Health insurance

MD, Max Healthcare Institute Ltd, New Delhi.
Currently, health insurance products in India narrowly cover hospitalisation benefits with a sum-assured limit. “What is missing from the cover is a number of secondary and tertiary preventive measures like preventive health check-ups, screening for cancer, as well as disease management programmes for specific conditions, which I think, would be beneficial for both, the insured as well as insurers,” says Dr Kushagra Katariya, chief executive, Artemis Health Institute. Also missing is the entire gamut of outpatient care as well as procedures and surgery that do not require admission.

Government role
The government has taken some initiatives in partnership with the private sector to provide health cover for below the poverty line families under the Rashtriya Swasthya Bima Yojana, which was started early last year. Apart from the central government, few state governments have also adopted a dynamic role in this sector. For example, Andhra Pradesh government’s ‘Arogya Sri’ health insurance scheme and health card scheme for 18 million BPL families and the Karnataka government’s Yeshaswini Insurance scheme launched in 2002 have already proved beneficial for the residents of these two states.
“The government also needs to continue to closely monitor and regulate the development of this sector since health insurance is provided by a company other than the healthcare provider and the consumer,” avers Dr Katariya.
The government plays a dual role. One is of being a facilitator through policy changes, and also that of a contributor to the healthcare funding gap through spending on the sector. The IRDA has initiated several positive measures to facilitate the growth of the sector. The key anticipated reforms include raising the FDI cap on private insurance companies from 26 per cent to 49 per cent, reduction in capital requirements for standalone health insurance companies to Rs 50 crore from Rs 100 crore earlier and the development of separate guidelines for health insurance to promote sustainable growth of the health insurance in India – resulting in close monitoring and development of industry.
“These reforms are viewed as an incentive for promoting the entry of more health insurance and reinsurance companies in India, and increase the penetration of health insurance in India,” says Sharma.
However, on the funding side, the government’s role could be further enhanced from what it is at present. Government spending on health formed a mere 20 per cent of total healthcare spending (FY 2006) as opposed to 35 per cent in China, and 80 per cent in Japan and the UK.
Dr Ahmed feels that the IRDA has done very little to lay down ground rules for hospitals that run health plans, or to register themselves as insurers or hospital-managed organisations (HMOs), which is mandatory within the US federal and state health insurance regulation. “The government does not realise the fact that currently almost 80 per cent of the hospital beds are in the private sector. And it is time that the concept of free medical care is reviewed and people are required to pay even if partially, for the services,” he opines.
In addition, the government needs to seriously look into its healthcare budget. The Centre spends less than 2 per cent GDP on healthcare (2002-2008), which is 10-12 per cent less than other developing countries, who have an average of 14-15 per cent GDP spent on healthcare. “The implementation of standard treatment protocols, mandatory documentation, coding formats and standardised billing practices by the government are necessary for supporting the growth of health insurance,” states Dr Nilima Kadambi, health insurance expert. Better control over private healthcare providers and hospitals is