PRN No.

1904076400012

Semester No. 1

Name of Learner: Shivendra Nath Tripathi

Course Name: PGDHIM

Program Name : PGDMLS & PGDHIM

Set of Assignment: 1st

Course 1: Health Insurance, Its Models & Financials

• Describe the current scenario of Health Insurance Industry in

India?
The concept of Health Insurance was first proposed in the year 1694 by Hugh the elder.
Healthcare in India is in a state of enormous transition. Increased income and health
consciousness among the majority of the classes and the introduction of private healthcare
financing drive the change. Before independence, the health structure was in dismal
condition i.e. high morbidity and high mortality and prevalence of infectious diseases. Since
independence, emphasis has been put on primary health care and we made considerable
progress in improving the health status of the country. But still, India is way behind many fast
developing countries in health indicators.

Health insurance, which remains highly underdeveloped and less significant segment of the
product portfolios, is now emerging as a tool to manage financial needs of people to seek
health services.

Less than 15% of population is covered through health insurance. And most of it covers only
government employees. At any given point of time, 40 to 50 million people are on medication
for major sickness and share of public financing in total health care is just about 1% of GDP.
Over 80% of health financing is private financing, much of which is out of pocket payments
and not by any pre-payment schemes.

The existing health insurance schemes available in India can be broadly categorized as:

1. Voluntary health insurance schemes or private-for-profit schemes

2. Mandatory health insurance schemes or government run schemes (namely ESIS,
CGHS)

3. Insurance offered by NGOs/Community based health insurance

4. Employer based schemes

Voluntary health insurance schemes or private-for-profit schemes: In private insurance,

buyers are willing to pay premium to an insurance company that pools similar risks and
insures them for health related expenses. The main distinction is that the premiums are set
at a level, which are based on assessment of risk status of the consumer (or of the group of
employees) and the level of benefits provided, rather than as a proportion of consumer’s
income. In the public sector, the General Insurance Corporation (GIC) and its four subsidiary
companies (National Insurance Corporation, New India Assurance Company, Oriental
Insurance Company and United Insurance Company) provide voluntary insurance schemes.

The most popular health insurance cover offered by GIC is Mediclaim policy introduced in
1986. It reimburses the hospitalization expenses owing to illness or injury suffered by the
insured, whether the hospitalization is domiciliary or otherwise. It does not cover outpatient
treatments. Government has exempted the premium paid by individuals from their taxable
income. Because of high premiums it has remained limited to middle class, urban tax payer
segment of population.

Some of the various other voluntary health insurance schemes available in the market are :-
Asha deep plan II , Jeevan Asha plan II, Jan Arogya policy, Raja Rajeswari policy, Overseas
Mediclaim policy, Cancer Insurance policy, Bhavishya Arogya policy, Dreaded disease
policy, Health Guard, Critical illness policy, Group Health insurance policy, Shakti Shield etc.

Mandatory health insurance schemes or government run schemes (namely ESIS,

CGHS) also Employer State Insurance Scheme (ESI), enacted in 1948, applies to power
using factories employing 10 persons or more and non-power & other specified
establishments employing 20 persons or more. It covers employees and the dependents
against loss of wages due to sickness, maternity, disability and death due to employment
injury. It also covers funeral expenses and rehabilitation allowance. Medical care comprises
outpatient care, hospitalization, medicines and specialist care. These services are provided
through network of ESIS facilities, public care centers, non-governmental organizations
(NGOs) and empanelled private hospitals. The ESIS is financed by three way contributions
from employers, employees and the state government.

Central Government Health Insurance Scheme (CGHS):-CGHS covers employees and

retirees of the central government and certain autonomous and semi autonomous and semi-
government organizations. It also covers Members of Parliament, Governors, accredited
journalists and members of general public in some specified areas. Benefits under the
scheme include medical care, home visits/care, free medicines and diagnostic services.
These services are provided through public facilities with some specialized treatment being
permissible at private facilities. Most of the expenditure is met by the central government

Universal Health Insurance Scheme (UHIS):- For providing financial risk protection to the
poor, the government announced UHIS in 2003. Under this scheme, for a premium of Rs.
165 per year per person, Rs.248 for a family of five and Rs.330 for a family of seven , health
care for sum assured of Rs. 30000/- was provided. This scheme has been made eligible for
below poverty line families only. To make the scheme more saleable, the insurance
companies provided for a floater clause that made any member of family eligible as against
mediclaim policy which is for an individual member.

Some of the popular Community Based Health Insurance schemes are: - Self-Employed
Women’s Association (SEWA), Tribuvandas Foundation (TF), The Mullur Milk Co-operative,
Sewagram, Action for Community Organization, Rehabilitation and Development
(ACCORD), Voluntary Health Services (VHS) etc.

Employer based schemes Employers in both public and private sector offers employer
based insurance schemes through their own employer. These facilities are by way of lump
sum payments, reimbursement of employees’ health expenditure for out patient care and
hospitalization, fixed medical allowance or covering them under the group health insurance
schemes. The Railways, Defense and Security forces, Plantation sector and Mining sector
run their own health services for employees and their families.
Overall Health Insurance sector in India is in its developing stage and recent Pradhan Mantri
Jan Arogya Yogna is the latest social benefit scheme launched by central government

• What are the Rating Methods in health insurance? (5 Marks)

Rating methods in Insurance are used to decide the premium for a policy. There are various
methods on which the rating is done like

Risk Rating

Community Rating

Income Rating

Experience Rating

The difference between the selling price for insurance and the selling price for other products
is that the actual cost of providing the insurance is unknown until the policy period has
lapsed. Therefore, insurance rates must be based on predictions rather than actual costs.
Most rates are determined by statistical analysis of past losses based on specific variables
of the insured. Variables that yield the best forecasts are the criteria by which premiums are
set. Actuaries set the insurance rate based on specific variables, while underwriters decide
which variables apply to a specific insurance applicant.

Because an insurance company is a business, it is obvious that the rate charged must cover
losses and expenses, and earn some profit. But to be competitive, insurance companies
must also offer the lowest premium for a given coverage. Moreover, all states have laws
that regulate what insurance companies can charge, and thus, both business and regulatory
objectives must be met.

The primary purpose of rating is to determine the lowest premium that meets all the required
objectives. A major part of rating is identifying every characteristic that can reliably predict
future losses, so that lower premiums can be charged to the low risk groups and higher
premiums charged to the higher risk groups. By offering lower premiums to lower risk
groups, an insurance company can attract those individuals to its own insurance, lowering its
own losses and expenses, while increasing the losses and expenses for the remaining
insurance companies as they retain more of the higher risk pools. This is the reason why
insurance companies spend money on actuarial studies with the objective of identifying
every characteristic that reliably predicts future losses.
Risk Rating:- This method involves risk perceived by the insurer based on individual like
individual’s medical history, occupation, life style, and other individual characteristic

Community Rating:- In this system the whole community is rated a one. The premium is
same for all individuals of different age, sex, occupation etc. No individual risk is assessed.
Some companies may provide “modified” community rating where they may charge different
premium based of location or age of community.

Income Rating:- This system involves determining premium based on income of individual.
A defined portion of income is charged as premium irrespective of the other factors. Mostly
used in government social sector schemes like Employees’ State Insurance Scheme.

Experience Rating:- In this system the insurance premium is based in Insured past loss
experience. This method is used for individual who have been covered for a long time and
their records and data base is available. Mostly used in group health insurance schemes. In
India there is lack of experience based rating system as the data available is low’

Short note on Universal Health Coverage in India

"Universal coverage" refers to a scenario where everyone is covered for basic healthcare
services. This is a scheme, under which all Indian citizens, regardless of their economic,
social or cultural backgrounds will have the right to affordable, accountable and appropriate
health services of assured quality defined in a published package of services and benefits. It
is also a supplemental system of financing to protect people from increasing medical
expenses.

The goal of Universal Health Coverage is to ensure that all people obtain the health services
they need without suffering financial hardship when paying for them. This requires a strong,
efficient, well-run health system; a system for financing health services; access to essential
medicines and technologies; and a sufficient capacity of well-trained, motivated health
workers.

Ensuring that every individual in this diverse nation obtains the needed health services
without suffering financial hardship

India has made rapid strides towards increasing access to health services in pas few years
through a no of initiatives like National Rural Health Mission in 2005, National Urban Health
Mission in 2013. For below poverty line population Rashtriya Swastha Bima Yogna, Pradhan
Mantri Jan Arogya Yogna 2018
Initiatives for UHC in India

The National Health Policy 2017 envisages the attainment of the highest possible level of
health without anyone having to face financial hardship as a consequence.

Mission Indradhanush, one of the largest global public health initiatives was launched in
2014. In its four phases till date, MI has successfully reached over 25 million children in over
528 districts. Since 2014, Rotavirus vaccine, Pneumococcal Conjugate Vaccine (PCV), and
the Measles-Rubella (MR) vaccine, and also the JE vaccine for adults have also been
launched.

The Pradhan Mantri Dialysis Program has been launched to provide free services through
Dialysis Units under Free Drugs and Diagnostics Program.

AMRIT outlets have been established to provide subsidised medicines

To provide comprehensive primary care, the Government has announced transforming 1.5
lakh sub health centres to Health and Wellness centres in the country.

Universal screening of common NCDs such as diabetes, hypertension and common cancers
at the sub-centre and Primary Health Centre has been initiated.

Laqshya| Labour Room Quality Improvement Initiative

There is enough evidence that supports the fact that improving the quality of care in Labour
rooms especially on the day of birth, is central to maternal and neonatal survival.
Recognizing this fact, Government of India has launched Laqshya- Labor Room Quality
Improvement Initiative.

LaQshya is expected to improve the quality of care that is being provided to the pregnant
mother in the Labour Room and Maternity Operation Theatres, thereby preventing the
undesirable adverse outcomes associated with childbirth. This initiative will be implemented
in Government Medical Colleges (MCs) besides District Hospitals (DHs), and high delivery
load Sub-District Hospitals (SDHs) and Community Health Centres (CHCs).

The initiative plans to conduct quality certification of labour rooms and also incentivize
facilities achieving the targets outlined. The goal of this initiative is to reduce preventable
maternal and new-born mortality, morbidity and stillbirths associated with the care around
delivery in Labour room and Maternity OT and ensure respectful maternity care.

Short note on Ayushman Bharat

Prime Minister Shri Narendra Modi, in his Independence Day speech of 2018, announced
the launch of the Ayushman Bharat-National Health Protection Scheme (AB-NHPS).
On September 23, 2018, the Prime Minister Narendra Modi launched Ayushman Bharat,
world's largest government-funded healthcare scheme in Jharkhand's capital Ranchi. The
Centre's flagship scheme has been renamed as PM Jan Arogya Yojana (PMJAY). The
scheme become operational from September 25 on the birth anniversary of Pandit
Deendayal Upadhyay.

The scheme is targeted at poor, deprived rural families and identified occupational category
of urban workers' families. According to the Socio-Economic Caste Census (SECC) 2011
data, 8.03 crore families in rural and 2.33 crore in urban areas will be entitled to be covered
under these scheme, i.e., it will cover around 50 crore people.

PMJAY will have a defined benefit cover of Rs 5 lakh per family (on a family floater basis)
per year for secondary and tertiary care hospitalisation. It will offer a benefit cover of Rs 5
lakh per family per year. It will subsume the existing Rashtriya Swasthya Bima Yojana
(RSBY), launched in 2008 by the UPA government.

To ensure that nobody is left out (especially women, children and the elderly), there will be
no cap on the family size and age under the PMJAY The scheme will be cashless and
paperless at public hospitals and empanelled private hospitals.

It will be an entitlement based scheme where it will be decided on the basis of deprivation
criteria in the SECC database. The beneficiaries are identified based on the deprivation
categories (D1, D2, D3, D4, D5, and D7) identified under the SECC database for rural areas.
For the urban areas, the 11 occupational criteria will determine entitlement. In addition,
Rashtriya Swasthya Bima Yojna (RSBY) beneficiaries in states where it is active are also
included.

The beneficiaries will not be required to pay any charges and premium for the hospitalization
expenses. The benefit also include pre- and post-hospitalization expenses.

Each empanelled hospital will have an 'Ayushman Mitra' to assist patients and will
coordinate with beneficiaries and the hospital. They will run a help desk, check documents to
verify the eligibility, and enrolment to the scheme.

All the beneficiaries will be given letters having QR codes which will be scanned and a
demographic authentication will be conducted for identification and to verify his or her
eligibility to avail the benefits of the scheme.

Benefits of the scheme are portable across the country and a beneficiary covered under the
scheme will be allowed to take cashless benefits from any public/private empanelled
hospitals across the country.
It will cover medical and hospitalisation expenses for almost all secondary care and most of
tertiary care procedures. The health ministry has included 1,354 packages in the scheme
under which treatment for coronary bypass, knee replacements and stenting among others
would be provided at 15-20 per cent cheaper rates than the Central Government Health
Scheme (CGHS).

There is no enrolment process in PMJAY as it is an entitlement-based mission. Families who

are identified by the government on the basis of deprivation and occupational criteria using
the SECC database, both in rural and urban areas, are entitled for PMJAY. Currently the
database is based on census for the year 2011.

A list of eligible families has been shared with the respective state governments as well as
state level departments like the ANMs, BMO, and BDOs of relevant areas. A dedicated
PMJAY family identification number will be allotted to eligible families. Only families whose
name is on the list are entitled for the benefits of PMJAY.

Additionally, families with an active RSBY cards as of 28 February 2018 will covered. No
additional new families can be added under PMJAY. However, names of additional family
members can be added for those families whose names are already on the SECC list.

ii. What is RSBY scheme?What are the key features of the RSBY
Scheme?

(5 Marks)

With a dramatic increase in population through the early years of this millennium, and a lack
of corresponding growth in employment opportunities and wealth, it became evident that
social security and healthcare for all was a pressing demand. According to reports from the
early 2000’s, about 93 percent of the work force of the country was employed with the
unorganized sector. While many of these workers were already below poverty line (BPL), the
occurrence of ailments and hospitalization costs sapped the people of whatever little wealth
they had. Despite widespread availability of medical facilities, quality healthcare costs in the
country have remained high.

One of the major insecurities for workers in the unorganized sector is the frequent
incidences of illness and need for medical care and hospitalization of such workers and their
 family members. Despite the expansion in the health facilities, illness remains one of the
most prevalent causes of human deprivation in India. It has been clearly recognized that
health insurance is one way of providing protection to poor households against the risk of
health spending leading to poverty. However, most efforts to provide health insurance in the
past have faced difficulties in both design and implementation. The poor are unable or
unwilling to take up health insurance because of its cost, or lack of perceived benefits.
Organizing and administering health insurance, especially in rural areas, is also difficult.

In order to address this concern, the government of India had enacted the Unorganized
Workers Social Security Act in 2008.

Key features of RSBY

Funding Pattern

Contribution by Government of India: 75% of the estimated annual premium of Rs.750,

subject to a maximum of Rs. 565 per family per annum. The cost of smart card will be borne
by the Central Government.
Contribution by respective State Governments: 25% of the annual premium, as well as any
additional premium.
The beneficiary would pay Rs. 30 per annum as registration/renewal fee.
The administrative and other related cost of administering the scheme would be borne by the
respective State Governments

Implementing Agency & Formulation of Projects

The State Government while formulating the pilot project will determine the implementing
agency on behalf of the State Government.

Eligibility

Unorganized sector workers belonging to BPL category and their family members (a family unit
of five) shall be the beneficiaries under the scheme.
It will be the responsibility of the implementing agencies to verify the eligibility of the
unorganized sector workers and his family members who are proposed to be benefited under
the scheme.
The beneficiaries will be issued smart cards for the purpose of identification.
 Benefits

The beneficiary shall be eligible for such in-patient health care insurance benefits as would
be designed by the respective State Governments based on the requirement of the people/
geographical area. However, the State Governments are advised to incorporate at least the
following minimum benefits in the package / scheme:
The unorganized sector worker and his family (unit of five) will be covered. Total sum insured
would be Rs. 30,000/- per family per annum on a family floater basis.
Cashless attendance to all covered ailments
Hospitalization expenses, taking care of most common illnesses with as little exclusion as
possible
All pre- existing diseases to be covered
Transportation costs (actual with maximum limit of Rs. 100 per visit) within an overall limit of
Rs.1000.

Revamped RSBY

A revamped RSBY was launched in October 2014 to include the following.

1. Enrollment with RSBY to be linked with opening of bank account and issuance of
Aadhaar card.
2. Scheme currently covers 3 crore workers. It will be expanded to include construction
sector also.
3. Single central smart card to be issued to include other welfare schemes like Aam
Aadmi Bima Yojana and National Old Age Pension Scheme.

From 1st April The Labour and Employment Ministry is handed over the RSBY scheme to the
Ministry of Health and Family Welfare The RSBY,

Course 3:Health Insurance Products & Underwriting

• What are the different types of benefits that are associated with
the long term care health insurance plans? (3 Marks)
Long Term Care insurance is relatively newer concept. In India its not a popular form of
insurance. With decreasing family size and migration of children to another cities for jobs,
elderly face issues when they cannot perform routine daily activities

Long-term care insurance (LTC or LTCI) is an insurance product, that helps pay for the costs
associated with long-term care. Long-term care insurance covers care generally not covered
by health insurance, Medicare, or Medicaid.

Individuals who require long-term care are generally not sick in the traditional sense but are
unable to perform two of the six activities of daily living (ADLs) such as dressing, bathing, eating,
toileting, continence, transferring (getting in and out of a bed or chair), and walking.
Long-term care is an issue because people are living longer. As people age, many times they
need help with everyday activities of daily living or require supervision due to severe cognitive
impairment. That impacts women even more since they often live longer than men and, by
default, become caregivers to others.[2]

Benefits
Long-term care insurance can cover home care, assisted living, adult daycare, respite
care, hospice care, nursing home, Alzheimer's facilities, and home modification to accommodate
disabilities.[3] If home care coverage is purchased, long-term care insurance can pay for home
care, often from the first day it is needed. It will pay for a visiting or live-in caregiver, companion,
housekeeper, therapist or private duty nurse up to seven days a week, 24 hours a day up to the
policy benefit maximum. Many experts suggest shopping between the ages of 45 and 55 as part
of an overall retirement plan to protect assets from the high costs and burdens of extended
health care.
Other benefits of long-term care insurance:

 Many individuals may feel uncomfortable relying on their children or family members for
support, and find that long-term care insurance could help cover out-of-pocket expenses.
Without long-term care insurance, the cost of providing these services may quickly deplete
the savings of the individual and/or their family. The costs of long-term care differ by region.
The U.S. government has an interactive map to estimate the costs by state.
 Premiums paid on a long-term care insurance product may be eligible for an income tax
deduction. The amount of the deduction depends on the age of the covered person. Benefits
paid from a long-term care contract are generally excluded from income. Some states also
have deductions or credits and proceeds are always tax-free.
 Business deductions of premiums are determined by the type of business. Generally
corporations paying premiums for an employee are 100% deductible if not included in
employee's taxable income.
In the United States, Medicaid will provide long-term care services for the poor or those who
spend-down assets because of care and exhaust their assets. In most states you must spend
down to $2000. If there is a living spouse/partner they may keep an additional amount.
A welfare program, Medicaid does provide medically necessary services for people with limited
resources who "need nursing home care but can stay at home with special community care
services." However, Medicaid generally does not cover long-term care provided in a home
setting or for assisted living. People who need long-term care often prefer care in the home or in
a private room in an assisted living facility.
• Coinsurance (2 Marks)

Coinsurance is the percentage of claim to be paid by the insured from his own side, also
called as Co-Pay. Coinsurance can be percentage of claim and is over and above deducible
amount if both clauses are included. While coinsurance is the percentage of the clain the
insured is liable to pay, Co-Pay is the standard cost to be born by insured every time they
use services. Co-Pay is usually fixed charge like 1000Rs or more.

Suppose if you have a coinsurance at 20% and the claim amount after compulsorily
deducible is 10000Rs then the Insurer will pay 10000-20% = 80000. The amount of 20% I.e
20000 in this case is co insurance.

Coinsurance is included in the policies to reduce the liability of insurance company.

• Discuss about the similarities and differences between individual insurance and
group medical insurance benefits. (5 Marks)

Individual Insurance Plan is type of a plan which caters to an individual and is customized as
per his needs and requirements. Specifications related to the individual like age, health,
family medical history, etc are considered while determining the premium amount. The policy
is valid for the time decided by the policyholder and is not dependent on any other factor like
employment, association, etc. The premium rate is fixed at the time of buying the insurance.
You can buy additional benefits (riders) depending on your needs. In other words, you have
a lot of freedom to cover exactly what you want in an individual insurance plan.

Group insurance is offered to the employees of a company as an employment benefit. Group

insurance can also be sought by an alumni group, members of an association, and so on.
The members of the group are provided a certain fixed and uniform cover. The cumulative
risk of all the members is considered while deciding upon the premium amount. The logic
here is that in a group some members would be less likely to make a claim than the others.
So this balances the risk factor to a great extent. The members are covered till the time they
are a part of the group (employed in the company, part of the association, etc). The
coverage is removed when they leave the group.

Similarities

Both type of insurance provide the treatment cost as per terms and conditions of the policy.
Both may also cover opd charges. Both may have option of annual health checkups. Both
cover family also
Differences

Individual Group

Premium Usually higher Usually Lower

Eligliblity Any Individual Only Group members

Waiting Period Yes Usually waived off

Payment of premium 100% by Individual Shared between employer

and employee if group if of
employees

Pre existing illness Not covered Covered

Applicability Life long or till maximum age Till member of group

Customized Possible Not Possible

Terms and Conditions Free to set Cannot set

Renewal Premium Depends Upon Individual Depends upon groups

Medical History and may be experience rating by
low company and may go higher
eventually if claims are high

No Claim Bonus Yes No

Right to coverage Provider can deny coverage Provider cannot deny

on various grounds coverage to member of
group Individually