Why is Health Insurance important?
Having health insurance is important for several reasons :

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Rising medical costs Sharing of health related risk uncertain hospital bills Expensive/quality health care services Money value Sick Vs Healthy Family health insurance Tax benefit Productivity of workforce Removes some of the burden from the state Keeping pace with the customer needs while achieving profitability

90% 100.000.000 Life Standalone Non-life Life Total 4.000.82% 90.67% 94.000 10.00% 1.Progression of Health Insurance business in India 2007-08 Policy Growth Rate 2008-09 Health Insurance Policies Procured by lines of business Standalone Non-life 282% 67% 110% 70% 117% 23% 124% 29% 12.75% 96.097 798588 332.000.000 40.10% 3.000.000 2.541 % share of Health insurance policies sold 2006-07 2007-08 2008-09 0 2006-07 2007-08 2008-09 Standalo ne Non-life Life Total 0.000 8.000.77% 100.000.16% 100.43% 3.00 % 3 .078 356419 169703 153.00 % 2.000 6.41% 6.

000.86% 100% 2.00 2006-07 100.037 700.45% 4.000.79% .72% 100% 7.00 Standalone Non-life Life Total Standalone 1297% 55% 222% 61% 243% 23% 278% 34% 500.000.00 496.99% 95.29% 1.757 400.Progression of Health Insurance business in India (cont .00 2006-07 2007-08 2008-09 J ANITA & D CHAKRAVARTHI 4 .000.000.00 319.509 1.34% 98.86% 100% 0.000.594 8968 33875 2007-08 2008-09 Standalone Non-life Life Total .116 2788 15.68% 87.) Health Insurance Premium Procured by lines of business (In lakhs) Premium Growth Rate 2007-08 2008-09 609.901 600.00 53.00 % share of health Premium 200.00 Non-life Life 300.000.

Focus on rampant diseases With introduction of Sec 80(D). Subject Term Premium Guaranteed Diseases Covered Death Benefit Coverage Type Max. most products do not have death benefit Only life assured to Dependent members Non linked to linked 50 to 65 years 65 to 75 years J ANITA & D CHAKRAVARTHI 5 . Entry age Max..Journey of Life health insurance products since 2003 . Maturity age Observations 1 to 30 years From 1 year to 5 years From 5 to 100.

‡ 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. the entire population with the government subsidizing the financially vulnerable sections.Health Insurance Plan Social Health Insurance ‡ The SHI is based on income-determined contributions from mandatory membership of. . in principal.

permanent disablement of self and dependant) as well as other benefits such as funeral expenses and rehabilitation allowance. the membership is higher for more industrialized States). . the Employees State Insurance (ESI) Act was the first major legislation on social security in India. The ESIS is financed by a three-way contribution from employers. employees and the State Government. The current coverage stands at 84 lakh employees and 353 lakh beneficiaries across 22 States and Union Territories (expectedly. the actual package of benefits available is determined more by the type of facility accessed rather than the type of cover. The benefit package is quite comprehensive in its coverage of health-related expenses. maternity. Employees earnings up to Rs 7500 per month being covered. However. going beyond the cost of medical care to include cash benefits (sickness. along with their dependants.Employees State Insurance Scheme (ESIS) Enacted in 1948.

accredited journalists and members of the general public in some specified areas. These services are provided through public facilities (including CGHS-exclusive allopathic. 2003) across 24 cities with membership in Delhi being the highest. ayurvedic. about a third is spent on wages and salaries of the CGHS staff . The families of the employees are also covered under the scheme. homeopathic and unani dispensaries) with some specialized treatment (with reimbursement ceilings) being permissible at private facilities.4 lakh card holders. the CGHS covers employees and retirees of the Central Government. and certain autonomous.Central Government Health Scheme (CGHS) Established in 1954. semiautonomous and semi-government organizations. Total beneficiaries stand at 43 lakh (10. governors. Of the total expenditure. 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. It also Covers Members of Parliament.

resulting in very low levels of awareness. reflected in the low enrollment and very poor claim ratios. To make the scheme more saleable.000 was provided. Identification of the eligible families The procedures are cumbersome and difficult for the poor the premium has to be paid in a lump sum . for a premium of Rs 365 per year per person.a In 2004 the subsidy was increased to Rs 200.Universal Health Insurance Scheme (UHIS) For providing financial risk protection to the poor. Rs 300 and Rs 400 to individuals. Failure:The public sector companies find it to be potentially loss-making and do not invest in propagating it. health care for an assured sum of Rs 30. Under this scheme. the insurance companies provided for a floater clause that made any member of the family eligible as against the Mediclaim Policy which is for an individual member. Rs 548 for a family of five and Rs 730 for a family of seven. the Government announced a UHIS in 2003. families of five and seven. BPL families were given a premium subsidy of Rs 200 p. respectively.

trade unions. an insurance scheme for farmers. Enrolment is usually facilitated by membership of the organizations. etc. (iii) to mobilize resources to cover local operating costs.g.Community-Based Health Insurance The initiative had the following objectives: (i) to revitalize public health systems. The unit of enrolment is an individual and the membership is voluntary in most of the schemes. The annual premium ranges from Rs 20 to Rs 120 per individual. The membership of these CHIs scheme varies from 1000 to more than 20 lakh. (ii) to decentralize decision-making. Yeshaswani. designed and implemented by the Government of Karnataka since 2002 has widespread attention. Most of the schemes operate in rural areas and cover people from the informal sector. (iv) to encourage community participation through management of services and locally generated funds. e. . and (v) to define the minimum package of essential health services. cooperatives. micro finance groups.



3. ‡ ‡ ‡ ‡ Daily hospital cash One can buy maximium daily covers of anything between Rs500 and Rs5000. . and operation theatre charges.Types of health insurance ? 1. ‡ 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. ‡ Cover expenses if hospitalised for at least 24 hours. doctor s fees. For stay in ICU.e. Family floater plan ‡ Fairly new entrant in the health insurance. ‡ 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. ‡ Some of the expenses that are covered are room rent. 2. Individual health plan mediclaim . cost of blood and oxygen. ‡ Indemnity policies.. they reimburse the actual expenses incurred up to the amount of the cover that you buy. The premium would depend on the age and amount. the amount is automatically doubled. i. anaesthetist s fees. There is usually a cap on the number of days of claim per year .

No-claim bonus is paid only by few plans . Family floater plan.How they work ? 1. 2. 3. Senior Citizens plan In case of a claim. Individual health plan. expenses incurred are reimbursed. Critical illness plan In case of a claim . irrespective of the actual expenses. the entire sum insured is paid on diagnosis of the specified issue. Daily hospital cash (DHC) plan. The remaining amount can be claimed during the year. The pre-decided daily benefit amount is paid in full. In case of no claim. 5% or 10% of the sum insured is given as no-claim bonus. .Expense benefit is paid on per day basis after hospitalisation (most plans mandate at least 48 hours of hospitalisation).

lifestyle and choice of hospitals.Roadmap ‡ ‡ Step I Get Started Individual health plan. The amount of cover would depend on the age. Your final level of protection could be in the form of specific plans. Double the amount of what you would have paid for an individual plan. Step IV Go for cash benefit plans Daily hospital cash. Acquire this plan as soon as you cross the threshold age. Try to continue with the earlier insurer. Go for as much as you can afford. buy this basic plan. such as a cancer plan or a diabetes plan. This is needed to meet any incidental hospital expenses ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ . Senior citizens¶ plan. Sep II Get critical cover Critical illness plan. Family floater plan. Buy this plan as the second level of protection to meet higher financial contingencies. so do take adequate cover. Buy or enhance your cover when you have a family. which offers wide coverage with minimum restrictions. The treatment of critical illnesses is generally expensive. If you are single. Step III Add special covers Specific plans.

Recent initiatives of IRDA  Committee to formulate regulations  Pure health insurance products  Allowing the formation of an stand alone health insurance company  Standalone health insurance companies  Renewability  Senior citizens J ANITA & D CHAKRAVARTHI 16 .

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 J ANITA & D CHAKRAVARTHI 17 .Challenges in Health Insurance ‡ Medical advance.

Impediments to providing Health Insurance . ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ 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/fraud J ANITA & D CHAKRAVARTHI 18 .

conditions & exclusions Efficient back-office support for underwriting and claims processing Higher Reinsurance Need for quicker services. Eg: Toll free no.s. cashless. quick response Expense analysis on a regular basis Product innovation Efficient training of sales force J ANITA & D CHAKRAVARTHI 19 .How to mitigate/address these impediments ‡ Insurer ± ± ± ± ± ± ± ± ± Designing a less complex products Transparency in the product features Clarity in policy terms.

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