Health Insurance

Health Insurance

HEALTH INSURANCE Introduction of Insurance With such a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 percent to the country’s GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation “Malhotra Committee” was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today.

The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.

Introduction of Health Insurance

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Health Insurance Health insurance is a safeguard against rising medical costs. A health insurance policy is a contract between an individual and a group, in which the insurer agrees to provide specified health insurance at an agreed upon price (the premium). Depending upon the policy, premium may be payable either in a lumpsum or in installments. Health insurance usually provides either direct payment or reimbursement for expenses associated with illnesses & injuries. The cost & range of protection provided by Health insurance depends on the insurance provider & the policy purchased. There are many health concerns including the following which accentuate the demand for health insurance:  Environment pollution is causing serious health problems to humans.  The fast spreading AIDS, poisonous gases, various wastes including nuclear waste generated by the people are seriously endangering the life on earth.  A person may face serious monetary problems for the medical treatment & hospitalizations during life. Nowadays, most companies give the benefit of health insurance to its employees. Health insurance is a part of a larger business set-up and tends to remain a loss leader in the initial stages and can become viable only in urban context with large-scale risk pooling and effective demand. These experiments do not convey in full measure the potential of insurance to risk pooling, community rating and controlled administrative costs, limited exclusions and co-payments. Health insurance properly developed and regulated can act as a bridge between patients and providers balancing quality care at reasonable costs with an effective and accountable health care. We need big players as insurers with staying power and competence to deal with large risk pooling and innovative product. In this article, therefore, the author analyses various issues concerning health insurance in India

History of health insurance:National  1912 Insurance Act passed 2

Health Insurance  1923: Workman’s Compensation Act  1938 Insurance Act, 1938  1948: ESI Act passed  1952: First ESI Hospital established  1956 Life Insurance industry nationalized  Mudaliar committee (1959-1961) recommendations.  Long range health insurance policy for all.  Small fee for availing health services.  1972 General Insurance industry nationalized  1999 IRDA bill passed in Parliament to allow foreign players entry  2001: Insurance amendment Act Emphasis on TPAs. From the above table we see that the first real attempt at insurance was carried out well before Independence, with the passing of the Insurance Act in 1912, which set down rules and regulations specific to the insurance industry. Then there was a more fundamental shakeup in 1938 with the Insurance Act, 1938 and this led to an insurance wing being set up, attached to the Ministry of Finance. At the time of nationalization of Life Insurance industry there were 176 (life and non-life) companies in the industry. The general insurance industry was nationalized in 1972. The next significant event was the passage of the Insurance Regulatory & Development Authority Act, which opened up the insurance sector to the private players. This was followed by the Indian Insurance (Amendment) Bill 2001 which dealt with the means by which insurers might access the new markets that had opened up and the role of brokers in the insurance market.

International  1883: Bismarck- Sickness benefit to workers

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Health Insurance  1911: Lloyd George- National Health insurance scheme to cover sickness expense, medical relief, drugs & compensation of wages lost, to improve quality of life & improve industrial production.  J.F.Kimball: Prepayment system of health care

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Health Insurance How Does A Health Policy Differ Vis-À-Vis A Life Insurance Policy? The health insurance plan is more comprehensive in its coverage. All expenses involved in hospitalization fall under its purview. Life insurers usually cover critical illness and hospital cash extensions (only room rent charges) on life policies, which do not include doctor’s fees, expenses incurred on buying medicine and surgery costs etc.

HEALTH CARE SCENARIO: Health care has always been a problem area for India, a nation with a large population and a larger percentage of this population living in urban slums and in rural area, below the poverty line. Before independence the health structure was in dismal condition i.e. high morbidity and high mortalities, and prevalence of infectious diseases. Since independence emphasis has been put on Primary Health Care and we have made considerable progress in improving the Health Status of the country. CG: Central Government PH: Primary Health MCH: Maternal and Child Health

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Health Insurance

Why Health Insurance 6

Health Insurance Health is a human right, which has also been accepted in the constitution. Its accessibility and affordability has to be insured. While the well-to-do segment of the population both in rural & urban areas have acceptability and affordability to wards medical care, at the same time cannot be said about the people who belong to poor segment of the society. It is well known that more then 75% of the population utilizes private sectors for medical care unfortunately medical care becoming costlier day by day and it has become almost out of reach of the poor people. Today there is need for injection of substantial resources in the health sectors to ensure affordability of medical care to all. Health insurance is an important option, which needs to be considered by the policy makers and planners.

 Recognition as an industry: In the mid 80's, the healthcare sector was recognized as an industry. Hence it became possible to get long term funding from the Financial Institutions. The Government also reduced the import duty on medical equipments and technology.  Socio Economic changes: The rise of literacy rate, higher levels of income and increasing awareness through deep penetration of media channels, contributed to greater attention being paid to health. With the rise in the system of nuclear families, it became necessary for regular health check-ups and increase in health expenses.  Brand Development: Many family-run business houses, have set-up charity hospitals. By lending their name to the hospital, they develop a good image in the market, which further improves the brand image of products from their other businesses. HEALTH SECTOR IN INDIA Till now, in India, the health sector i.e. the primary health care system has been managed mainly by the shallow structure of government health-care facilities and other public health care systems in a traditional model of health funding and provision. But, it is unable to justify the demand for health security by over 200 million of the health

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Health Insurance insurable population in India, mainly due to service costs being out of reach of many people, absence of good and effective number of physicians, low rate of education programs, less number of hospitals, poor medical equipment and over all, the poor budget of government towards the health program. Even Social insurance schemes available in India, such as the Employee State insurance Scheme (ESIS) and Central Government Health Scheme (CGHS) have restricted coverage to a very small segment of the population, around 3 per cent. The game is old but the rules are new, and in the process of changing further. From being ensconced in a monopoly run from the nationalisation days beginning 1956, the insurance industry has indeed woken up — to a de-regulated environment, with the industry space now being populated by several private players in partnerships with multinational insurance giants. The opening of the insurance sector in India has been a landmark event in India’ economic history. Gone are the days of the domination by the LIC and GIC when ordinary citizens had to work according to their whims and fancies. Over the past one year, the traditional notion of insurance has been turned on its head. Today insurance offers complete solutions to create wealth, protect health and insure life. Added to this, the profile of the Indian customer is changing. Today, while boundaries between various financial products are getting blurred, people are increasingly looking not just at products but also at integrated financial solutions that can offer them stability of returns along with total protection. Insurance products will need to be customised to satisfy these myriad needs of the customers and this where the private players come in bringing with them hopes of wider options and efficient service. The market is already seeing a rise in number of players and in making insurance products, new companies will have to adopt systems which factor in all potential risks. In such a scenario, it’ll be difficult to say what will be the differentiator across the different Players — products, pricing or service?

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Health Insurance There is also the case of the neglected health insurance sector. Will there be more players venturing into this sector? The poor health scenario in India does offer a gamut of options for new players. This paper looks at the opening of the insurance sector and its implications with specific reference to the health insurance sector, the current scenario, future positions, Bottle necks that could be faced, future growth potentials and comparisons with similar South Asian countries which also have economies which are opening up.

Health Insurance in Foreign Countries The level of care and treatment available to foreign nationals in much of Europe can vary widely from country to country, not to mention the cost. Health Insurance can help remove this uncertainty by offering quick access to quality medical treatment in time of need. Lloyd & Whyte International can take you through the process from start to finish offering expert and impartial advice. Your policy will be written in English no matter where you are located in Europe, and all our offices have multilingual staff to cater for your every need. We are authorised and regulated by the Financial Services Authority so you can rest assured that you will receive the very highest levels of service. When abroad you will be exposed to a different climate, which in itself can cause health problems that you may not have previously been exposed, and if you are looking to move to warmer climes the increased risk of skin cancer is just one example that you may need to consider. Different climates and countries also bring different diseases, which as a foreigner you may be more susceptible. As highlighted above the healthcare systems can vary from country to country across Europe, therefore by making your own provisions you know that you will receive quality medical care and treatment no matter where you are.

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Health Insurance Determinants of Viable Health Insurance Similar studies on the effect of community risk sharing in health care in Rwanda, India and Thailand have been undertaken by different research institutes. These studies as well as the Senegal case have been selected as part of the work of the Commission on Macroeconomics and Health of the World Health Organisations. This commission examines the interrelations among investment in health, economic growth, and poverty reduction. All the studies are based on household surveys on the effect of community financing schemes (CF schemes) and have used the same methodology for data analysis. The following points summarize important findings of the different studies with respect to the design of the schemes:  Flexibility in Paying Procedure In Rwanda the households who could not afford to pay the premium in one bit, were allowed to pay in installments to a tontine before joining a pre-payment scheme. In addition, church based groups collected fees for the indigent, disabled, orphans etc. The paying of contributions by charitable organizations has also be reported in the Senegal study, which has given otherwise excluded people the chance to participate in the mutuals. Some mutual even start collective activities from which they use some of the earnings to pay membership fees. Another example for a possible source of financing is organizing a tombola or lottery. In conclusion there are various possibilities to adapt paying procedures to the local level requirements. In this context, the role of the state also needs to be explored e.g. the possibilities for demand targeted subsidies  Experience in Social Protection and Community Participation Community financing schemes (CF schemes) are often set up by voluntary, nonprofit oriented organizations. These organizations act as an insurance broker between the interest of a health care provider and the expectations and needs of their members. To deal with these ambiguities is of major importance and requires trained personal. In this context it must be stressed that the administrative procedure for handling claims should be as simple and transparent as possible. The SEWA example but also other experiences 10

Health Insurance (e.g. Grameen Bank in Bangladesh) shows that mutual insurance schemes are likely to perform better, when they are linked to an organization which already has experience in the field of financial services and social protection. Community participation matters, when it comes to the control of moral hazard behavior and costs. The results of the studies in the four countries suggest, that the degree of community participation in the design and running of the CF schemes can vary widely and is usually greater if funds are owned and managed by the members themselves than if schemes are run by health facilities. If members can identify themselves with “their” schemes because they control the funds and have decision-making power, they will tend less to unnecessary use of health care services.  Existence of a Viable Health Care Provider The success or failure of health insurance schemes is largely dependent on the existence of a viable health care providers, e.g. to the hospital that offers services to the insured. Decisions taken by the health care provider have an impact on mobilizing demand for CF schemes as well as on the financial balance of the scheme. The Senegalese case study was enlightening in that respect: From the beginning of the mutual health organization movement, it has been supported by the hospital St. Jean de Dieu. The administration of the hospital had recognized that their ultimate target group – the poor – couldn’t pay their fees, but it was also not possible for the hospital to allow for a general exception of fees for the poor. The creation of mutual health organization allowed to directly targeting their clientele in a cost effective manner. Beside the financial support which the hospital gives to the mutuals an equal important point is the well recognized quality of care. The delivery of services with high quality is a very important point for mobilizing demand in the mid to long run. In some settings it will even not be possible to set up a viable insurance scheme and mobilize demand before quality of care is not improved, because if people feel that they will get no “value for money” at the hospitals or health posts, they would be unwilling to pay premiums.

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Health Insurance  Community and Household Characteristics The demand for health insurance is a crucial factor if the benefits expected from community financing schemes are to be realized. The demand of households for health insurance depends not only on the quality of care offered by the health care provider, on the premium and benefit package, but also on socio-economic and cultural characteristics of households and communities. Widespread absolute poverty among potential members can be a serious obstacle to the implementation of insurance. This argument was frequently put forward from non-members in Senegal. If people are struggling for survival every day, they are less willing to pay insurance premiums in advance in order to use services at a later point in time. Social exclusion may persist even if barriers to access are reduced for part of the population, and exemption mechanisms for the poorest or sliding scales for premiums that might be a remedy are not easy to implement. After or before the introduction of health insurance, rising incomes, that may be brought about by development projects, can be necessary to attract members and realize the potential benefits of CF. SEWA’s activities in this direction are a good example. The prevailing concepts of illness and risk are relevant to the decision of households whether to purchase health insurance or not. If people see illness as a somewhat random event that can hit anyone, they are surely more willing to purchase insurance than if they perceive it as punishment for misbehavior by magic powers. Cultural habits in dealing with the risk of illness can influence the demand for insurance. In Senegal this has been frequently reported as one obstacle to buy health insurance as people were used to put money aside for unpredictable events like marriages and funerals, but they believed that saving money for eventual health care costs meant “wishing oneself the disease”. If solidarity is strong, people will not worry so much if the benefits of the premiums they paid will accrue to themselves or other community members. For example, members of the Fandene scheme in Scheme expressed the opinion that if they would not need health care themselves, at least they had done something good for the community by contributing to the insurance fund. The degree of solidarity and mutual trust is probably higher in homogeneous, close-knit communities

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Health Insurance than in scattered and diverse populations comprising people of different ethnic origin, religion and culture.

Health Insurance Schemes: Based on ownership the existing health schemes can be broadly divided into following categories: Government or state-board systems (including CGHS & ESIS)  Market-based systems (Private & Voluntary).  Employer provided insurance systems.

Government/State Based Systems: The best documented &target system of health care delivery in India is the diverse network of hospitals, primary health centre, community health centre, dispensaries & speciality facilities financed & managed by the central & 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 & child health programmes & speciality disease prevention programmes these public facilities carry out a central role in India’s primary health care system studies have shown that these facilities are mostly under funded, understaffed & short of drugs & essential supplies & that they sometimes suffer from low morale & inadequate motivation. The health facilities made available to the public are managed & operated under the authority of central & state agencies. The state government mostly own & manage the public sector delivery system & have to bear the costs of operation. But the central government plays a major role in the planning, financing & transfer of resources that determine new investment in health facilities & specialized programmes. Much of the funding for health facilities originates from the Union Ministry & family Welfare & is channeled to the state governments, which retain considerable authority for the spending decisions. Virtually all decisions are made by the central & state government-including the staffing & supply decisions, with little & autonomy for providers of health care at lower levels. Over the years, the central government has been the main source of funds for the primary health care facilities, whereas the states bear the major responsibility of recurrent costs, especially the costs of returning hospitals. This system has added to overall inefficiency of public health facilities. 13

Health Insurance Central Government Health Scheme: The Central Government Health Scheme (CGHS) was introduced in 1954 as contributory health scheme to provide comprehensive medical care to the central government employees & their families. It was basically designed to replace the cumbersome & expensive system of reimbursements (Ministry of Health & 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 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 & some other facilities. The list of beneficiaries includes all categories of current as well as former government employees, members of parliament & so on. Since the large central but bureaucracy India definitely belongs to the middle-income & high –income categories, they are likely to make above-average use of health services. The CGHS has been in the recent past, widely criticized from the point of view of quality & accessibility.

Employees State Insurance Scheme: Established in 1948, the Employees State Insurance Scheme (ESIS), an insurance system which provides both the cash & the medical benefits. It is managed by the Employees State Insurance Scheme (ESIS), a wholly government-owned enterprise it was conceived as a compulsory social security benefit for workers in the formal sector. The original legislation creating the scheme allows it to cover only factories which have been “using power” & employing ten or more workers. However, since 1989 the scheme has been expended, & it knows includes all such factories which are “not using power” & employing 20or more persons. Mines are explicit excluded from coverage under the ESIS act.

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Health Insurance Comprehensive Health Insurance Scheme National Common Minimum Programme, Comprehensive Health Insurance Scheme for one district in each state in 2004-05 has been formulated for implementation with community participation. The Salient Features of the Scheme are:  Primary focus of Health Insurance in the Pilot District would be the poorer section of the society i.e. both BPL and Non-BPL.  The experience gained from the outcome in implementing the scheme in these Pilot Districts would form the basis for possible expansion and its replication in other districts in future.  To focus on the health insurance needs of the Population by marketing the entire range of existing Health Insurance products catering to the needs of all income groups such as Mediclaim, Bhavishya Arogya, Jan Arogya, Universal Health, Swasthya Bima Policies etc.  All the existing Health Insurance products would be marketed to the population in the Pilot District in a holistic manner by mobilizing support from different agencies viz. State Government, Local bodies, Community based organizations, NGOs, Cooperatives and other organizations involved in Social Sector activities. 

The four Public Sector Insurance Companies would market the product by utilizing the existing marketing channels.

 The claims settlement process would be simplified depending upon the availability of the Third Party Administrators (TPAs) or through Tie-up arrangements with Service Providers, medical facilities would be provided cashless, as far as possible. 

The programme will be undertaken, in one District in each State ideally be the one that have a strong presence of Community Based Organizations and having a reasonable health infrastructure and delivery mechanism.

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Health Insurance .

Types of Health Care Insurance Available: •

Medical Insurance

•

Critical Illness Insurance

Leading insurance companies are coming out with new plans to meet the requirements of their customers; health care insurance plans especially target customers in the higher age group. It is necessary for younger people to start planning for their future after they retire, at an early age, so as to lead a financially stable life in later years

Medical Insurance Medical insurance in India is gaining such a high trend that policies are out even for infants. It is the buffer against medical emergencies. These covers is a hospitalisation cover and reimburse the medical expenses incurred in respect of covered disease /surgery while the insured was admitted in the hospital as an in patient Different types of Medical Insurance are available here:  Individual Medical Insurance  Group Medical Insurance  Overseas Medical Insurance Calculation of Medical Insurance Amount/Premium: The amount of premium depends on the sum insured (amount of coverage) age of the member and also if one is taking an individual or a group Insurance. Premium can be paid on a monthly/quarterly/half yearly/ yearly basis. Amount also depends on the company policies of the insured.

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Health Insurance Medical Insurance Claim Procedure: •

An individual has a fill and submit the claim form to the insurer

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A claim representative, so appointed, analyses the expenses incurred

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After submission of the medical expenses report, the claim is cleared within 7-15 days. The number of days may vary from company to company

Documents Required for Medical Insurance Claim: 1. Hospital/doctor report 2. Memo of expenses incurred 3. Salary Slip

Critical Illness Insurance Critical Illness Insurance provides for payment of amount equal to sum assured, if illness strikes, irrespective of expenses incurred on treatment. Most insurance companies are providing this insurance as an addition to the life insurance; additional premium payable for critical illness. It is introduced as a value addition to meet the demands and also as marketing strategy. The insurance covers surgery cost, critical illness cover and post-hospitalisation. The insurance is different in paying only for prolonged hospitalisation. One of the unique features of this insurance is that a lump sum allowance is paid irrespective of the actual medical expenses.

Calculation of Critical Illness Insurance Amount/Premium: The amount of premium depends on the insurance of the insurance company. Sometimes life insurance companies charge extra premium for the insurance, which is an add on to the LIP. Premium is generally paid on a yearly basis.

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Health Insurance Critical Illness Insurance Claim Procedure: Insurance holders can make multiple claims till their lifetime cover is exhausted. The company pays a lumpsum amount as claims irrespective of the actual expenses, as against a medical insurance, which is only reimbursement insurance. The claim should be reported to the insurers, who in turn will appoint a surveyor. Surveyor will check the necessary documents and analyse the extent of damage. The claim process takes anywhere from 7-21 days.

Documents Required for Critical Illness Insurance Claim: 1. Copy of FIR (If any) 2. Medical Certificate & details of medical expenses & disability certificate 3. Leave certificate from employer 4. Duly filled Claim Form 5. Salary Certificate from employer.

Medicare Medicare is the Federal health insurance program for Americans age 65 and older and for certain disabled Americans. If you are eligible for Social Security or Railroad Retirement benefits and are age 65, you and your spouse automatically qualify for Medicare. Medicare has two parts: hospital insurance, known as Part A, and supplementary medical insurance, known as Part B, which provides payments for doctors and related services and supplies ordered by the doctor. If you are eligible for Medicare, Part A is free, but you must pay a premium for Part B. Medicare will pay for many of your health care expenses, but not all of them. In particular, Medicare does not cover most nursing home care, long-term care services in the home, or prescription drugs. There are also special rules on when Medicare pays your bills that apply if you have employer group health insurance coverage through your own job or the employment of a spouse.

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Health Insurance Some people who are covered by Medicare buy private insurance, called "Medigap" policies, to pay the medical bills that Medicare doesn't cover. Some Medigap policies cover Medicare's deductibles; most pay the coinsurance amount. Some also pay for health services not covered by Medicare. There are 10 standard plans from which you can choose. (Some States may have fewer than 10.) If you buy a Medigap policy, make sure you do not purchase more than one.

Medicaid Medicaid provides health care coverage for some low-income people who cannot afford it. This includes people who are eligible because they are aged, blind, or disabled or certain people in families with dependent children. Medicaid is a Federal program that is operated by the States, and each State decides who is eligible and the scope of health services offered.

Disability Insurance Disability insurance replaces income you lose if you have a long-term illness or injury and cannot work. This is an important type of coverage for working-age people to consider. Disability insurance does not cover the cost of rehabilitation if you are injured. Check your major medical insurance to see if it is covered there. Some employers offer group disability insurance and this may be one of the benefits where you work. Or you might be eligible for some government-sponsored programs that provide disability benefits. Many different kinds of individual policies are also available. The Consumer's Guide to Disability Insurance explains disability insurance and sources of disability income to help you decide if you need this coverage.

Hospital Indemnity Insurance This insurance offers limited coverage. It pays a fixed amount for each day, up to a maximum number of days. You may use it for medical or other expenses. Usually, the amount you receive will be less than the cost of a hospital stay.

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Health Insurance Some hospital indemnity policies will pay the specified daily amount even if you have other health insurance. Others may coordinate benefits, so that the money you receive does not equal more than 100 percent of the hospital bill.

Long-Term Care Insurance Long-term care insurance is designed to cover the costs of nursing home care, which can be several thousand dollars each month. Long-term care is usually not covered by health insurance except in a very limited way. Medicare covers very few long-term care expenses. There are many plans and they vary in costs and services covered, each with its own limits.

Individual Insurance If your employer does not offer group insurance, or if the insurance offered is very limited, you can buy an individual policy. You can get fee-for-service, HMO, or PPO protection. But you should compare your options and shop carefully because coverage and costs vary from company to company. Individual plans may not offer benefits as broad as those in group plans. If you get a noncancellable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you keep paying the monthly premium. The insurance company can raise the cost, but cannot cancel your coverage. Many companies now offer a conditionally renewable policy. This means that the insurance company can cancel all policies like yours, not just yours. This protects you from being singled out. But it doesn't protect you from losing coverage. Before you buy any health insurance policy, make sure you know what it will pay for...and what it won't. To find out about individual health insurance plans, you can call insurance companies, HMOs, and PPOs in your community, or speak to the agent who handles your car or house insurance.

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Health Insurance Tips when shopping for individual insurance:  Shop carefully. Policies differ widely in coverage and cost. Contact different insurance companies, or ask your agent to show you policies from several insurers so you can compare them.  Make sure the policy protects you from large medical costs.  Read and understand the policy. Make sure it provides the kind of coverage that's right for you. You don't want unpleasant surprises when you're sick or in the hospital.  Check to see that the policy states: the date that the policy will begin paying (some have a waiting period before coverage begins), and what is covered or excluded from coverage.  Make sure there is a "free look" clause. Most companies give you at least 10 days to look over your policy after you receive it. If you decide it is not for you, you can return it and have your premium refunded.  Beware of single disease insurance policies. There are some polices that offer protection for only one disease, such as cancer. If you already have health insurance, your regular plan probably already provides all the coverage you need. Check to see what protection you have before buying any more insurance.

Group Insurance Most Americans get health insurance through their jobs or are covered because a family member has insurance at work. This is called group insurance. Group insurance is generally the least expensive kind. In many cases, the employer pays part or all of the cost. Some employers offer only one health insurance plan. Some offer a choice of plans: a fee-for-service plan, a health maintenance organization (HMO), or a preferred provider organization (PPO), for example. Explanations of fee-for-service plans, HMOs, and PPOs are provided in the section called Types of Insurance.

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Health Insurance What happens if you or your family member leaves the job? You will lose your employer-supported group coverage. It may be possible to keep the same policy, but you will have to pay for it yourself. This will certainly cost you more than group coverage for the same, or less, protection. A Federal law makes it possible for most people to continue their group health coverage for a period of time. Called COBRA (for the Consolidated Omnibus Budget Reconciliation Act of 1985), the law requires that if you work for a business of 20 or more employees and leave your job or are laid off, you can continue to get health coverage for at least 18 months. You will be charged a higher premium than when you were working. You also will be able to get insurance under COBRA if your spouse was covered but now you are widowed or divorced. If you were covered under your parents' group plan while you were in school, you also can continue in the plan for up to 18 months under COBRA until you find a job that offers you your own health insurance. Not all employers offer health insurance. You might find this to be the case with your job, especially if you work for a small business or work part-time. If your employer does not offer health insurance, you might be able to get group insurance through membership in a labor union, professional association, club, or other organization. Many organizations offer health insurance plans to members.

What types of group health insurance plans are available? Group health insurance plans are categorized as either indemnity plans (also known as "traditional indemnity," "fee-for-service," or "FFS" plans) or managed care plans. Indemnity and managed care plans differ in their basic approach. Put broadly, the major differences concern choice of providers, out-of-pocket costs for covered services, and how bills are paid. You will typically have a broader choice of doctors (including specialists, such as cardiologists and surgeons), hospitals, and other health care providers

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Health Insurance with an indemnity plan while you will typically have less out-of-pocket costs and paperwork with a managed care plan.

Indemnity plans once dominated the American health insurance market, but are no longer as popular as they used to be. They are most common on the east coast. Managed care plans now take up a much larger share of the general health insurance market and are especially dominant in the western parts of the country. There are three basic types of managed care plans: PPOs, HMOs, and POS plans

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Health Insurance

HEALTH FINANCING 24

Health Insurance Health care financing in India:  The share of public financing in total health care is just about 1% of GDP compared to 2.8% in other developing countries.  Beneficiaries are both poor as well as well-fed section of society.  Over 80% of total health financing is private financing, much of which is out-ofpocket payments (i.e. User charges) & not any prepayment schemes.  Access to health care service providers and availability of physicians is one part of the issue  Financing for health care is the  other aspect of the issue  Public spending in health care is very low at 17% and the National Health Policy has recognized this  More than 86% of healthcare financing is through unplanned for, noncontributory spending.

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Health Insurance Health care spend in India is considerably lower than that in other countries 2004 US Life expectancy 77.4 (Avg of years) Of Physicians 2.7 Per 1,000people Health care spend 5,365 (USD per capita) Health care spend 13.2 (% of GDP)

UK 78.3

MEXICO 72.6

BRAZIL 71.4

CHINA 72.5

INDIA 64.0

1.9

1.7

1.2

1.7

0.4

3,036

336

236

62

32

8.4

5.5

7.5

5.0

5.3

The experience of different countries suggests that private insurance has important role to play in overall health care.  Private health insurance has increased service capacity & supply by injecting financial resources up front E.g.: In US, private health insurance has financed health insurance in terms of doctor facilities through the HMO set-up  Private health insurance increases choice (provider, benefits, cost-sharing) for the individual E.g.: In Australia, private insurance offer the option to access to spare capacity & elective care in non-public institutions.

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Health Insurance The proportion of insurance in health care financing in India is extremely low Health care financing in India 2002 % 100%

83% from private sector spendin g

86% from out-ofpocket expense s

0% Sources of finance

Means of finance

The key issue related to financing of health care in India revolves around the lack of adequate insurance  Limited Coverage  Only around 10% of the population is covered through health financing schemes.  Geographic spread in terms of health care facilities & financing awareness is limited.  Selection criteria by suppliers often restricts the poor (& more likely to be ill) from affordable pre-payment scheme.  Moral hazard & Adverse selection  Claims ratios for mediclaim 7 Jan Arogya policies has been in the range of 120-130%

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Health Insurance

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Health Insurance The final lap towards the privatization of the Health care sector in India was made with the passing of the IRDA Bill. Till then, control of formal insurance lay with the public sector. This bill allows for the entry of various private players into various sectors of the insurance industry, overseen by a regulatory authority, which will control the various entities. It is to be assessed whether such a system will prove to be effective, in keeping with the three moot points of health insurance policy in India.  Aggregate cost of providing health care in India.  Inequitable distribution of healthcare delivery systems (all metro-centered and poorly subsidized).  Quality of healthcare benefit.  Healthcare Costs Because Of Entry Of Private Players Theoretically there are many reasons why entry of private entities into the health insurance sector would spiral up costs. Healthcare providers, like doctors, are supposed to be more informed about their patients’ health, future situation, etc. than the latter himself. This, along with prospects of being ill and the various opportunity costs of being so makes the demand for health care quite dependent on the treatment course suggested by the physician. In a regime of indemnity insurance (also called ‘fee-forservice’-in which the insurer pays for the cost of covered health care services after they have been provided)), the provider may actually sell more health care than needed. Also there is the problem of asymmetric information in the transaction between the insurer and the insured. Once insured, a person feels less the need to take precautions against ill health. However these effects are likely to have the same effect in any scenario…public health setting or privately insured. The major cost spiral due to private entry lies in a third more significant factor. Under the public sector, which involves the dual functions of financing and provisioning of services, there are a host of restrictions, especially referral to higher order care and budgetary limits.

29

Health Insurance Looking at the special insurance programmes of the Indian govt. for its employees- under the Central Government Health Scheme (CGHS), employees are not eligible for reimbursements without referrals from the concerned authorities. It is the same for the Employees State Insurance Schemes (ESIS), in the organized sector. The case of referrals is not much for outside private players, (CGHS has only 6 of total expenditure on private referrals), but is widespread within the public sector wherein the utilization is highly biased towards the public hospitals and facilities. One must remember that in India, the only significant health insurance policy is Mediclaim and the major players are few and all public sector entities. Here the only choice that one actually has is to decide WHOM to insure HOW MUCH for. This is quite unlike the west where there is a staggering range of health policies to choose from, along with various options like HMOs (Health Maintenance Organization) and PPOs (Preferred Provider Organizations) to aid you. Now the question arises, What are HMOs? Managed health care institutions that have emerged in India, like the HMOs, which have come up in the private sector in other countries combine the role of the insured and the insurer and can therefore help cut costs. This has been seen to a certain extent in countries like the USA. An HMO is a form of insurer provider that, in return for a monthly premium, provides comprehensive health care services to its members. It is different from any standard health care insurance provider in that the patient’s are required to see doctors only within the company’s network of physicians. A similar organization are PPOs. A PPO (Preferred Provider Organization) is a hybrid between a normal health insurance program and an HMO. Under these programs PPOs contract physicians on a fee-for service basis and allow visits to specialists without a recommendation from a primary care physician. PPOs tend to be more expensive than HMOs. In India, there are also certain small companies that provide what is known as ‘group insurance’. Employers sometimes provide this to their employees in whom the former pays part or the entire insurance premium of the latter (which is not much). Insuring large groups together is a viable option when one considers that not only is the danger of risks in the applicant pool lesser in large groups (as per the law of large

30

Health Insurance numbers) but also, the administrative costs are lower-Close to home, GIC offers discounts over 15% for individual insurance to almost 67% for groups of 50 thousand crores or more (Phelps 1997). Also, employee based group insurance can be promoted (as is being done already to an extent) by linking it to insurance-linked tax benefits. In India, since the premium can be paid either by the employees or the employer, tax benefits can accrue to either. It would perhaps be more feasible to promote employerbased benefits, to aid insurance, especially if corporate income tax rates are higher than personal tax rates. The same would hold if the employers could gain returns to scale through group insurance administration. Specific to developing countries, like India, is another factor that leads to extremely high health care costs- the financial health of the health insurance companies. Many companies in developing nations face inadequacy of even minimum capital reserves. Plus they also lack sufficient information of the factors that affect health. Which is why they may be charging premiums whose real cost is much less than their benefits offered in a competitive environment. Adding to this are the foolhardy get-rich quick solutions that these companies adopt which are highly risk-prone, forcing governments to create expensive bailout packages that drain the former of the need to be efficient. There is a need to set a minimum standard of regulations and restrictions with regard to management and personnel, solvency, capital requirement etc. along with strict control at the national level.  Quality Of Health Care In India Unquestionably, the quality of health care provided in India will improve with the influx of private insurers. In the free market, as the consumer grows more informed and aware, he desires better quality- institutions he may choose to label/certify products and services in the health sector, such that only the reputed brands stay on in the market and the other non-certified ones are sidelined. As demand for health pushes up its price, the opportunities for well qualified professionals will increase, but at the same time, so will the supply of low quality

31

Health Insurance workers (fake degrees, certificates in allopathy etc.), which may even lead to deteriorating quality at the margin. It is here that we need to look at the options of managed care. The developments would be in the direction of developing a strong information base and accreditation system for the providers. In India too we have certain similar schemes like SEWA** and Tribhuvandas (run through NGOs) and these models need to be examined carefully. However we need to realize that the arguments for Indemnity insurance are very different from those for HMOs. There are certain constraints on the latter that may actually be a case for indemnity insurance. The quality of services offered by HMOs may be compromised to make the package sold affordable, by empanelling ill-qualified practitioners, etc. There is need for much harsher control for this to be prevented.  Equity Implications Of Private Health Insurance Potentially, the entry of new private players into the market may actually worsen the equity balance in the economy, in terms of distribution of spending on health. One reason is that insurers may indulge in risk selection and screen off any potentially high-risk clients. Such a process will pose an unfairly large burden on those who are sick and need risk protection. Exacerbating this will be lack of a suitable buffer in terms of good quality public health insurance. Public facilities may actually deteriorate with all qualified personnel moving to the better paying private market. Though there has been an argument advanced that provision of better quality and higher cost insurance may lead the rich to adapt to it, leaving the lower priced policies to the less well off. However, we find that such a trend is highly insignificant in terms of the percentage of the elite moving away, considering the many subsidies they receive on these very public policies.. The only way this will happen is if the quality differences between the private and public sectors are very large and the premium on private insurance very cheap, which is an extremely unlikely situation. Worldwide concurrence is that inequality will worsen with market opening up, until the regulatory authorities address these problems with measures like limiting the number of

32

Health Insurance policies that will be on offer, controlling price, etc. However, this negates the very point of opening up of the health insurance sector. In the liberalized insurance market, there will be multiple distribution channels, which will include agents, brokers, corporate intermediaries, bank branches, affinity groups and direct marketing through telesales and Internet. Some channels will be cheaper than others. Hence there will be competition among the channels. The new insurers will operate with the help of multiple distribution channels but the existing insurers may be forced to operate only with the help of agents. Hence, intense competition will grow among the old and new insurers in the market to win the consumers. This will pose a great challenge to the insurers in the liberalized insurance market.

33

Health Insurance

Social Security:

34

Health Insurance The Social Security Disability (SSD) program is one of our government’s best kept secrets. Social Security is an involuntary national insurance policy. A certain amount of money is taken out of your pay check every week (your FICA taxes) to cover benefit payments and Medicare when you reach retirement age, or if you become disabled. Almost everyone knows about the retirement function, and it’s one of the better run government programs. Almost nobody knows about the disability function of Social Security. And the government isn’t doing anything to tell you about its secret. Let’s make this clear right now: If you work long enough at a job which is covered by Social Security and you become disabled you are probably eligible for Social Security Disability (SSD) benefits. According to the Social Security Administration, a “Disability” can be physical or emotional, or some combination of both. In order to win benefits you must have a disability severe enough to keep you from working in any regular paying job for at least 12 consecutive months.

Advantages of social security 1) Increased Monthly Income Long-term disability benefits or disability pensions from an employer or insurance company are generally not adjusted for inflation. However, Social Security disability benefits increase when Social Security cost-of-living adjustments are made. When the Consumer Price Index increases a certain percentage, Social Security benefits follow. However, the monthly benefit amount from an employer plan generally remains the same. If a disabled employee currently receives $1,000 monthly from an employer, 10 years from now that employee will still receive a $1,000 monthly payment regardless of inflation.

35

Health Insurance 2) Increased Retirement and Survivors Benefits Social Security disability entitlement "freezes" a person's Social Security earnings record. In other words, the time period during which a person receives Social Security disability benefits is not counted as time the person is employed. With employer or insurance company plans, this isn't the case. This is important because future benefitsSocial Security retirement benefits, dependents; benefits or even subsequent disability or survivors; benefits-are computed based on a person's average earnings during a period of time; for example, the past 35 years. If there were no earnings for a number of months or years because of a disability and that period of time is included in the calculation, the average will be lower and the benefit computation will be lower. Because Social Security doesn't count that period of time at all, there is no negative impact on the average earnings. 3) Tax-Free Income This advantage is contingent upon how a premium is originally paid on long-term disability benefits. For example, if a person pays the premium during working years out of post-tax dollars, then the long-term disability benefit is not taxable when received. If a person did not pay the premium (but was paid by another source), or if the person paid the premium out of pre-tax dollars, then the long-term disability benefit is taxable when received. In addition, 50 percent of a Social Security disability benefit is also taxable. 4) Medicare Coverage Only 25 percent of today's employer’s offer extended health care benefits to their employees and most employers only offer COBRA protection on disabilities. COBRA legislation mandates that an employee can purchase 18 months of health coverage when leaving a company. However, if a person qualifies for Social Security disability during the first 18 months of COBRA coverage, an additional 11 months of COBRA can be purchased. So, obtaining Social Security disability can provide a person with health care

36

Health Insurance coverage for up to 29 months after a disability occurs. The disabled person, regardless of age, is then eligible for Medicare coverage when COBRA expires. Medicare coverage includes Part A hospital benefits and Part B medical benefits, which, when added to any other health insurance coverage, will increase overall health insurance protection. (Note: Some businesses are exempt from offering COBRA coverage, such as those with not-forprofit status and those with fewer employees than the federally required minimum.) 5) Vocational Rehabilitation and Return-To-Work Incentives When Social Security approves a person's claim for disability benefits, a determination is made as to the likelihood that the person's medical condition will improve. If a person's condition improves while participating in a vocational rehabilitation program that is likely to assist the person in becoming self-supporting. Social Security benefits may continue until the program ends. If medical improvement is not expected, a person will be eligible for a trial work period. This trial allows a person to return to work with no restriction on earnings for up to nine months. After this period of time, a grace period of three months is allowed, during which the person can continue to work, while his or her individual case is evaluated. If the evaluation determines that the person is still disabled, that person can receive a Social Security disability monthly check, if there's any month during the next three years in which he or she does not earn $500 from employment. So what's in it for the employer? Employers should keep in mind that, when an employee qualifies for Social Security disability, the employer-paid disability benefit is reduced by the original amount paid by Social Security. (Cost-ofliving increases are not factored in.) This offsetting effect assures that the cost of benefits is shared by the employee and his or her employer. That's the best way to assure that employers can afford to offer this benefit to future employees.

37

Health Insurance Current Policies Available In Market and the Major Players When talking of health insurance in India, the first name that comes to mind is mediclaim, which is GIC’s health insurance policy and has been the only policy of any real note in the country even though it may seem unattractive to any person who has been used to a comprehensive health insurance policy. As of now there are only two players in this field, Life Insurance Corporation and the General Insurance Corporation (with its four subsidiaries.) Mediclaim is the health insurance scheme offered by GIC and Jeevan Asha is the health insurance scheme offered by LIC. The General Insurance Corporation (GIC) was formed by a Legislative Act; it is a merger of more than a hundred private companies. It was then regrouped into the 4 subsidiaries of GIC: National Insurance Company, New India Assurance Company, Oriental Insurance Company, and United India Insurance Company. The opening up of the sector has, however, brought in a lot of new players: With the markets of Developed countries nearing saturation, insurers are looking at the world’s emerging markets. These developing economies comprise 84% of world population and 22% of global GDP but only 9% of world insurance. On the other hand is the global insurance market, concentrated mainly in North America, Western Europe, Japan and Oceania- containing 91% of world’s annual premium collection? Since the gestation period of the typical insurance business is around ten years, it is high time for foreign insurers to make their presence felt in India. The new players will have to prove their creditworthiness. It will be a tedious and difficult task to woo customers away from LIC and gain their trust. Their previous track record and brand value in overseas market will not help them much in getting immediate brand recognition in India. Though they may piggyback on the brand names of their local partner, in the long run, it is their persistent track record and creditworthiness, which will matter. So, being among the first will be a major deciding factor to achieve success in this business. Already several companies have entered into the market and a dozen companies have joined with foreign partners. The real growth in the twenty-first century will come

38

Health Insurance from countries like India and China. Delay may doom future efforts to stake a claim in these high potential markets.

The Current Scenario: Most of the foreign Companies entering India have decided to focus on life insurance rather than health insurance per se. Though there are companies like Bajaj Alliance, which has launched a mediclaim policy with cashless claim facility. The insured under this policy can avail of cashless treatment from 41 hospitals across the country to the extent of sum insured and for ailments that are covered. The major advantage is that under such plans, the policyholder is not required to settle his hospital bills upfront and then make a claim with the insurer. Instead, the insurer settles the hospital bills on behalf of the policyholder, who can leave for home without paying. It's a precursor to the formal transition to a third-party administrator regime, which provides hassle-free health insurance and also standardizes medical diagnostic procedures and hospitalization expenses. This is something that is missing in the present day Mediclaim policy of GIC, which requires you to make the payments for hospital expenses and then submit the bill to the insurance company and wait to get reimbursed which itself may take time due to the bureaucratic procedures involved. 0% 5% 10% 15% 20% 25% 30% 35% USA Japan UK Germany France The 5 Biggest Insurance Markets In 1999, In Percent. Composition Of The Global Insurance Market In 1999 Life 61% Non-Life 39%

39

Health Insurance

The Global Comparison

40

Health Insurance Comparison of India’s existing health scenario vis-à-vis other nations going through a similar liberalization phase; The Indian insurance scenario pales into comparison when compared with other countries of the world where most of the developed countries have a large portion of government involvement in this sector. The quality and availability of governmentfunded healthcare in India is an area of concern. With the advent of newer technologies, the cost of healthcare has become prohibitive for a large segment of the population. The government and the people are using various health financing options to meet rising health care costs. Health insurance recently becoming being an affordable option, the potential and opportunity for insurance companies has immensely brightened. In countries such as Korea, Taiwan, and Sri Lanka, after the insurance sector was opened up, premia grew at thrice the rate of GDP growth. Clearly then, India can benefit from the entry of private players. Even overall, India still has a low insurance penetration of 1.95 per cent that makes it 51st in the world. Despite the fact that India boasts a saving rate of around 25 per cent, less than 5 percent is spent on insurance. The following data indicates the status of select Asian Countries, with reference to their National incomes and their Health expenditure both in public and private sectors.

41

Health Insurance

Rural-Urban Mix 42

Health Insurance It must be borne in mind that India is a predominantly rural country and will continue to be so in the near future. New players may tend to favor the "creamy" layer of the urban population. But, in doing so, they may well miss a large chunk of the insurable population. A strong case in point is the current business composition of predominant market leader the Life Insurance Corporation of India. The lion's share of its new business comes from the rural and semi-rural markets. In a country of 1 billion people, mass marketing is always a profitable and cost-effective option for gaining market share. The rural sector is a perfect case for mass marketing. Competition in rural areas tends to be kinder than that in urban areas, which are usually cutthroat and the generally smaller policy amounts in rural areas would be more than offset by the higher volume potential in these areas in contrast with urban areas. Identifying the right agents to harness the full potential of the vibrant and dynamic rural markets will certainly provide results. Rural insurance should be looked upon as an opportunity and not an obligation. Two aspects that need to be developed so as to allow health insurers to penetrate the rural market are:  A smaller bundle of innovative products in sync with rural needs and perception  An efficient delivery system. In this light, the suggestions of the IRDA bill are extremely useful. We need to set up cooperative societies that will encourage targeting the rural sector. Also, insurance agents need to be trained to sell health insurance to the rural layman, considering that the bucolic population in India is more susceptible to falling ill, as regard to the health – conscious urban one.

Health Insurance Is Necessary; But Who Will Develop It For The Poor? Like you, we are aware of the huge need to bolster health insurance in India. A growing number of private health insurers sell insurance to wealthy individuals. And the government of India is motivated to look for solutions to encourage health insurance for the poor, in pursuit of breaking the vicious cycle of poverty -> ill health -> poverty.

43

Health Insurance For the time being, most poor Indians are unable to pay the cost of healthcare to heal their illnesses, and they must rely on themselves alone when paying the direct and indirect cost of illness. In some cases, individuals can get limited help from their community, as some groups have started “micro health insurance” units, which offer rudimentary pre-payment solutions. Can micro health insurance units serve as an effective instrument in insuring the poor? The project “Strengthening Micro Health Insurance Units for the Poor in India” intends to provide new evidence-based reasoning how the stability and efficiency of schemes in place can be increased, and pave the way for the establishment of new schemes.

Health Insurance for the Rural Poor? For most people living in developing countries “health insurance” is an unknown word. It is generally assumed that, with the exception of the upper classes, people cannot afford such type of social protection. This is a pity as also poor people demand protection against the financial consequences of illnesses. For most people living in poor developing countries illness still represents a permanent threat to their income earning capacity. Beside the direct costs for treatment and drugs, indirect costs for the missing labor force of the ill and the occupying person have to be shouldered by the household. Health insurance schemes are an increasingly recognized factor as a tool to finance health care provision in low income countries. Given the high latent demand from people for health care services of a good quality and the extreme under-utilization of health services in several countries, it has been argued that social health insurance may improve the access to health care of acceptable quality. Whereas alternative forms of health care financing and cost recovery strategies like user fees have been heavily criticized, the option of insurance seems to be a promising alternative as it is a possibility to pool risk transferring, unforeseeable health care costs to fixed premiums. Recently, mainly in Sub-Saharan Africa but also in a variety of other countries, non-profit, mutual, community-based health insurance schemes have emerged. These schemes are characterized by an ethic of mutual aid, solidarity and the collective pooling of health risks. In several countries these schemes operate in conjunction with health care providers, mainly hospitals in the area.

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Health Insurance Against this background the Center for Development Research (ZEF-Bonn) analyses within his research program on social security systems in rural areas the prospects and limitations of innovative health insurance schemes. In close collaboration with national research institutes empirical studies are currently being carried out in Ethiopia, China, Ghana, India, Senegal and Tanzania. The aim of these projects is to estimate demand for health care and health insurance, quantify economic and social impacts, as well as identifying factors of success and failure. The studies focus on rural areas because here the need for insurance is especially, but private insurance markets do not exist and public measures often fail to reach their target population.

Impact on the Poor Developments on the health insurance front will not leave the poor unaffected. Even though private for-profit insurance companies are not expected to voluntarily provide health insurance cover to the poor, the poor may still be affected on account of the influence that development of health insurance will have on the supply of such services. Furthermore, the poor may also directly benefit if insurance regulations are specifically designed to achieve redistribution and equity objectives. At the minimum the government must ensure that (i) the liberalisation of insurance market provides value for money for the direct beneficiaries (ii) the poor are not adversely affected by the liberalisation (Peters et al. 2000). However, the government can definitely aim higher by ensuring that the poor too benefit from the developments in health insurance. The likely impact of developing voluntary insurance on the poor is far from clear. There are both potential benefits and risks associated with it. Development of health insurance would influence supply of health services both in terms of its quality and price. It would also influence the extent of public funds available for subsidising the poor. The potential benefits and risks are formally listed below:

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Health Insurance Potential Benefits:  If the introduction of evidence-based medicine trickles down to other providers that are used more often by the poor, the poor could benefit from the improvement in quality in the private sector.  If public subsidy to the non-poor who join health insurance decreases, greater public resources may be available for providing subsidy to the poor

Potential Risks: This section is based on the findings and recommendation made during the World Bank organized national seminar on private health insurance in November 1999. These are reported in Ferreiro (2000), Peters, D. et al. [a] and Peters, D. et al. [b].  The gap between the poor access at present and the required access may increase with cost escalation;  As the non-poor make a switchover from public to private hospitals there is a risk of political support for public financing getting reduced which would impact the poor by excluding them quality care from private market or by deteriorating quality and weakening support for public services (Peters et al. 2002) The poor might benefit from the expansion of private providers if the supply of health care expands due to increase in affordability resulting from health insurance. However, if prices grow faster than delivery capacity, cost escalation may even expand the existing gap between the poor and the required access to health care. All this is unpredictable, since it depends on the supply response of health care and the model of health insurance implemented in the country. Regarding the latter, it is clear that an Indemnity/fee-for-service system will unavoidably result in a severe cost escalation whereas a managed care which coordinates financing and delivery of healthcare would probably be capable of maintaining costs under control. Managed care by containing of unnecessary treatment helps in containment of costs and thereby makes health insurance more affordable to larger number of people; provides incentives for improving healthcare delivery; promotes preventive care such as medical check ups, immunisation and so on. Since fee-for-service approach to payment of health providers tends to escalate costs the government should encourage managed care models.

46

Health Insurance

Women and health sector

47

Health Insurance Given the above dismal picture of health care in India not much can be expected in favor of women as clients of the health care system. Both the private and the public health system's core attention towards women is viewing the latter as mothers. While the private nursing home sector mostly comprises of maternity homes, the public health sector's major concern vis-à-vis women is to prevent them from becoming mothers. While the private maternity homes cater to the urban population and the middle classes (about 50 million women in the reproductive ages) the public sector's health services offer family planning services (overwhelmingly tubectomies and IUCDs) in both rural and urban areas covering over 100 million couples. The maternity services available under the public sector, especially in rural areas, is mostly through paramedics like auxiliary nurse midwives or trained dais. Beyond the above and some other occasional services like ante-natal care and abortion services (both within the context of family planning), very little else is available to women to address their general and other gender-specific health care needs. Of course the informal sector practitioners do cater to some specific needs of women like abortions, white discharges, psychic problems (what patriarchal literature calls hysteria) etc. But very little of it is documented to enable a discussion or make comments. Some efforts are definitely being made to understand the contributions and /or harms of such providers. Some NGOs and Women's groups have put in efforts to document this and have even helped in improving skills of such practitioners. This gross neglect begins with defining women's health care needs and their low status in society. Women in India, and especially those in rural areas, given their general living conditions and the double burden on their shoulders, have never publicly voiced their concern over their reproductive, sexual and gynecological health needs. Even something as obvious as menstruation is grossly neglected and this has serious consequences because many diseases in our country are related to blood loss tuberculosis, malaria, dysentery, kalaazar, hookworm - and hence makes anemia an extremely important concern of women's health which presently receives very little attention.

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Health Insurance The health system, as indicated earlier, views women's health only in terms of their uterus. Thus, historically all health programmes designed specifically for women have been related to that - MCH, family planning (contraception), child survival, safe motherhood, etc.. What is tragic is that even this narrow focused approach has failed to provide women with safe pregnancy, maternity, contraception, etc.. High maternal mortality and the high level of unsafe, unhygienic births, especially in the countryside, is evidence which stands out pointedly. The table below clearly shows the poor overall coverage of both the private and public health sectors taken together for the various MCH services as found during the 42nd Round of the National Sample Survey in I986-87 and the NFHS in 1992-93. The rural - urban and the strong class differences are also worth noting. While the NFHS data is not strictly comparable with the NSS data, the improvement in coverage, especially of immunisation and ANC, over the period due to perhaps the mission approach and higher allocation of resources is also worth noting.

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Health Insurance Much Services Utilisation (Public & Private Sectors) Across Classes and Rural-Urban Areas: All India Percentage Coverage 1987 & 1993 Class

Rural

Urban

Completed

Maternity

Immunization Care Polio Triple ANC PNC

Completed

Births

Maternity

Immunization Care

Domic Hosp-ilary ital

Births Domi

Polio Triple ANC PNC -cilar y

Hosp -ital

1987 - NSS Bottom 10%

Top

7.24

4.41

17.36 10.35 86.75 8.91

14.31 9.54

39.04 21.16 62.05 33.75

10% All 25.76 20.44 41.67 20.36 55.24 39.03 59.26 51.16 94.05 58.32 8.75 84.25 10.77 7.56

21.15 12.60 80.52 13.53 26.82 20.51 46.83 23.76 46.85 48.20

Difference Between Top

& 3.5

4.6

2.4

2.0

46.6

56.7 -

0.6

4.4

4.1

5.4

2.4

2.7

83.0

16.0

70.2

68.8

81.1 -

0.1

2.5

Bottom (Times) 1993 NHFS

–

48.4

50

41.5 57.6

Health Insurance Health Sector Financing in Context of Women’s Health In the last decade or so the health of women has been receiving special attention the world over. From the Nairobi UN Conference, through the Cairo ICPD and to the recently concluded Beijing Conference, health and health care of women has been an important agenda item which has taken a growing share of attention, and especially so reproductive health. And it is here where the catch lies. While recognising the importance of reproductive health, especially in a country like India which still has relatively high fertility, overwhelming proportion of deliveries being conducted at homes, often under unhygienic conditions, a supposed unconcern for gynecological morbidities and an embarrassingly high proportion of abortions being done illegally, it is even more important to emphasis the need for making available comprehensive health services to all, and especially to women as a group for their special needs. The danger of beginning with reproductive health is narrowing down the focus to the uterus, precisely what the women's health movements want to avoid. And pushing for making reproductive health a special program under the State's primary health care program would end up the same way in which earlier versions of health programs of women like the MCH program or safe-motherhood have ended - targets for population control programs, and especially hazardous contraceptives like injectables and implants. Thus the demand must begin with provision of easily accessible and free of cost comprehensive health care for all, with a clear recognition and provision for the special needs of women, as well as for other vulnerable groups like children, senior citizens, tribals etc. Natural and social justice demands that society must provide for a basic decent human life. This becomes even more imminent in countries where poverty is rampant but it is precisely in such countries where social provisions, like health, education, housing, public transportation and other public utilities, are not available to a large majority of the population.

51

Health Insurance

Case Study Individual Health Plan Mr. P R Arunagiri, who had bought our Individual health insurance plan for Rs 2,00,000 cover, suffered fracture in an accidental injury on May 23, 2005. He being aware about cashless hospitalization procedure immediately contacted our TPA helpline and got pre-authorisation approval for availing cashless facility. He was hospitalized for two days and incurred a total cost of Rs 8990. However, ICICI Lombard health insurance plan came to Mr Arunagiri’s rescue. His entire expenses -- Rs 1875 (nursing), Rs 445 (x-ray), Rs 350 (operation theatre), Rs 570 (pharmacy) and Rs 5750 (surgeons fee/ consultancy charges) were put up for claim. Out of Rs 8990, the claim was processed for the final amount of Rs 8961, which was directly borne by the company.

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Health Insurance Health Administration Team (HAT) scores a first! This Claims Settlement case, handled by HAT, perfectly underlines how we can generate that extra goodwill - just by leveraging our knowledge and experience. The client in this claim was a lady employee of Gujarat Paguthan Energy Corporation. The patient in need of Health Insurance coverage was her spouse. The client was earlier handled by a TPA and was quite satisfied with the services. The proposition of our HAT services was made to the client at the time of renewal. Initially, there was some hesitancy from the client's side as they were apprehensive about an insurer coordinating cashless services directly. Coverage of hospitalisation expenses & cost of surgery. The patient was suffering from inguinal hernia and needed an operation. The client intimated us of the hospitalisation 3 days in advance to ensure smooth cashless dealings with the hospitals. HAT suggested hospitalisation at a prominent hospital in Mumbai, which was a part of the Bajaj Allianz Health Administration Team network. HAT contacted the hospital and arranged for the preauthorization of the client to get an estimate of the expenses. The hospital provided an estimate of Rs. 50,000 excluding the surgeon's charges as the latter would be provided by the surgeon after the patient was admitted. Based on past experience with TPAs, HAT deduced that this may be a ploy to inflate the bill after the patient has been admitted, as, by then, changing hospitals wouldn't be a viable option. Meanwhile, HAT had gathered data about the approximate costs for this surgery in other hospitals. The client was anxious, expecting a huge bill for the surgery, and more so, as HAT was handling its first case with a big corporate hospital. After admission, a preauthorization estimate of Rs. 1,25,000 was sent to HAT for approval which was much above the average cost of this surgery in other hospitals. The hospital billings department was immediately contacted and negotiation of the rates was conducted. HAT took a strong stand on the flimsy logic behind the high estimate and insisted that the rates be reduced to a reasonable level. The hospital responded by stating that other TPAs had been adhering to this rate without objections. HAT pressed upon the hospital authorities to revise the rates on the premise that HAT would discontinue the agreement unless preferential rates were extended to our members.

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Health Insurance After further negotiations, HAT was able to convince the hospital to reduce the cost of the treatment and surgery to Rs. 65,000 including all cost components. The patient underwent surgery for his ailment, and the operation was conducted successfully. In this case, HAT was able to help the patient by drawing on its past experience. HAT could gather accurate information from its network of affiliated hospitals, which enabled it to verify the accuracy of the cost estimate of the surgery. This made it possible for HAT to negotiate with The hospitals on behalf of the patient on solid grounds, and bring the estimate of the operation down by a significant amount. Thus, the patient was ensured the highest quality of heath care at a reasonable price. The balance sum insured can be used later. The client was very satisfied with the services offered by HAT, and responsiveness to the situation at hand. They were glad to have got hassle-free hospitalisation with all the modalities being taken care of by HAT. They were particularly happy about the price differentiation that they availed of by moving away from the TPA services to HAT.

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Health Insurance Conclusion: Health insurance is a emerging important financial tool in meeting health care needs of the people in India. Exponential rise in the cost of delivery of healthcare services, price competition, market realignment are the major factors that are forcing hospitals to scrutinize their business processes and to redesign them in a manner that would not only help to keep the prices competitive but also help in delivering quality care to the patients.

Private consumption expenditure on health care as a percent of GDP

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