Health Insurance

Dr Anshuli Trivedi I st year PG Dept of Community Medicine. Based on lecture by Dr Joseph Kuruvilla. CMC Vellore. On 3/9/8.

What is Health Insurance?
³It is a contract between insurer & insured

where the latter is covered against health costs on payment of premium as per terms & conditions of the issues.´
It is regulated by IRDA-Insurance Regulatory Development Authority. Under Ministry of Finance. Health Plans-Subscription based Medical Care. Beneficiaries-Self Help groups, factory workers RMP¶s, students, defence personnels & other sections of society.
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Key words in Health InsurancePremium- The amount need to pay in policy in order
for insurer to take the risk of health care of the insured. Contract- Documentary understanding of terms & conditions between insurer & insured. Sum Insured-Total amount, a policy assures as insured as a risk coverage based on premium paid. Third party Administrator-(TPA)-Agent who takes care of hospital bills of insured clients as there are very few insurance companies which deals with hospitals directly.Ex Star Health,Bajaj

Inadmissible-Those items not covered by medi claim insurance policy. Ex-Medical records, diet. ICD & CPT-International Classification of Disease & Current Procedural Terminology. C:\Documents and Settings\Administrator\My Documents\HEALTH

Denial & Authorization- Whether TPA
approves hospitalization & estimated amount or not. Co pay ment- In every policy there is particular % of amount needed to pay out of whole bills. Deductible-Amount which client has to pay before HIC starts paying. Diagnostic Related Groups (DRG)- Payment related to payment schedule as per govt. rule. Charge Master-Hospital tariffs for investigation ,drugs, consultation. Co-Insurance-Instead of paying a fixed amount policy holder pays % of total cost.


Pre Authorization Form-Authorization or permission from TPA in order to admit patient in hospital. Capitation-Amount paid by insurer to health care provider. Coverage Limits-Health plans with fixed health care payments. Out of Packet Maximums-The members obligation ends when they reach out of pocket maximum, health plan pays the rest. Empanelment- Inclusion in list of treating physicians & institute.
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Health insurance typically helps a patient manage health care costs beyond a threshold amount through pooling . . .
As a contingent claim instrument, health insurance is an efficient way to help individuals prepare for health care

Patient expenditure (INR)
Stop-loss level

Insurer payment (from premium pool)

Individual payment



Health care expenditur e
(INR) SOURCE-Russell Parera National Industry Director Financial ServicesDelhi 18 October 2004

The World Health Organization has defined possible approach to financing of health Tax-based and expenditure . . .
TaxTax-funded Public Social security Externally funded Total health expenditure Out-ofOut-ofpocket Private Private health ins. Externally sourced

Using central / state revenues for health Compulsory premium contributions to health Channeling loans, grants etc. to healthcare Payments to health care providers for services
Premium contributions

out-of-pocket expenses are direct expense related outlays

Health insurance involves a fund pool for future health care External fund sources rely on donations, grants

towards health support Channeling donations etc. to healthcare

SOURCE-Russell Parera National Industry Director Financial Services Delhi18 October 2004

Types of Health Insurance1)Fee for Service Health. 2) Managed Care Health Insurance.

Health Care is provided by1) Health

Maintenance Organization. 2) Preferred Provided Organization.

Coverage of Health InsuranceIndividual Health Insurance. Students Health Insurance. Small Business Health Plans. International Health Insurance. Injury Plan. Group Health Insurance. Family Health Insurance. Disability Insurance. Low Cost Insurance. Medical Savings Plan. Travel Insurance. Crop Insurance.

Issues relating Health Insurance in Medical Institute - ABCDE««.. 
Analysis-MOU¶S ±Memorandum Of Understanding. Balancing-Terms, condition, Time of settlement of Bills. Consensus Building. Drafting/Developing- Final agreement. Executing. Empanelment. Regular Auditing of bills & validity of claims. Timely payments of claims.

Community based health InsuranceAmbulatory & Inpatient care. MODELS
model-Usually NGO, Hospital health insurance for community around it. Annual payment given to provide-annual health checkup, discounted OPD & IPD facilities. Ex-Student Health Homes in Calcutta, VHS Chennai. 2) Insurer Model-Insurer collects money from community & purchase health service for it. Ex. Spandan in A.P. 3) Linked Model-NGO intermediately between Target population & insurance company. Ex-SEWA Health Insurance by ICICILombard for females.
1) Provider

Health Insurance in IndiaIt is infantile stage. Limited Coverage (10% of pop.) Lack of uniform schemes. Very less amount spent on health as compared to other countries.(32 $ p.c ,5.3 % GDP.) Insurance is not attractive due to lot of exclusions in medical bills. Lack of uniform CPT & DRG leading to discrepancy in billing. Govt. of KA,TN,M.P. are promoting micro insurance.

The proportion of insurance in health care financing in India is extremely low . .
Health care financing in India 2002, %
1 %

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

83% from private sector spending

86% from out-ofpocket expenses

% ource of finance Means of finance
Source: WHO. CII-McKinsey. 2003.

Universal Health Insurance SchemeIn 2004, MOF, UHIS for BPL families, Premium of Rs200/individual,Rs300/5 member family,Rs-400/7 member family.

Health Insurance for HIV +VE
Pilot project in Karnataka by Programme Director of Population Service International ,in collaboration with Star Health , Allied Insurance Company & KNP. Rs-30,000insurance cover for 250 HIV +ve Rs -15,000 assistance for hospitalization & family following demise.

Health Insurance for Urban Dwellers
For 55 million slum dwellers in 489 cities-Under National Urban Health Mission for 100,000 population .Insurance cover of Rs-40-50,000. By premium of 600/person/annually. CASHLESS PAYMENT directly to hospital.
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Benefits in Health InsuranceExcellent viable alternative to provide huge sum of money in urgent medical needs. Ex ±Traumas. Even on long time payment of small sums, one time large payments can be avoided. Low premiums are affordable, not the large bills. HI is a future payment of Medical Expenditure. Few HIC also covers HIV. More efficient & transparent than Public Health Care System as expected..

Mal Practices in Health Insurance
1)Adverse Selection. 2)Moral Hazard. 3)Dictate terms to hospital. 4)Can reject claims even on receiving PAF. 5)Denial of claims on reasonable/unreasonable grounds. 6)Less the pay, More they keep. Lack of transparency in terms & conditions. 7)Un necessary delay In settlement of bills. 8)Interference with length of stay, medical procedure interventions, & freedom of physicians. 9)Frauds by TPA & HIC. 10)Over billing 11)No coverage for Pre-existing conditions Ex- alcoholism, HIV. etc.

Scope for Improvement 
Integration of Insurance &health Care provision. Care Oriented Health Insurance. Generous Health Insurance for more sick individuals. Appropriate Health infrastructure is an essential, & is required to health care reforms. Focus on health as against finances. Centralized database, HI experience statistics. Insurance approach must be designed around different segment of population as per its mindset of population.


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