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Indian Healthcare Insurance – The Scope, The Challenges

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Healthcare Insurance

Driven by the US government’s move to take healthcare to all citizens, India is steadily making strides despite it being a Herculean task. In these scheme of things, opportunities and challenges related to the Healthcare Insurance in India offers an interesting insight, explores Luv Saxena of Elets News Network (ENN).

While the Healthcare Insurance in India comprises various complex challenges, it holds massive opportunities as well.

Despite a plethora of medical innovations and interventions, addressing the pertinent question of access to affordable basic health and wellness care has remained a challenge, especially for people belonging to low-income and lowest strata of life.

Providing affordable and quality healthcare to over a billion people is nothing less than a Herculean exercise. So far, it has no definite solutions or quick-fix solutions, in a country  where the insurance penetration is as low as 3.3 percent.

Challenges faced by healthcare insurance:

In India, the Healthcare insurance is provided in three forms;

  • Commercial insurance (health covers, maternity covers, accidental covers, etc.)
  • Government welfare schemes, completely taken care of by the government where the beneficiary does not have to pay to avail the scheme’s benefits
  • Health schemes which are part insurance and part welfare where the beneficiary has to pay some nominal premium to avail the benefits (Rashtriya Swasthya Bima Yojana).

Despite the endeavours towards expanding the horizon of healthcare in India, the out of pocket expenditure on healthcare is about 85.9 (according to 2013 World Bank data ). Out of pocket expenditures of countries with comparable backgrounds and economic growth such as Indonesia and Malaysia stands at 75.1% and 79.9% respectively. As opposed to this, countries such as France and Canada have recorded significantly lower out of pocket expenditures at 32.9% and 50.1% respectively (World Bank).

Low penetration of healthcare services and insurance leads to various difficulties such as reach and accessibility, literacy levels and information penetration, and mindset and cultural practices. Escalating costs of healthcare services and unavailability of competent medical professionals, equipment, infrastructure, and medicines are also huge challenges.

On an average, people of the country end up spending a major portion of healthcare needs from their pockets because in India only tertiary healthcare needs (hospitalisation) are covered under any kind of health insurance. A visit to the physician or a sonography – primary and secondary outpatient healthcare services are not covered under most health insurance options and the patient has to pay from his or her own pocket.

It may be mentioned that insurance schemes or policies can be utilized in India only when the patient spends 24 hours on a hospital bed.

Opportunities available:

Catering to individuals’ hospitalisation needs can’t suffice healthcare needs alone, enabling individuals to utilize primary and secondary healthcare in a similar manner is also essential for our Government and other institutions of the ecosystem. If early treatment of an ailment can prevent hospitalization, not only does it save the patient emotional stress and pain but also benefits the ecosystem of healthcare socially and economically too.

Thus, it becomes extremely important to address these needs and build a robust system, which enables coverage of primary and secondary care for all. Here such scenarios offer great opportunities for Healthcare Insurance sector to perform.

National Health Protection Scheme – ‘Modicare’

Recently, the Union Budget announced the National Health Protection Scheme (NHPS), the biggest such global plan to provide quality health coverage to a population larger than the combined citizenry of the US, France, Germany and the UK.

Unofficially known as ‘Modicare’, the plan seeks to extend health insurance to 10 crore people from financially vulnerable households, meaning that about four in 10 Indians would have access to modern medicine, critical care, and quality tertiary care through private and state facilities — financed through Rs 5 lakh  per family insurance cap.

Thus, this plan presents huge opportunities for insurers in India. G Srinivasan, chairman and managing director of New India Assurance says “I look at it as a great opportunity for the insurance industry and there is a scope of expanding health insurance by 40% in one year.”

In brief, one tends to understand as the Indian healthcare Industry is estimated to grow in leaps and bounds by 2020. With over 70% out-of-pocket expense burden on the consumers, the market is ripe for health insurance entities including global players. The healthcare industry is likely to witness major reforms.

Whichever model evolves, it is clear that the healthcare financing and delivery system is poised for a major change. It looks the country’s healthcare transformation should focus on the three key goals of access, cost, and quality.

Entities will encounter multiple challenges in catering to the needs of the 1.2 billion populations, stratified on culture, economy, and means. Private entities need to complement public initiatives to develop a comprehensive healthcare delivery and financing system.

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