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Why is Health Insurance important?


Having health insurance is important for several reasons :

   
   
      
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Œrogression of Health Insurance
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Œrogression of Health Insurance business in India (cont͙.)


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ANITA & D CHAKRAVARTHI m
ourney of Life health insurance
products since Ñ͙..
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ANITA & D CHAKRAVARTHI 5
Health Insurance Œlan
 |  
 The SHI is based on income-determined contributions
from mandatory membership of, in principal, the entire
population with the government subsidizing the
financially vulnerable sections.
 While the SHI is an effective risk-pooling mechanism
that allocates services according to need and
distributes the financial burden according to the ability
to pay (thereby ensuring equity in access), such
schemes are difficult and expensive to implement
where a majority of the workforce is unemployed or
employed in the informal sector.
" *  + ,
Ynacted in 19m, the Ymployees͛ State Insurance (YSI) Act was
the first major legislation on social security in India.

Ymployees earnings up to Rs 75 per month being covered, along with their dependants.
The current coverage stands at m lakh employees and 5 lakh beneficiaries across ÑÑ
States and Union Territories (expectedly, the membership is higher for more industrialized
States).

The benefit package is quite comprehensive in its coverage of health-related


expenses, going beyond the cost of medical care to include cash benefits
(sickness, maternity, permanent disablement of self and dependant) as well as other
benefits such as funeral expenses and rehabilitation allowance. However, the actual
package of benefits available is determined more by the type of facility accessed rather
than the type of cover.

The YSIS is financed by a three-way contribution from employers, employees and


the State Government.

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-|,
Ystablished in 195m, the CGHS covers employees and retirees of the Central Government,
and certain autonomous, semiautonomous and semi-government organizations. It also
Covers Members of Œarliament, governors, accredited journalists and members of the general
public in some specified areas.

The families of the employees are also covered under the scheme. Total beneficiaries stand
at m lakh (1.m lakh card holders, Ñ) across Ñm cities with membership in Delhi being
the highest. Benefits under the scheme include medical care at all levels

Benefits under the scheme include medical care at all levels and home visits/care as well as
free medicines and diagnostic services. These services are provided through public facilities
(including CGHS-exclusive allopathic, ayurvedic, homeopathic and unani dispensaries) with
some specialized treatment (with reimbursement ceilings) being permissible at private
facilities. Of the total expenditure, about a third is spent on wages and salaries of the CGHS
staff
  |  +|,
uor providing financial risk protection to the poor, the Government announced a
UHIS in Ñ.

Under this scheme, for a premium of Rs 5 per year per person, Rs 5m for a
family of five and Rs 7 for a family of seven, health care for an assured sum of
Rs , was provided. BŒL families were given a premium subsidy of Rs Ñ p.a

In Ñm the subsidy was increased to Rs Ñ, Rs  and Rs m to individuals,
families of five and seven, respectively. To make the scheme more saleable, the
insurance companies provided for a floater clause that made any member of the
family eligible as against the Mediclaim Œolicy which is for an individual member.

uailure:-
The public sector companies find it to be potentially loss-making and do not invest in
propagating it, resulting in very low levels of awareness, reflected in the low
enrollment and very poor claim ratios.

Identification of the eligible families

The procedures are cumbersome and difficult for the poorͶthe premium has to be paid in
a lump sum

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The initiative had the following objectives:
(i) to revitalize public health systems; (ii) to decentralize decision-making; (iii) to mobilize
resources to cover local operating costs; (iv) to encourage community participation
through management of services and locally generated funds; and (v) to define the
minimum package of essential health services.

The membership of these CHIs scheme varies from 1 to more than Ñ lakh. Most of the
schemes operate in rural areas and cover people from the informal sector. Ynrolment
is usually facilitated by membership of the organizations, e.g. micro finance
groups, cooperatives, trade unions, etc. The annual premium ranges from Rs Ñ to Rs 1Ñ
per individual. The unit of enrolment is an individual and the membership is voluntary in
most of the schemes.

Yeshaswani, an insurance scheme for farmers, designed and implemented by the


Government of Karnataka since ÑÑ has widespread attention.
COMMUNITY HYALTH INSURANCY
SCHYMY
INSURANCY COMŒANY
NGO
SHH,VHS,ACCORD, RHIS
GROUΠRYIMBURSYMYNT
ŒRYMIUM
ŒRYMIUM HYALTH
CARY
NGO
(SYWA,BAIu,NAVSAR AN AND KARUNA)

COMMUNITY
ŒRYMIUM RYIMBURSYMYN ŒROVIDYR

COMMUNITY
| | | 
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|

V  V  
 V 
V     
V

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1.     $ 1  ͛,
 Cover expenses if hospitalised for at least Ñm hours.
 Indemnity policies, i.e., they reimburse the actual expenses incurred up to the amount of the
cover that you buy.
 Some of the expenses that are covered are room rent, doctor͛s fees, anaesthetist͛s fees, cost of
blood and oxygen, and operation theatre charges.

Ñ. & "
 uairly new entrant in the health insurance.
 It takes advantage of the fact that the possibility of all members of a family falling ill at the same
time or within the same year is low.
 The entire sum insured can be availed by any or all members and is not restricted to one
individual only as is the case in an individual health plan.

. [ "   
 One can buy maximium daily covers of anything between Rs5 and Rs5.
 The premium would depend on the age and amount.
 uor stay in ICU, the amount is automatically doubled.
 There is usually a cap on the number of days of claim per year .
How they work ?
1.     2& " 2 
 3 *
In case of a claim, expenses incurred are reimbursed. The
remaining amount can be claimed during the year. In case of no
claim, 5% or 1% of the sum insured is given as no-claim bonus.

Ñ.
     
In case of a claim , the entire sum insured is paid on diagnosis of
the specified issue. No-claim bonus is paid only by few plans .

. [ "   +[|


, . Yxpense benefit is paid on per day
basis after hospitalisation (most plans mandate at least m hours of
hospitalisation). The pre-decided daily benefit amount is paid in
full, irrespective of the actual expenses.
Roadmap
  / ð  
 (  / . 
     basic plan, which offers wide coverage with
minimum restrictions. The amount of cover would depend on the age, lifestyle and choice of
hospitals. Go for as much as you can afford.

 + "    / 


 
  

  when you have a family. Double the amount
of what you would have paid for an individual plan. Try to continue with the earlier insurer.

  6 7/ . p    



  



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 -   / .      
 level of protection to meet higher financial
contingencies. The treatment of critical illnesses is generally expensive, so do take adequate cover.

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Recent initiatives of IRDA
ù Committee to formulate regulations

ù Œure health insurance products

ù Allowing the formation of an stand alone health


insurance company

ù Standalone health insurance companies

ù Renewability

ù Senior citizens
ANITA & D CHAKRAVARTHI 1
Challenges in Health Insurance
 Medical advance, both a challenge & also impediment

 Increase in health care cost

 Ageing population

 Acute shortage of trained personnel ranging from


doctors to

health care administrators

 New emergence and resurgence of old diseases


ANITA & D CHAKRAVARTHI 17
Impediments to providing Health
Insurance͙.
 Lack of Data
 Moral Hazard/Adverse Selection
 Complex nature of the product
 Medical Inflation
 New treatments
 Unnecessary treatments
 Difficulty in pricing
 Government provision of health care
 Long term nature
 Changing life style
 Mis-selling/fraud͙͙

ANITA & D CHAKRAVARTHI 1


How to mitigate/address these
impediments͙
 Insurer
 Designing a less complex products
 Transparency in the product features
 Clarity in policy terms, conditions & exclusions
 Yfficient back-office support for underwriting and claims
processing
 Higher Reinsurance
 Need for quicker services. Yg: Toll free
no.s, cashless, quick response
 Yxpense analysis on a regular basis
 Œroduct innovation
 Yfficient training of sales force
ANITA & D CHAKRAVARTHI 19
Ñ