Healthcare Insurance

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Healthcare Insurance Past , Present Future
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• It is not pieces of gold silver but
  health that is the real wealth
• Mahatma Gandhi

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Economic growth is an indicator of a countrys
well being and development

• Empirical evidence suggests that a significant
  portion of economic growth is contributed by
  human capital the elements of which are level
  of education and health of the people

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Health Scenario in India

• India with a population of 1.2 billion possesses
  around 16.6 of the global population and 20 of
  the global disease burden.
• Health care expenditure in India is around 5 of
  GDPI as compared to 8.4in UK, 7.5 IN Brazil In
  USA and Japan the Govt.spending on Health is
  around 80. MORE THAN 70 OF HEALTHCARE
  EXPENDITURE IN INDIA TODAY IS MET OUT OF
  INDIVIDUALS POCKETS.
• Given the implication that a healthy and
  productive population has on economic
  development, there is need to step up health care
  funding mechanism

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History of Health Insurance

• Medical Insurance was first offered in the United
  States in 1850 and insured injuries arising from
  railroad and steamboat accidents.
• In India the formal health insurance started with
  the ESIS (Employees State Insurance Scheme) under
  the ESIS Act 1948 and with the CGHS (Central Govt
  Health Scheme) 1954.
• In 1981, a limited cover was devised for
  individuals and families. This was structured
  formally in 1986 when 4 subsidiaries of GIC
  launched the Mediclaim policy (HDH) both for
  individuals and Groups

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Milestones for Mediclaim since 1986 Changes
introduced from 1991

• Removal of Sub limits
• Introduction of Family Floater Concept
• Critical Ilness Cover
• Tailormade Policies for Corporates
• Hike in Premium and Sum Insured

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The next phase ( 2000 2005 )

• Opening up of the Insurance Sector
• Introduction of TPAS
• Govt Health Insurance Schemes

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Latest Trends - 2005 onwards

• PRODUCT MODIFICATION
• - Three products for different age groups
• - Family Package Cover
• - Pre-existing Disease Cover
• - Disease Specific Policy
• - Senior Citizens Policy
• CO-BRANDED PRODUCTS WITH BANKS

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Latest Trends - 2005 onwards

• Stand Alone HEALTH INSURANCE COS.
• Life Insurance Companies providing Health Cover
• Govt Schemes
• - Weavers Artisans Cover
• - Universal Health Ins. Cover
• - Rajiv Aarogyashri AP Govt.
• - Yeshasvini Scheme Farmers in Karnataka
• - Rashtriya Swasthya Bima Yojona ( RSBY)

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Tax Benefits As it stands today

• Under Section 80D, Premium upto Rs 15,000 paid
  for Self spouse dependent children qualifies
  for Tax Benefit. (This amount is likely to be
  increased to Rs 50,000 through DTC in 2012.)
• Additional premium paid upto Rs 15,000/ for
  parents health insurance also qualifies and in
  case of Sr Citizens parents, premium paid upto Rs
  20,000 qualifies for tax deduction.
• As per Section 80 DD a fixed total of Rs 50,000
  qualifies as deduction irrespective of amount
  incurred towards expenditure / investment for
  medical treatment of handicapped dependent and in
  case of severe disability this is increased to Rs
  75,000
• As per Section 80 DDB, deduction of upto Rs
  40,000 ( For Sr citizens Rs 60,000/) is allowed
  for medical treatment of specified diseases
  certified by Govt hospitals.

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Health Insurance Claims settlement process

• Cashless
• For availing cashless treatment (only at
  authorized network hospitals), the TPA has to be
  notified in advance (for planned hospitalization)
  or within the stipulated time limits (for
  emergencies). The claim amount needs to be
  approved by the TPA, and the hospital settles the
  amount with the TPA/ Insurer. Typically there
  will be exclusions and such amount will have to
  be settled directly at the hospital.
• Reimbursement
• Reimbursement facility can be availed at both the
  network and non-network hospitals. Here the
  insured avails the treatment and settles the
  hospital bills directly at the hospital
• Self administered portfolio
• Insured may opt to purchase Health Insurance
  policy without TPA in which case the settlement
  would be on reimbursement basis by the insuring
  Office concerned.

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Role of Third Party Administrator (TPA)  

• TPAs licensed by IRDA are the intermediary
  between Insured and Insurance Company and
  responsible for providing value added services to
  policy holders including all aspects of claim
  arising out of health insurance policies.
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• The work of the TPA starts once the Policy is
  issued.
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• TPAs have helped insurance companies provide
  better service to their policyholders through
  their efficiency in claim settlement .
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• There are at present 29 IRDA registered TPAs
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Functions of Third Party Administrator (TPA)  

• 1) TPA issues ID cards to all their policyholders
  in order to validate their identity at the time
  of Claim.
• 2) In case of a claim, policyholder will have to
  inform TPA on their 24 hr toll free line . In
  case of a network hospital the TPA issues
  authorization letter to the hospital for
  admission of policyholder and also pays for
  treatment. At the time of discharge all the bills
  are sent to TPA for processing the claim.
• In case of Emergency hospitalization in a
  hospital outside the network, cashless facility
  cannot be extended and claim is reimbursed after
  submission of documents .
• 3) After making the payment to the hospital, the
  TPA sends all necessary documents of claims to
  insurance company and the Insurance company then
  reimburses TPA.
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The Preferred Provider Network (PPN)

• The Preferred Provider Network (PPN) of hospitals
  is an initiative of the 4 Public Sector General
  Insurance Companies (PSGICs) taken in July 2010
  to introduce
• Discipline on the pricing of hospital services
  charges
• Pre-negotiated rates for medical procedures and
• overall standardisation of hospital facilities.
• The Agreement is entered into with Hospitals
  which are then listed under the PPN Network.
  Presently the PPN Facility operates in Delhi,
  Mumbai, Chennai and Bangalore and will be
  extended to four more cities, viz. Hyderabad,
  Kolkata, Ahmedabad and Chandigarh from 1 July
  2011.
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Insurer
Health Insurance
Regulator
TPA
Hospitals
Health Care Provider
Health Insurance Council
Doctors
Diagnostics
Insured
Employer
Individual
Government Scheme
Employee
Families
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Financing Health care
In India healthcare is financed through a
combination of sources like -

1. Household and Individual out of pocket payments
2. Central State Government tax revenue
3. Mandatory Social Voluntary Health Insurance
   like ESI, CGHS,
4. Micro Insurance
5. Other Employees / Mutual Schemes not using public
   or private Insurance companies

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Necessity of Health Insurance Life style diseases

• Every one needs medical care. Of all the risks
  facing a household, health risk probably poses
  the greatest threat to lives livelihoods.
• Sedentary life style, hectic schedules, long
  working hours and eating habits are leading to
  silent diseases and causing rise in number of
  people suffering from obesity, diabetes and
  cardiovascular diseases.
• As per Government of India Report 2006, the
  morbidity rate for males is 8.3 (Rural) and 9.1
  (Urban) and for females 9.3 (Rural) and 10.8
  (Urban).
• 2.5 million hospitalization in 2005 due to road
  accident. Projected 3 million by 2010 and 3.5
  million by 2015 National Medical Journal 2008

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Necessity of Health Insurance Mediflation

• High escalation in medical costs due to
  advancement high tech intervention in health,
  diagnostic therapeutic procedures, prescription
  drugs leading to Mediflation.
• The explosion of knowledge in genetic engineering
  Bio technology, Nano-technology, Medical
  Informatics Gene therapy will further escalate
  health care costs beyond the reach of most people
  in future.
• Medical Tourism As more and more patients from
  Europe, the US and other affluent nations with
  high medicare costs look for effective options, a
  blend of top-class medical expertise at
  attractive prices is helping a growing number of
  Indian corporate hospitals lure foreign patients.
  Costs would escalate for the Indian insured.

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Necessity of Health Insurance Mediflation

• Expenses towards medical expenses is the second
  highest cause of rural indebtedness after
  agriculture. Major portion of the countrys poor
  (over 45) had to borrow / sell assets to meet
  costs of care.
• This huge out of pocket expenditure does not pass
  through any pooling mechanism and thus needs to
  be channeled through Health Insurance.

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Health Insurance Figures
According to figures upto Feb 2011, the total
health insurance premiums written by non-life
companies and standalone health insurance
companies grew by 22.95 . The health insurance
market continues to be dominated by the four
state-owned general insurers, which together
accounted for almost 58.39 per cent of the
premiums. March 11 figures reveal that National
Insurance Company, led the Health Portfolio pie
with 1492 crores registering a sharp Growth of
46.47 cent this fiscal with an exceptional
Accretion of 473 crores. ICICI Lombard, Bajaj
Allianz General and HDFC ERGO are the top players
amongst private non life insurers.
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Rashtriya Bima Yojana Policy Health Insurance for
the Poor



RSBY has been launched by Ministry of Labour and Employment, Govt of India to provide health insurance coverage for Below Poverty Line (BPL) families. RSBY started rolling from 1st April 2008. The objective of RSBY is to provide protection to BPL households from financial liabilities arising out of health shocks that involve hospitalization. Beneficiaries under RSBY are entitled to hospitalization coverage up to Rs. 30,000/- for most of the diseases that require hospitalization. Government has even fixed the package rates for the hospitals for a large number of interventions. Pre-existing conditions are covered from day one and there is no age limit. Coverage extends to five members of the family which includes the head of household, spouse and up to three dependents. Beneficiaries need to pay only Rs. 30/- as registration fee while Central and State Government pays the premium to the insurer selected by the State Government on the basis of a competitive bidding.
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Unique Features of RSBY

• Empowering the Beneficiary
• Freedom of choice to BPL Policy holder to choose
  hospitals and be treated as a significant
  provider of revenue
• Business Model for all Stakeholders
  Insurers/Hospitals/ Intermediaries/Govt.
  Incentives have been built for all stakeholders .
  Conducive both in terms of expansion of the
  scheme as well as for its sustainability.
• IT intensive
• Every beneficiary family is issued a biometric
  enabled smart card containing their photographs
  and fingerprints. All hospitals empanelled under
  RSBY are IT Enabled and connected to the server
  at the district level.

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Unique Features of RSBY

• Safe and Foolproof
• The use of the biometric cared and a key
  management system makes this scheme safe and
  foolproof.
• Portability
• A beneficiary will be able to use his/her smart
  card in any RSBY empanelled hospital across
  India. This is of great help to migrant workers
• Cashless and Paperless transaction
• No payment is to be made by the beneficiary and
  participating providers may send online claims to
  the insurer and get paid electronically.
• Robust Monitoring and Evaluation
• An elaborate data management system is being put
  in place which can track any transaction across
  India and provide periodic analytical reports .
  This should allow for mid course improvements in
  the Scheme.

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Financing for RSBY

• The majority of the financing, about 75 percent,
  is provided by the Government of India (GOI),
  while the remainder is paid by the respective
  state government. Government of Indias
  contribution is 90 percent in case of
  North-eastern states and Jammu and Kashmir and
  respective state Governments need to pay only 10
  of the premium.
• Beneficiaries need to pay only Rs. 30 as the
  registration fee. This amount shall be used for
  incurring administrative expenses under the
  scheme.

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RSBY Facts

• More than 376 districts in 29 states in India are
  covered under this scheme
• There are 8096 private and public hospitals
  empanelled as Health Care Providers
• As of April 2011 the number of Active smart cards
  issued is 2,33,46,929 .
• National Insurance, Oriental Insurance and United
  India Insurance are the 3 major non life
  insurance players with ICICI leading the private
  non life insurer group.

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Rising Claims Ratio

• RSBY, has been witnessing an increase in its
  Claim ratio.
• Several states have reportedly exceeded 100
  percent mark, a pointer to be concerned with
  future premium rate setting. The number of
  Hospitalisation cases reported as on April 11 is
  16,82,391
• rate of hospitals is extremely low.

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Health Insurance Future Initiatives for
Holistic Health care

• Portability of Mediclaim in India w.e.f. 1st July
  2011.
• This is to ensure that a customer continues to
  enjoy benefits under the Health Policy even if he
  wishes to change his insurance provider.
• Traditional Healthcare practices to be brought
  under Mediclaim fold.
• A panel has been set up by the General Insurance
  council to examine the merits of reccognizing
  Ayurveda, Unani, Siddha and Homeopathy forms of
  Healthcare. These alternative practices though
  recognised by GOI have yet to be brought under
  the Mediclaim list.
• Clinical Establishment Registration and
  Regulation Act
• This law passed last year aims to regulate
  standards at private hospitals and check
  overcharging, unnecessary tests, negligence and
  other malpractices. Since health is a state
  subject the State Assemblies need to pass a
  resolution before the central law can apply in
  that State

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Health Insurance Future IRDA Initiatives

• IRDA is working on a set of comprehensive health
  insurance guidelines which would cover
• Standard Treatment Guidelines (STGs) for common
  causes of hospitalisation like diarrhoea, asthma,
  cataract surgery and typhoid. FICCI has
  recommended 22 STGs to the regulator.
• A list of items as part of common exclusions
  under non-medical expenses may include costs for
  diabetic chart, external durable devices like
  walking aids and cervical collar, eye kits and
  X-ray films.
• Standard definitions of 11 critical illnesses
  such as cancer, first heart attack, open heart
  replacement and major organ/bone marrow
  transplant. Insurers would be required to cover
  these under their critical illness plans.
• A common form for claim settlement including
  claim settlement protocol.

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Health Insurance Future IRDA Initiatives

• Health Insurance Councils
• IRDA is working on setting up of Health Councils
  through provision of Section 14(f) of the IRDA
  Act.
• This proposed common health body is envisaged to
  help in ensuring harmonized growth of business
  and also in reducing differences arising between
  stakeholders like TPAs , Insurers, Hospitals and
  the public.
• In addition to other functions, the council will
  also set up mechanisms to enforce strict
  vigilance on attempts to defraud the insurance
  system and take effective and concrete action
  thereupon.

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Health Insurance Future Govt. Initiatives

• The National Aids Control Organisation (NACO) has
  pressed for inclusive and universal healthcare
  for people living with HIV. The Karnataka
  government has launched a health insurance scheme
  to benefit about 12,000 HIV-positive children in
  collaboration with Star Health.
• The Government is actively considering the scope
  for a public-funded health insurance scheme
  covering all citizens as part of the 12th Five
  Year Plan, with premium rates linked to the
  beneficiarys income levels. The ambitious scheme
  is planned to cover both hospitalisation expenses
  and treatment expenses at listed hospitals.

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Health Insurance Future Govt. Initiatives

• The Employees' State Insurance Corporation
  (ESIC), which provides health insurance to all
  workers whose monthly gross pay is up to
  Rs15,000, is gearing to improve its services.
• All the beneficiaries will soon be issued a smart
  card to avail treatment at any ESI hospital or
  affiliated healthcare provider across the
  country.
• The initiative, spearheaded with the help of the
  software company, Wipro, is to inter connect the
  2,200 ESI institutions across the country and
  launch an online portal.

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Health Insurance Future Corporate Health Care
Plans

• Preventive Health Care Wellness initiatives.
• The goal of these programmes is to make the
  workplace environment healthier, to improve the
  health of individual employees , to reduce
  healthcare costs and increase employee value. As
  part of the healthcare policy, organizations
  offer various benefits including Health
  insurances, mental health counselling , physical
  health camps, wellness camps etc
• Corporate Health Check Ups
• Earlier confined only to MNc or those industries
  with Health hazards such as paints, pesticides or
  manufacturing companies, today there is an
  increase in Corporate sponsored Health testing.
  Some employers make this annual check up
  compulsory for all above 40 as commonly
  hypertension, diabetes and deranged lipid
  profiles have begun to be diagnosed

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Health Insurance Future Scope for Employment in
Health Care related Industry

• Considering that only 10 of the India population
  of more than
• 1 billion is insured under Health policies, the
  arena of Healthcare
• offers a large universe for employment
• Specialisation in subjects like Hospital
  Administration, Risk Management,
• Actuarial Sciences will be the need of the day .
  
• Insurance Companies, Health Specialists, Health
  Tourism centres, TPAs ,
• Hospitals will be the potential employers.

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Mediclaim its shortcomings

• Mediclaim, the traditional health insurance
  product accounting for more than 80 of total
  health insurance market in India, is short-term
  in nature and covers only inpatient costs. More
  than 70 of the total health spend ( Rs.1700
  crores WHO-2007 estimates) is for outpatient
  cost and there are very few, products to cover
  these costs in India today.
• Further, Mediclaim falls under the category of
  protection products where there is no payment
  from the insurer if no claim is made. Many Indian
  people see less value in protection products like
  Mediclaim as compared to savings products like
  endowment policies.
• There is need for long term health products to
  enable customers to provide for their health and
  long-term care costs, particularly after
  retirement

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Health Insurance Way Forward

• Global experience both in highly industrialised
  countries as well as in low and middle income
  economies clearly demonstrate the importance of
  achieving universal coverage through either a
  purely tax based regime or social health
  mechanism or both.
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• Medical savings accounts or Health Savings
  Accounts Much like Pension Funds, Health
  Savings accounts have been successful adapted in
  Singapore, USA, China and South Africa where the
  Govt . Extends tax concessions for savings on
  this account.

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Health Insurance Way Forward ?

• Health Savings Account Issues and applicability
• An HSA is a tax exempt savings account similar to
  an Individual pension account but earmarked for
  medical expenses.
• Deposits in the account are tax exempt and can be
  easily withdrawn to pay for routine medical
  bills.
• HSA works in conjunction with a special High
  deductible health insurance policy resulting in
  the provision of comprehensive health insurance
  coverage at the lowest possible net cost
• Health Savings Account, enables an insured to
  save his money, which he may use to meet the
  expenses when he falls sick .
• USA, China, Singapore and South Africa have
  adopted the HSA model for their citizens .

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Utilization of funds in an HSA

• The balance in health savings accounts may only
  be used to pay medical expenses at any time
  during the account holders life-time such as
• Medicines and drugs
• Diagnostic expenses
• Dental expenses
• Co-pays or deductibles as part of the medical
  insurance cover
• Other miscellaneous medical expenses not covered
  under medical insurance like medical cost for
  pre-existing diseases, maternity related
  expenses.
• Specialist consultations fees
• Long-term care expenses

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HSA The Indian Context

• Bhavishya Arogya was the first HSA type product
  introduced in the Indian market in 1990. The
  coverage under the policy was similar to
  Mediclaim, i.e. hospitalisation benefits, but
  with the difference that the utilisation of
  benefits was deferred up to the retirement age (
  vesting age) between 55 and 60 years.
• Introduction of HAS in the Indian market will
  help deepen health insurance penetration.
• HSAs with ensuing tax benefits are likely to
  encourage people to start saving early for their
  old age health expenses since they would have an
  incentive to accumulate HSA balances. An early
  entry into the health insurance system would help
  address the systemic and contentious issue of
  pre-existing condition exclusions.
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HSA The Indian Context

• Rationalizing and reducing healthcare expenses
• With HSA providing greater discretion to
  individuals on their total healthcare spending,
  it is expected that patients would seek greater
  transparency and efficiency in the medical
  services accorded to them by healthcare providers
  eventually rationalizing and reducing healthcare
  expenses.
• HSAs would provide greater emphasis to the
  insurance industry towards reviewing the need for
  providing high risk, catastrophic policies which
  will encourage individuals to self-insure for
  routine medical care. The corresponding reduction
  in premium costs would allow more individuals,
  households and employers to purchase health
  insurance, thus deepening health insurance
  penetration.

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HSA The Indian Context

• Learning from the Singapore and China model of
  HSA suggests that controlling healthcare demand
  should be achieved simultaneously with Government
  initiatives to implement health sector reforms.
• The reforms should include
• development of standard treatment guidelines
  (STGs),
• accreditation of different layers of healthcare
  providers,
• adoption of DRG (Diagnosis Related Group) and ICD
  (International Classification of Diseases) coding
  and quite importantly,
• the revival of the Indian Medical Council of its
  original charter for enforcing ethics and
  professionalism in the medical profession.

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Challenges which hinder Growth of Health care
services in India

• Low awareness of health insurance
• Affordability
• Lack of standardization of healthcare providers
  and Proper data for informed decisions
• Limited understanding of the features of policy.
• Consumers skeptical about tedious claim
  administration.
• High loss ratio of health insurance particularly
  group

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Ushering in Change

• Increasing consumer awareness
• Standardization and accredition of health care
  providers
• Enhancement of health care infrastructure
• Building of Health Insurance repository

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Enablers of growth

• Technology
• Innovation around products
• Pricing Channels of Distribution
• Positive contribution of the Key stakeholders -
  Govt., IRDA, Insurers, Healthcare Providers,
  Distribution channels, Health Centers, Media.

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IN CONCLUSION

• India has a great opportunity to spearhead a
  viable and competitive health insurance sector
  and encourage the development of a sound high
  quality health delivery system .
• What is required is a good understanding of the
  actuarial and other risks in the business , a
  long term vision for those entering it, simple
  product design , supportive regulation and
  sustained customer education.

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• An Arab proverb says
• He who has health has hope. And he who has
  hope, has every thing
• We say
• He who has a Health policy has hope. And he who
  has hope has every thing

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• THANK YOU