Posted on Jul 19, 2011 by Sergio Ulloa
Although the health insurance sector in India has experienced rapid growth in the past decade
, the complexities currently involved in policing the industry has prevented the overall benefits of this positive development from permeating down to the common Indian citizen. The Health Insurance Advisory Group from the Federation of Indian Chambers of Commerce and Industry (FICCI) is now putting together a series of policy recommendations to better standardize the relationship between health insurer and provider and to ensure greater affordability and accessibility of care for all.
Last year, India's public health insurance sector was in a state of crisis as policyholders were left stranded following a deadlock between the four leading public sector insurers (New India Assurance, Oriental Insurance, United India Insurance and the National Insurance Company) and major private hospitals over the cancellation of cashless medical insurance reimbursement for treatment, known as mediclaim. The state-owned insurers alleged that the hospitals were routinely overcharging consumers, and thus pushing their businesses towards unsubstantiated losses. Following heated negotiations and an intervention by the high court, a truce was brokered between public insurers and private hospitals and the cashless services were partially restored, with the number of enrolled facilities reduced and many treatments now reserved primarily for cases of emergency. Almost 5 percent of India's 1.2 billion population is estimated to be covered by some form of mediclaim policy and they were left with little option but to pay out-of-pocket for hospitalization during the lockout period.
The Insurance Regulatory and Development Authority of India (IRDA) has been tasked with developing draft norms that better define and standardize terms such as critical illness and hospitalization cost, amongst others, to hopefully reduce the scope for future claims disputes between Indian insurance companies and hospitals. The FICCI has also been brought in to help the insurance regulator and to present a wide range of recommendations, including its own list of excluded expenses in hospital indemnity policies, standard treatment guidelines, and administrative contact norms and billing procedures, all ultimately to ensure better regulation of the public healthcare sector. More details about the FICCI's plans will no doubt be revealed at its annual conference on health insurance on July 19, 2011 at Hotel Lalit, New Delhi. The title of the conference this year is "Efficiency in Delivery: Win-Win for Stakeholders."
To further address these operational issues and push towards better national health outcomes, the FICCI and IRDA have been looking to establish a multi-stakeholder group, with representatives from the World Bank
, healthcare insurers and providers and other key persons of interest who could work towards streamlining and synchronizing business protocols in the healthcare and health insurance sectors. The healthcare industry should recognize the imperative to now develop innovative models to lower the costs of medical treatment and make care more widely available in India
. Much more work can be done to make quality healthcare both accessible and affordable using India's significant economies of scale.
"The long-term vision to make quality health care affordable for the country should be to increase the health insurance penetration to at least 50 percent of population by the year 2020 and 80 percent by the year 2030," FICCI said in a statement.
The FICCI noted that the affordability of health care across the socio-economic pyramid in India would be crucial in achieving the South Asian country's noble objective of providing quality healthcare to everyone. Currently, only 15 percent of the population has access to any form of health protection from catastrophic loss. The government is concerned that an increasing number of people in India are going deep into debt due to medical expenses. The rising costs of inpatient medical treatment, low levels of health insurance penetration, and the accompanying high out of pocket expenditure are all placing an undue burden on individuals, in particular those who remain below the poverty line and the sizeable elderly population. The newfound prevalence in both communicable diseases and the arrival of lifestyle diseases across urban and rural India have also contributed to escalating health cost concerns.
According to the latest data compiled by the National Sample Survey Office (NSSO), around 65 percent of India's poor population has gone into debt and a further 1 percent, which equates to millions of people, falls below the poverty line segment every year due to a lack of adequate healthcare coverage. The NSSO also estimates that by 2025, over 189 million Indians will be at least 60 years old. Therefore, it is evident that in the face of rising costs, seeking better value for money in long-term care will become a priority
. Efficiency discussions regarding long-term care expenses have thus far received relatively little attention in India and better evidence and proactive action based upon what works is urgently required.
The threat of skyrocketing inflation and increasing interest rates has also dampened the ability of many Indians to adequately prepare themselves for health issues later in life. Various pressures are pushing inflation up across Asia, including growing wage bills and the rising global prices of commodities, food and fuel in these emerging resource hungry Asian economies. According to the International Monetary Fund, consumer prices rose by 13.2 percent in India last year. The considerable speed at which these prices are rising on the Subcontinent means that people will become poorer if they cannot invest their earnings successfully, despite the fact that, broadly speaking, Asia is getting richer. This particularly affects the elderly population who watch the value of their savings depreciate as health costs continue to rise.
Public sector insurers in India have long succumbed to losses as their pricing strategy cannot match the true costs of operating in this developing and populous healthcare market; private insurers have been able to manage their claims better. If the goal of the Indian government's fundamental healthcare reform is to provide some level of base cover for every citizen, either premiums or medical costs will have to be lowered substantially. What is certain is that the demand for greater healthcare services and protection will not go away and that this will present significant business opportunities
for both domestic and international insurance providers.
Federation of Indian Chambers of Commerce and Industry (FICCI) is India's head chamber representing over 500 industry associations and business units employing over 20 million people. FICCI works closely with the Indian Central and State governments and regulatory bodies to research and implement policy change.