An intensive care unit in a hospital. Picture by S.H. Patgiri

Health insurance has not been able to penetrate the market in India even after almost 20 years of existence. With only one per cent of the population covered under some form of health insurance, the situation is indeed grim if compared to the other developed nations where almost 90 per cent of the people are insured. We are all responsible for this situation and it would be wrong to put the entire blame on the insurance companies. We have been paying premium for our vehicles, home, factories, shops and so on, but one reason for this may be that we are compelled to do so either by regulation or forced by our bankers. But we hardly feel the need to pay a small amount for our health. If a family of four pays around Rs 4,000 per annum as premium towards health insurance, in 15 years they have contributed Rs 60,000 towards their treatment.

One small gallstone or appendix operation during this period makes up for this amount and if any major disease is contracted, the family ends up getting back much more than the amount of premium paid. Thus, it provides financial security to the family in times of uncertainties. We realise its importance only when we pay the hospital bills. At the same time, efforts made by insurance companies to market their products properly and to reach out to the masses have to improve. Mismanagement in the claim settlement process, bad claim experience and very high claim ratio for the insurance companies have further dampened the spirit of those opting for insurance.

The insurance sector has seen some major developments in the country recently, thanks to the initiative taken by the Centre. The Union government has introduced the third party administration (TPA) service on the lines of developed nations. Mediclaim policies are now meaningful and have received the fillip to be a popular insurance product. Prior to the introduction of the TPA, a major shortcoming of the mediclaim policy was that one had to pay the hospital first and then claim reimbursement from the insurance companies. This meant arranging funds from relatives and friends or taking a loan, while the unlucky few had to sell their assets.

With the introduction of the TPA, treatment does not require cash, wherein the insured does not have to pay at the network hospitals. That is, one can walk straight up to a hospital with a card, get the treatment and leave after signing the bills.

However, in today’s scenario, things are not always so easy, though efforts are being made to make them simple. When claims were being settled under the reimbursement procedure, it took three to four months to get them cleared. Now the TPA takes on the liability within 24 to 48 hours of intimation. This can be possible only if there is total co-operation among the insurance company, the TPA, the insured and the hospital.

Whenever a TPA request is denied, it is either because the pre-hospitalisation form, a pre-requisite for availing of the facility, has not been filled up properly or the policy has not been enrolled or the claim is inadmissible because of inadequate information.

The TPA accepts the liability based on the information provided in the form if the ailment is covered according to the terms and conditions of the mediclaim policy. As the terms and conditions of the policies are stringent and because of bad claim experience, the TPA is sometimes denied in cases that are doubtful. The prerequisite for the success of the TPA is an accurate database of the insured and maintenance and upgradation of the same during renewal.

The policy details are sent by the insurance companies to the TPA and the cards are issued accordingly. According to the system, the policy details sent by the insurance companies should contain the necessary information like name, policy number, previous policy number, date of inception of the policy, claim history, cumulative bonus, details of the insured and so on.

However, the information provided to the insurance companies are not always complete. Therefore, when there is a request for a TPA, the authorities have to call up for the other details, thereby causing delay and apparent harassment to the insured. Given these problems, it is not justified to expect the TPA to perform perfectly in its first year of operation.

Things have, however, started improving and the process of cash-free authorisation has also become efficient. The insurance companies have now realised the need to market mediclaim policies aggressively.

In the past 15 years of its existence, the total market size reached only Rs 700 crore when it should have been at least Rs 7,000 crore. The situation is not encouraging in the Northeast either. Out of the seven states of the region, not even 50,000 people have health insurance cover.

The market is almost untapped in this region and the insurance companies need to create awareness on the possible benefits of health insurance. The organisations — business firms, associations and corporations — should also take it up with their employees and provide compulsory health insurance cover. Organisations that provide medical allowances to their employees/members will end up spending less by paying the premium for such health insurance cover.

The state governments can set examples by providing health insurance cover to all of their employees and their family members. Thus, it requires a serious effort from all of us — the people of the Northeast — to cover everybody under health insurance policies.

Insurance companies are now well aware that if the target volume is reached, it would bring in huge profits for the insurance companies. All personal insurance products are high cost, low premium products.

Therefore, the only way to make the business profitable is by achieving high volumes. The intermediaries or the agents, who market these products, need to be motivated and sell these products aggressively, as they are normally least interested in selling them.

Medical insurance is one of the biggest businesses all over the world. In India, even if a mere five per cent of the population is tapped, it would generate a huge premium.