1 Crore it is estimated that there is need to employ 250 people. Amidst
this depressing scenario exists tremendous opportunity with the health insurance sector poised
to touch the Rs. 25,000 Cr. mark by the turn of this decade and if the right kind of products
are offered, the figure would treble by 2025 A.D. It is also observed that the failure to look
beyond military security to human security is reflective of the under investments in the form
of spending on HIV/AIDS a disease that claims 3 million lives a year and represents three
day’s worth of military spending. Another observation in our country is the gender
disadvantage, which starts right from birth. The death rate for children between the ages 15 is 50% higher for girls than for boys.
Human Development Indicators in Some Selected Developing Countries
TABLE 1
COUNTRY
MALAYSIA BRAZIL
CHINA
SRI
INDIA
LANKA
Total Population (000), 2003
24,425
178,470
1,311,709
19,065
1,065,462
Annual Growth Rate (%),
1993 - 2003
2.4
1.4
0.9
0.9
1.7
HDI rank
61
63
85
93
127
Life expectancy
at birth
73.1
70.3
71.5
73.9
63.1
Maternal Mortality
(per 100,000 live births)
41
260
56
92
540
Infant mortality
(per 1000 live births)
8
30
13
63
33
Conti.....
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COUNTRY
MALAYSIA BRAZIL
CHINA
SRI
INDIA
LANKA
Under-five mortality rate
(per 1000 live births)
7
35
37
15
Population with
access to affordable
drugs
50-79%
0-49%
80-94%
95-100% 0-49%
Public expenditure in Education 8.1
(%of GDP)
4.2
2.3
2.7
4.1
Public expenditure on Health
(%of GDP)
3.6
2
1.8
1.3
Total expenditure on health as % 3.8
of GDP
7.9
5.8
3.7
6.1
53.8
General govt. expenditure on
health as % of total expenditure
on health
45.9
33.7
48.7
21.3
Private expenditure on health as 46.2
total expenditure on health
54.2
66.3
51.3
78.7
10.1
10
6
4.4
64.2
96.3
51.3
78.7
90.9%
90.4%
61%
General govt. expenditure on
health as % of total govt.
expenditure
2
6.9
Out-of-pocket expenditure as % 46.2
of private expenditure on health
Adult Literacy rate
88.7%
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88.4%
87
Achieving ‘Health for all’ by Widening the Net with Innovative Products
Financing healthcare in India (2003)
Public sector
Of which social insurance
Private sector
Of which social insurance
Private insurance
Out-of-pocket
Total
Estimated users
in millions
250@
55
780@
30
11
739
1,030
TABLE 2
Expenditure
(Rs in billions)
252 (17)*
30 (2)
1,250 (83)**
24 (1.6)
11.5 (0.8)
1,214.5 (80)
1,552 (100)
@ Estimates based on National Sample Survey 52nd Round, and Labour Year Book
* Finance accounts of central and state governments, and Labour Year Book
** Private final consumption expenditure from national accounts statistics figures in parentheses
are percentages
Source: The out-of-pocket burden of healthcare, Ravi Duggal (www.infochangeindia.org)
Mediclaim Individual
2%
15%
1%
Out of pocket
2%
Private Social
Insurance
Public Financing
80%
Public Social Insurance
Fig 2 - HEALTHCARE FINANCING IN INDIA
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Studies point out that the primary cause of rural indebtedness is Agriculture, followed by
expenses incurred towards medical treatment. A study of slum populations in Delhi and
Chennai indicates the strategies used by the poor to meet health bills as shown in Fig 3 & 4.
The poor utilize services fully when they are efficient and involve no or minimum out-ofpocket expenditure, is illustrated by immunization, (93 %), antenatal care (74 %), inpatient
bed days (66 %, and the percentage of delivery-related inpatient bed days (63 %). Utilization
of public and private hospitals for trauma care is a gray area: the intensive care unit costs
more than an average of Rs. 2,000/- per day. Studies reveal that a major portion of the
country’s poor (over 45%) had to borrow/sell assets to meet increasing costs of care. Clearly
the capacity for resource mobilization largely determines the source, frequency, and nature
of health-seeking behavior among the poor.
Recent studies show that healthcare demand in India is growing and now accounts for nearly
5.1% of the GDP. It is expected to grow by 13-15% annually. Private healthcare expenditure
accounts for 4.2% of the GDP as compared to public healthcare, which is 0.9 %. The per
capita health expenditure was approximately $ 80 in 2004. Estimates point that out of this,
15% is publicly financed, 4% is from social insurance, 1-2% from health insurance products, while the remaining 80% account for out of pocket expenses as illustrated in Fig. 2
shown in & (TABLE 2).
Source of Funds for Hospitalization
A Own
resources
12%
B Liquidating
assets
5%
44%
32%
7%
C Loan from
friends
D Loan from
moneylenders
E Others
Fig. 3 - Sources of Funds for Hospitalization
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Source of Funds for OP Treatment
5%
2% 3%
A Own resources
B Loan from friends
C Loan from moneylenders
90%
D Others
Fig 4 - Sources of Funds for OP Treatment
Health insurance in India
Mediclaim policy launched by the PSU non-life insurers in 1986 is still the most widely sold
health insurance product in the Indian market. Liberalization of the Insurance sector in 2000
AD transformed the Indian Insurance market. This has bought in a lot of innovation in the
health insurance products. The introduction of TPA’s in 2001 further simplified the service
delivery procedure with cashless transaction being brought in 2003. It is estimated that health
care expenditure as a percentage of the household income will increase from the present 2%
to 6% with Employers driving the demand for special tailor made covers under the Group
Mediclaim policies and the rest being the individuals going in for Mediclaim and similar
health insurance products available in the market. Reports say that less than 2% of the
population is covered by some form of insurance or the other. As illustrated in Fig. 5, 72% of
India’s population lives in rural areas and 28% live in urban areas. More than 60% of the
urban population is insured. The rural population is highly unpenetrated as yet. This is
because of the lack of awareness and the ability to afford the health insurance products on
offer. This is where the real opportunity and challenge lies. Insurers need to innovate, come
up with low priced covers for the rural market and address demand in this segment.
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Urban
28%
Rural
Urban
Rural
72%
Fig. 5 - Population in India 2001
BURDEN OF DISEASE (BOD), 1998
The distribution of the BOD in 1998 between communicable and non-communicable diseases
in India, China, high-income, low-income and middle-income countries is diagrammatically
shown. The communicable diseases account for 50.3 % of the burden as compared to 18.1%
in China, and 43.8 % in low and middle-income countries. The BOD estimates of some
states like UP & Bihar is almost at the same level as the epidemiological transition in SubSaharan Africa.
SLIDE (CHINA)
SLIDE (INDIA)
17%
18%
18%
50%
INJURIES
INJURIES
NON COM M UNICABLE
NON COMMUNICABLE
COM M UNICABLE
COMMUNICABLE
33%
64%
Fig 6 - Burden of Diseases by Cause 1998
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HIGH - INCOM E ECONOM IES
SLIDE (CHINA)
18%
18%
7%
12%
INJURIES
INJURIES
NON COMMUNICABLE
NON COMMUNICABLE
COMMUNICABLE
COMMUNICABLE
81%
64%
WORLD
16%
41%
INJURIES
NON COMMUNICABLE
COMMUNICABLE
43%
Fig 7 - BURDEN OF DISEASE PROJECTIONS FOR 2020
A comparison of the distribution of communicable and non-communicable diseases and
injuries of India to that China, established market economies, and the world as a whole, the
BOD projections for 2020 indicate the persistence of a relatively larger burden of communicable diseases, despite a major shift in the epidemiological profile. Inevitably the proportion
of communicable to non-communicable diseases is expected to be almost reverse between
1998 and 2020, with the former dropping from 50.3% to 24.4%, and the latter rising from
33% to 56.5%. China is expected to have a communicable disease burden of just 4.3% in
2020, not only less than the 7% estimate for industrialized nations in 1998, but also lower
than their 5% projection for 2020.
The Burden of Diabetes in India 2004, Burden of Cardio Vascular Diseases in India 2005,
Prevalence of Hypertension in India with the Percentage of Risk attributable due to Hypertension, and Projected prevalence of Obesity, India with projected prevalence of Obesity in
Men and Women are indicated below in Fig. 8.
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B u r d e n o f D ia b e t e s in I n d ia ( 2 0 0 4 )
S o u r c e : w w w .w h o in d ia .o r g
B u r d e n o f C a r d io v a s c u la r D is e a s e
C AR D IO V AS C U L AR D E AT H S 2 0 1 0 ( p r o je c t e d )
W o rld
40%
In d ia
60%
S o urce : W O R L D H E A L T H O R G A N ISA T IO N , 20 0 5
P r e v a le n c e o f H y p e r t e n s io n in I n d ia
H yp e r t e n s io n p r e v a le n c e ( L a s t 5 0 Y e a r s )
30%
25%
P e rc e n ta
25%
20%
15%
15%
10%
5%
0%
U rb a n
R u ra l
P o p u l a ti o n
S o u r c e : w w w . h e a lt h in it ia t iv e . o r g
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P e r c e n ta g e r is k a t tr ib u ta b le d u e to
h y p e r t e n s io n
S o u r c e : w w w .w h o in d ia .o r g
Projected prevalence of
Obesity, India
M e n 2005
Not ov erw eight
Ov erw eight
22%
Men 2015
Not overw eight
Overw eight
31%
69%
78%
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Projected prevalence of
Obesity, India
Women 2005
Women 2015
Not overweight
Not overweight
Overweight
21%
Overweight
29%
79%
71%
Figs. 8 - Burden of Non-Communicable Diseases
The implications of this transition are :
High priority to the control of communicable of communicable and noncommunicable diseases;
Strenuous and sustained efforts, including the use of yoga and naturopathy, to control
the risk factors for NCDs caused by Tobacco, alcohol, and unhealthy lifestyles;
The equipping of peripheral health institutions for early diagnosis of chronic NCDs
and referral to secondary level institutions for treatment; and
The development of cost effective interventions, including equipment and training,
support to deal with NCDs at the peripheral level.
The epidemiological transition is likely to affect the poor more for the following two reasons:
1.
2.
Their exposure to the major risk factors –tobacco and alcohol is greater.
They lack the resources for the prolonged, expensive treatment NCDs may require.
Poverty, literacy, fertility, and nutrition are interlinked key areas that influence the health of
a nation and the indicators for our country is depressing. When these figures compared with
China the differences are striking. India’s BPL (below poverty line) is estimated at 26.1%
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whereas for China it is 6%. In China the illiteracy rate for males is just 9% and 25% for
females as compared to 24% for males and 46% for females in our country. The percentage
of child malnutrition in China is 16% as compared to India’s 53%. Thus poverty and
malnutrition are both causes and consequences of poor health
HEALTH PROJECTION 2020
Murry & Lopez (World Bank B 2000) have provided a possible scenario of burden of disease
(BOD) for India in the year 2020, based on a statistical model calculating the change in
DALYs (Disability Adjusted Life Years), which is shown below in Table III. DALY, which
was developed jointly by WHO, the World Bank and Harvard University, measures the overall
burden of disease (BOD) by combining on the one hand the years of potential life lost due to
premature death from disease and on the other, the years of productive life due to disability
produced by the condition.
TABLE- III
International comparison of Health Service utilization and
DALYs lost per 1000 population 1990 – 1998
Inpatient
admissions per
capita per year (%)
Average length Outpatient visits
of inpatient
per capita
stay (days)
per year
Disability
adjusted life
years lost (per
1000 poulation)
Indian Public Sector
0.7
14
0.7
-
India Total
1.7
12
3.9a
274
World
9
13
6
234
Low-Income countries
5
13
3
-
Middle Income countries
10
11
5
256b
High Income countries
15
16
8
119
Note: Income category is defined by per capita GNP in 1999: low income countries < $ 755; middle-income
countries $ 756 - $ 9265; high-income countries > $ 9265. Country income wages are unweighted.
a
Includes all visits to health providers regardless of system of medicine.
b
Estimated for low and middle income countries combined.
The key conclusion must be understood keeping in mind the fact that the concept of
DALYs incorporates not only mortality but also disability viewed in the terms of healthy
years of life lost.
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Projected deaths by cause, India, 2005,
WHO
7%
2%
8%
36%
8%
28%
11%
Communicable diseases & deficiency
Cardiovascular
Chronic resp diseases
Others Chronic diseases
Injuries
Cancer
Diabetes
Fig. 9 - Mortality by causes in India
India Health Report
In these projections DALYs are expected to dramatically decrease in respect of infectious
diseases and respiratory infections and less dramatically for maternal conditions.
60%
50%
50%
40%
30%
20%
Series1
19%
17%
8%
6%
10%
Nutritional
deficiencies
Infectious
and
parasitic
diseases
Respiratory
infections
Maternal
condtions
Perinatal
conditions
0%
Fig. 10a - Burden of communicable diseases in India - 1999
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TB is expected to plateau by the year 2010 HIV infections are expected to rise
significantly up to 2020. Injuries may increase less significantly. The Sr. Citizens
above the age of 65 will also increase and as a result the burden of non-communicable
diseases will also rise. Finally diseases resulting from life-style risks associated with
smoking, stress, high calorie improper diet and more sedentary life style are expected
to increase dramatically by the year 2020.
K
3%
J
2%
I
8%
H
2%
G
6%
F
7%
Series1
E
30%
D
4%
C
26%
B
2%
A
10%
0%
5%
10%
15%
20%
25%
30%
35%
Fig. 10b - Dist. Of burden of non-communicable disease in India -1999
A.
C.
E.
G.
I.
K.
Malignant neoplasms
Neuropsychiatric disorders
Cardiovascular diseases
Digestive diseases
Congenital anomalies
Other non-communicable diseases.
B.
D.
F.
H.
J.
Diabetes Mellitus
Sense organ disorders
Respiratory diseases
Musculo-skeletal diseases
Oral diseases
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The change in the rank order of DALYs for the leading causes (baseline scenario) with a
comparison between 1999 (Disease and Injury) and 2020 (Diseases & Injury) projected is
tabled below:
C h a n g e in ra n k o rd e r o f D A LY s fo r th e 1 5 le a d in g ca u se
(b a se line sce na rio )
1 9 9 9 D is e a se o r In ju ry
1 . A c u te lo w e r re sp ira to ry in fe c tio n s
2 . H IV / A ID S
3 . Pe rin a ta l co n d itio n s
4 . D ia rrh o e a l d ise a se s
5 . U n ipo la r m a jo r d e p re ss io n
6 . Isc h ae m ic h e a rt d ise a se
7 . C e re b r o va sc u la r d ise as e
8 . M a la ria
9 . R o a d tra ffic in ju rie s
1 0 . C h ro n ic o b s tr uctive pu lm o n a ry
d is e a se
1 1 . C o n g e nita l a b n o rm a litie s
1 2 . T u b e rc u lo s is
1 3 . F a lls
1 4 . M e a sle s
1 5 . A n a e m ia s
(D A L Y = D is a b ilit y-a d ju s te d life ye a r)
2 0 2 0 D is e a se o r In ju ry
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
Isc h ae m ic h e a rt d ise a se
U n ipo la r m a jo r d e p re ss io n
R o a d tra ffic in ju rie s
C e re b r o va sc u la r d ise as e
C h ro nic o b stru ctive p u lm o n a
d is e a se
L o w e r re s pira to ry in fe ctio n s
T u b e rc u lo sis
W ar
D ia rrh o e a l d ise a se s
H IV
Pe rin a ta l c o n d itio n s
V io le n c e
C o n g e nita l a b n o rm a litie s
S e lf-in flicte d in ju rie s
T r ac he a , b r on ch u s a n d lu n g
c a nc e rs
S o u rc e : W H O , E v id e n c e , In fo rm a tio n a n d P o lic y , 2 0
Fig. 11 - Change in Rank Order of DALYs for the 15 leading causes.
KEY HEALTH INDICATORS
In the past five decades
1)
2)
3)
4)
Life expectancy has increased from 36 to 64
IMR has come down from 146 to 71
Crude birth rates have dropped to 26.1
Crude Death rate from to 8.7
Reduction in infant mortality involves as much attention from protecting children from
infections as in ensuring nutrition. The call for holistic view of mother and child health care
services specially in the rural sector, services like ante-natal services to pregnant women, or
care during delivery and post-natal attention, low birth rate management programme and
management of childhood diarrhea are the key factors contributing to reduction in IMR in
India. Indeed persistence with improved healthcare practices and care for quality in
immunization would pave a way to reduce the world’s highest rate of maternal mortality.
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Smallpox eradication programme, pulse polio programme, near elimination of leprosy has
been some of the most successful immunization programmes in India.
ISSUES & PROBLEMS
Indian consumers are traditionally price sensitive and it is not much different when it comes
to health insurance. Also added to it the special nature of insurance products makes it difficult
to sell. Insurance is seldom bought but usually sold, and as they say ‘Insurance is a subject
matter of solicitation”. The mediclaim premium rates have not been revised since 1996
though the cost of medical services and other related facilities have gone up appreciably.
Fig. 12 shows that the break up expenses of a typical Claim under ‘Mediclaim’ from a study
conducted by the Insurance Research Cell, IIM Ahmedabad.
Break-up of Expencess under Health
Insurance Claim
Medicines
16%
Doctor
Fees
43%
Room
Charges
16%
Diagnostic
Fees
25%
Fig. 12 - Break –up of expenses Under a Health Insurance Claim
A comparison of health insurance premium in our country and the rest of the world reveal
that the health insurance premium in the developed countries is at least 5-7 time dearer, as is
the cost of drugs, medicines and so is the cost of rendering medical services.
Therefore it is high time that PSU Insurers hike the mediclaim premium to arrest the high
loss ratios and the latest information is that it likely to happen soon. Simultaneously the up
gradation of the facilities and the standardization of costs related to medical services will
bring a sense of order into the system. The IRDA has also initiated the process of grading the
hospitals throughout the country according to the quality of services rendered and costs
levied.
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However, affordability is a real issue when insurance policies are developed for the rural
masses, and at the same time the sums insured have to be substantial enough so as not to
defeat the sole purpose of insurance, which is to prevent the downward slide into poverty
and indebtedness. A balance between the premiums and the sum insured has to be carefully
studied before coming out with a product.
The difference between rural and urban indicators of health status and the wide inter state
disparity in health status is well known in India. The Urban Rural divergence is substantial
and ranges from childhood to the aged. The cost of medical treatment in rural area is lower
than in urban area. Yet health insurance premium is same to both urban & rural insurers
irrespective of the place & the hospital where treatment was ultimately taken. It is the same
whether the patient takes the treatment in his rural hospital or prefers to go to an urban
hospital where better high take facilities are available, but at higher price. This inequality
needs to be urgently addressed by an equitable proposal wherein due consideration is given
to the place where the consumer would prefer to take treatment and if the insured has a
preference towards treatment in an urban center he will have to proportionately bear extra
cost of the treatment.
RISK MANAGEMENT IN HEALTH INSURANCE
Some of the immediate steps, which need to be implemented for arresting the adverse claims
experience in the health insurance portfolio, can be listed as follows:
Imposing standard deductibles/excess.
Involving the Insured as co-insurer induce insured for co-payments to the extent of
10% or 20%, with 90% to 80% of the costs being borne by the Insurer.
Active participation of the Insured in the Claims Management process by rewarding
the insured suitably for a favorable claims experience.
Compulsory & thorough medical check-up at the inception of the policy should be
mandator as it will serve the dual purpose of diagnostic and preventive healthcare.
For patients it can result in a situation where a serous ailment is detected at a relatively
early stage for e.g. ‘Cancer’ – when detected at an early stage the chances of survival
are better. Thus it is a ‘Blessing in disguise’. As for the Insurers it is ‘Risk Mitigation’.
Routine medical examination at every renewal with expenses borne by Insurer.
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Loading/Malus to be incorporated at the inception stage of the policy for Insured’s
having vices such as smoking and or consumption of alcohol. Proposal forms should
have suitable questionnaire to reveal/detect the same.
Design more family package health insurance covers with family floater to balance
the adverse risk selection and favorable selection during the underwriting of these
policies. The portfolio could eventually self reliant and managed profitably without
having to cross subsidize it from the profit of other classes of business.
Domiciliary treatment expenses in the policy may be withdrawn and replaced by
provision for OPD expenses to the extent of 20% of the sum insured per annum.
All these initiatives in the product design and service delivery will balance the adverse risk
selection for both the parties ‘Insured’ and ‘Insurer’ and make health insurance products in
the Indian market more meaningful. Risk Management is based on the age-old dictum
‘Prevention is better than Cure’. Initiatives in this field worldwide suggest that the benefits
for insurers would be far better if they divert funds and invest in efforts towards risk
prevention/mitigation rather than loss minimization.
NEED FOR PRODUCT INNOVATION
The need of the hour is product innovation and this is the most critical requirement as of
now. Though innovative products have been introduced in the market by the private non-life
insurers a lot more needs to be done in this regard.
Some suggestions for product innovation in health insurance are:
To emphasize more benefit oriented health insurance policies as compared to
indemnity policies.
To introduce more return linked health insurance products in the market. Studies
suggest that the Indian consumer is willing to pay more premium for insurance
products which are returns/savings linked as the experience with Life Insurance
Endowment policies prove. Though the premium for Endowment policies is
substantially more than the term insurance products of LIC of India, the Endowment
policies are more popular and are sold in higher volumes compared to term insurance
policies.
Inclusion OPD treatment in health insurance policies.
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Include dental treatment in health insurance policies.
Review premium charges on annual basis, and link it with inflation, cost of medical
services, drugs, medicines etc.
Health Insurance products which include loss of earning capacity due to illness,
subsequent hospitalization, resulting in loss of income may be designed and
introduced in the market
Introduce Long Term Care (LTC) health insurance products in the market.
Product innovation should take into consideration the needs of the population, paying capacity
and the type of service provided. For e.g. the premium may suitably and gradually hiked up
for primary, secondary and tertiary healthcare policies – according to the perceived level of
service rendered and expenses incurred. This would again involve a major exercise to identify
the economic, geographic and other aspects of disease prevalence in the form of an enduring
database – lack of good database has often been the bane of Indian Insurers. It has definitely
been a major factor in preventing the growth in the Indian Health Insurance Industry.
Vital health statistics is an integral part of the health information. It is a basic tool of health
management. The health management system is composed of several related sub-systems,
which can be categorized in following areas:
1.
Demography and vital events.
2.
Health status of the population i.e. mortality, morbidity & disability.
3.
Healthcare resources: facilities, beds, manpower.
4.
Health services utilization.
5.
Financial statistics related to health, medical services and medical education.
This is crucial information that the hospitals can provide. Contributions from hospitals
nationwide will help us in creating a very good database. This database will play the most
important part in the innovation, development and modification of health insurance products.
The condition for ‘pre-existing conditions’ limitation needs to be reviewed. This can be
explained in the following manner:
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The concept of pre-existing can come under two heads:
i)
Pre-existing conditions like obesity, hypertension, and diabetes. etc.
ii)
Pre-existing ailments like asthma, angina, etc.
This line of division is widening because overall implication of the disease process on various
human systems (pathogenesis) are now better understood. For e.g. preexisting conditions
like diabetes mellitus and hypertension are though slow growing may be inherited also.
They affect almost all systems and organs in the human body especially in hypertension, the
brain, heart and kidney. In diabetes mellitus eye and kidneys are mainly affected due to the
disease process. Obesity is an acquired condition and is preventable by proper diet and good
exercise. The risk involved in insuring an obese patient is very high because of excessive
load on his/her cardiovascular system and fertility, while in pre-existing aliments like asthma
only respiratory system is affected, and in Angina Pectoris only the Heart is affected.
Pre-existing conditions is defined as a medical condition, any physical or mental condition
resulting from an ailment, illness, injury, disease, life style, occupation, sickness or congenital
malformation. It could broadly be classified as congenital or acquired which could further
be categorized into two categories that is static and progressive. “Static” where there is no
further impact on the health of the person. For e.g. a person loosing a finger in an accident
and a “Progressive” condition, which could progress further & cause impact on the health of
the person. e.g. Diabetes.
The concept of loading of premium /exclusion can be thought of in the following situation:
1.
Coverage of pre-existing diseases
2.
Coverage of congenital ailments
Insurers can explore the possibility of covering certain named pre-existing ailments, and as
they gain experience they can think of including more ailments gradually which could
eventually lead to a situation where only preexisting conditions are excluded from the scope
of the policy.
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Formation of Common Pool
The creation of a common pool for covering excluded diseases, conditions and ailments may
be thought of under the supervision of IRDA. The contributions to the pool could service the
following:1.
2.
3.
4.
5.
6.
7.
Terminally ill patients
Certain pre-existing conditions
Ageing population
Organ transplants
Treatment of congenital ailments where medical expenses are prohibitive
Cancer
HIV/AIDS
Preventive and promotive healthcare
In the words of Benjamin Disraeli “The health of the people is really the foundation upon
which all their happiness and all their powers as a state depend”. Healthcare services have
five dimensions – preventive, promotive, curative, rehabilitative and restorative; and three
levels of care – primary, secondary, tertiary. The recent years have witnessed major changes
in the conception of well-being and illness from a disease model to health model. This model
focuses on health promotion as well as disease prevention. The preventive and promotive
services are complementary to the other three dimensions of healthcare services. These services
concentrating on the health aspect helps in bringing down the overall cost of healthcare than
when an illness takes place. This is actually seen in eradication of small pox in the last 40
years. It is further hoped that current awareness campaign for pulse polio program will bring
down the incidences of polio.
At present, India is host to lifestyle diseases like diabetes, hypertension, obesity etc and the
burden will keep on increasing if no steps are taken in this regard. This has huge impact on
our economy, because the productivity of a company depends on the health of the employee.
The amount of man-hours wasted can be considerably reduced thereby contributing to the
nation’s growth. As already suggested earlier, the insurance sector can look to develop products
catering to the population, where the life style diseases are common.
Another aspect of preventive care the Governments have presently undertaken is in the
prevention of illness in mother and children. The insurance industry can actively participate
as a partner in delivery of such care for e.g. adopting certain villages, schools etc. This can
help in generating interest by indirect publicity, and serve as a marketing tool for creating
public awareness with regards to the concept of health insurance, and the products available
for them.
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Present resistance towards health insurance among the population is caused by the lack of
awareness of the public towards its benefits. Health education and sex education of school
children and adults is another way to reach out to the people and will help in eliminating
misconception towards health insurance and help in preventive health care. Health Insurers
should take this as another opportunity to expand their services.
The Medical/Health insurance products should also include expenses related to treatment
through complementary or alternative medicine, that are outside the scope of ‘traditional’
medicine most of which are outside the scope of a traditional Medical/Health Insurance
policy, such as:
Naturopathy
Homeopathy
Ayurveda
Unani
Siddha
Yoga
Acupuncture
Acupressure
Osteopathy
Chiroparctic
PARTNERS AS ADVERSARIES
The current scenario of health insurance vis-à-vis the intermediaries involved is not such a
happy one. This is largely due to the fact that each of the stakeholders perceives the other as
an adversary, rather than as a partner. If all the parties come together on a common platform
and share the same concern a better situation will emerge.
The common man seeking the health insurance cover is thoroughly disillusioned. In the
event of a claim the long wait for preauthorization letter from TPAs agonizes the patients
and their relatives who are already traumatized by the emergency or illness, which can
potentially lead to unruly scenes in the hospital. The insured feels that the hospital is not
doing enough to get the necessary sanction from the TPAs. Most of them come to know of
the clauses of the policy only after approaching the Hospital Administration. They believe
that the card obtained from the TPA is a virtually a Debit card, and if they happen to witness
preferential treatment given to corporate patients from the TPA even after paying a hefty
amount for availing the medical services, the experience turns sour, which is further
complicated by the undue delay in settlement of claims. Consumers complain that TPAs are
forcing the patients to visit only certain hospitals for treatment due to their alleged business
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links and tie-ups, which has led to many patients being disenchanted over the state of affairs
with TPAs. Some of them have opted out of the cashless transaction, and returned to the
reimbursement mode of claims settlement.
The hospitals are in turn blaming the TPAs for the delay in settling of claims. The TPAs,
who are supposed to provide the preauthorization facility for 24 hours, are accused of not
replying to the hospitals in time, thereby delaying the decision-making in medical treatment.
This can turn into a medico legal or ethical issue if the emergency treatment could not be
started for want of authorization from TPA. The TPAs in turn blame the hospitals for poor
documentation and fraudulent claims. They believe that some of the hospitals connive with
the patient by covering up preexisting illness and raising fraudulent claims They also site the
delay in payment from the insurance companies as the reason for the delay in settlement of
claims.
Many a times an interventional cardiologist is accused of performing an angioplasty without
prior authorization or sanction when the patient is taken for angiography and that such a
procedure may have been unwarranted. The argument of the cardiologist is that these
procedures are carried after consultation with patient’s relatives. They believe that what
they are trying to avoid is submitting the patient again to a similar procedure with its inherent
risk, reduce the toxicity of the dye and also bring down the hospital stay thereby the medical
expenses. They also say that the CD of the angiography can be provided along with the
necessary documents to substantiate their claims.
The Insurance companies accuse the hospitals of overcharging the patients under health
insurance cover. They believe that unnecessary investigations are ordered and all the charges
are thus inflated for their patients. This they perceive bleeds health insurance industry, which
ultimately results in making it an unprofitable proposition and the blame game continues.
SERVICE PROVIDER’S ROLE
The role of the service provider in popularizing the health insurance products and the concept
of health insurance has to be redefined and proactive. The service provider can surely deliver
better services to the customer and would have to take a few proactive steps to protect the
interest of customers.
ROLE OF INSURANCE COMPANIES
Justice Kaul of Gujarat High Court has asked Insurance Companies to safeguard the interests
of the consumers without compromising the financial health of insurance companies. Some
guidelines may be directed towards the insurance companies to modify or amend their
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insurance products to meet needs / demands of the two major stakeholders in health insurance
namely, consumer and service provider. To reduce inequities & the unfairness and ensure
rapid promotion of insurance cover among many more uninsured millions what is desirable
is less commercialism & more humane consideration.
STEPS IN THE RIGHT DIRECTION
It has been heartening that IRDA is taking a proactive step towards the issues, which have
been plaguing the health insurance industry for a long time. These issues were raised time to
time by one or other stakeholders. It formed a Health insurance working Group, which has
made recommendations in this regard. The working group consisted of representatives from
the Ministry of Health and Finance, ESI, CGHS, Corporate Hospitals, Insurance companies,
TPAS, actuaries, NGOs and consisted of three sub committees, the first working towards the
development of database, the second studying the feasibility of stand alone insurance
companies and the third dealing with innovation of health insurance products and preexisting
diseases. They have dealt with most of the issues that turns the stakeholders into adversaries
and sought to eliminate the animosity by bringing in transparency from the time of enrolling
in a policy from a customer to the settlement of claims by the TPAs and insurance companies.
The successes of schemes like Arogya Raksha, Yeshaswini in Karnataka and the Chiranjeevi
in Gujarat have prompted IRDA to set up an expert committee to popularize health insurance
in rural India. The IRDA has set up a panel which comprises of representatives from ICICI
Lombard, Royal Sundaram, Oriental Insurance, all insurance companies, Dr Devi Shetty of
Narayana Hrudayalaya, an official of Ministry of health, representatives of TTK health care
services a TPA, and Bearing Point a member of Institute of Economic Growth, and four
members of IRDA, including its chairman. Each member of the panel has been assigned a
task and they are expected to submit their report shortly. They will also look into the micro
financing of healthcare services.
Conclusion
The healthcare industry in India is undergoing tremendous transformation, both from the
demand and supply side. With the Governments in many countries are withdrawing the
subsidies and support to the healthcare sector ‘Healthcare Financing’ will need the support
of Health Insurance. We are now an economy on wings with the teeming Indian population
being looked at as a potential market and a huge opportunity awaits the Insurance industry.
We are also facing the twin burden of communicable diseases of the developing world as
well as the non-communicable diseases of the developed world e.g. lifestyle diseases. India
was a signatory to the Alma Ata declaration with the theme ‘Health for All’ by 2000 AD.
India is also a signatory country to the United Nations Millennium Declaration – widely
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referred to as ‘Millennium Development Goals’. There is a growing disparity between the
availability of healthcare and its affordability. Healthcare financing is a becoming a key
factor in the accessibility of healthcare where Health Insurance will play a crucial role.
However Health insurance covers only about 2% of our population, but to achieve the ideal
of ‘Health for All’, we have to increase the insurance coverage for population by introducing
innovative health insurance to target the vast segment of our country’s population. The partners
in this industry the customers, service providers, the TPAs and the insurance companies,
which presently perceive each other as adversaries, can take collective as well as individual
steps in developing trust amongst themselves and also in popularizing the concept of health
insurance. But these can only be achieved if the numbers are generated and the risk selection
of the insured population is evenly balanced as in the present situation where the risk selection
is heavily imbalanced and presently tilted unfavorably against the Insurance Companies. In
the process it favors the claim minded which explains the primary reason for the cautious
and inhibitive approach from the side of the Insurers. It is hoped that better risk management
techniques and the introduction of innovative health insurance products will fuel the demand
of health insurance and generate the numbers required and ultimately succeed and in the
process widen the net. This will ultimately facilitate the ‘Millennium Development Goals’ a
must for the healthy growth of our country. The recent steps taken with the initiative of
IRDA will to propel the healthcare insurance industry into a new horizon in the days to
come.
Ultimately we have to progress towards holistic health as shown below in Fig. 13 and promote
heath as defined by World Health Organization which defines ‘Health’ as the complete
physical, mental, social, and spiritual well being of a person and not merely the absence of
disease. Medical/Health Insurance products have to explore the possibilities of integrating
the above streams of medicines and alternative therapies along with traditional medicine to
complement and promote the concept of holistic health.
Physical
Mental
Vocational
Positive
Health
Social
Emotional
Spiritual
Thus to conclude in the words of Daniel Akaka
“A tremendous amount of needless pain and suffering can be eliminated
by ensuring that Health Insurance is universally available ”.
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REFERENCES
Articles and Books
1.
Bokil, P.V, Presentation on Challenges in Health Insurance, Silver Jubilee Seminar on
Health Insurance Scenario (08-09 Aug. 2005), National Insurance Academy, Pune
2.
Bokil, P.V, Presentation on Widening the net of Health Insurance in Role of Insurance
in Healthcare, (2005), CII, Chennai
3.
Deshpande, S.P; Comparative Study of Health Insurance in Developed Markets
vis-a-vis India; DJRS 2/2001, National Insurance Academy, Pune
4.
Healthcare – The Business of Health, Economic Times (2004)
5.
Ilich, Ivan, “Medical Nemesis”, Times of India, 11 July 2005
6.
India requires multiple approaches to expedite health insurance’ EHM News Bureau
- New Delhi, 01st to 15th Nov 2004 Express Healthcare Management
7.
IRDA Journals
8.
Medical Records Manual – A Guide for developing Countries; WHO, Regional Office
for the Western Pacific (2002).
9.
Raja Simhan, T.E, Time for the cure http://www.blonnet.com/ew/2003/08/20 stories/
2003082000080100.htm
10.
A
Ravindranath, Amnish, Towards A New Health Model; Impressions Vol VI (2005),
d
ministrative Staff College of India – Hinduja Institute of Healthcare Management,
Hyderabad.
11.
Shaw, K.M, “Healthcare for a billion”, Sunday Times of India, 23 October,2005
12.
Syed, Falaknaaz, “ Health Insurance Working Group drafts guidelines for pre-existing
illnesses”, Express Healthcare Management, 16th to 30th June 2005
13.
Syed, Falaknaaz, “IRDA appoints panel to popularize health insurance in rural areas”,
Financial Express, Dec 24,2005
14.
Varatharajan, D, Health insurance: what can we learn from other nations experience?
Health and Population: Perspectives and Issues. 2001 Jan-Mar; 24(1): 45-54
15.
Vikraman, Shaji, & Shetty Mayur, “Legislative Changes May Hold Up Health reforms”,
Economic Times, 11 July, 2005
16.
Vikraman, Shaji, & Shetty Mayur,”Hospitals May Share Health Insurance Pie,
Economic Times, 11 July, 2005
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17.
Health Care in India – Vision 2020 by R Srinivasan
18.
India Health Report by Rajiv Misra, Rachel Chatterjee & Sujatha Rao
Oxford University Press 2003.
19.
Target: Health for All – The need for product innovation in Health Insurance by
Dr. P V Bokil, Dr. Amnish Ravindranath & Murali R K Iyer
20.
The World Health Report, 2005.
21.
Human Development Report, 2005.
Websites
1. www.blonnet.com
2. www.economictimes.indiatimes.com
3. www.expresshealthcaremgmt.com
4. www.expresspharmapulse.com
5. www.financialexpress.com
6. www.gicofindia.com
7. www.gujhealth.gov.in/basicstatastics/
8. www.icicilombard.com
9. www.indiainfoline.com
10. www.infochangeindia.org
11. www.irdaindia.org
12. www.mit.gov.in/telemedicine/
13. www.mohfw.nic.in
14. www.thehindubusinessline.com
15. www.nari-icmr.res.in/
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