Include the Excluded and Get on with Health Insurance

An old saying reminds us that poverty and sickness marry into the same family. The poor cannot afford to be sick and when sick, most often, they cannot afford to get well.

Simultaneously we hear that the business of health insurance in India is growing rapidly, driven by group insurance schemes. Is this the only way to tap the bottom of the pyramid? Theoretical insights supported by sufficient empirical evidence have pretty much established that:

• there is a solvent market for health insurance among India’s low income segments;
• most people prefer a holistic benefit package with basic health coverage in lieu of high coverage of only rare events;
• tapping this huge market is contingent on product development;
• in turn, product development needs to start with, and be constantly guided by a deep understanding of the clients’ needs and wants;
• on the ground, the demand for propoor and pro-rural health insurance at realistic premiums exceeds the supply available;
• the poor and the vulnerable do prioritise access to some healthcare; and,
• the declared willingness to pay levels are much higher than what has been assumed as feasible.

Health insurance is a complex issue. There is concern that the teeming millions are not enthused by the numerous health insurance products with fancy titles offered in the market. The fact is that while the aam aadmi prioritises health care for himself and family, he does not fully comprehend the plethora of insurance products being offered in the market. The life insurance health plans offer health and savings benefits but they cover only certified diseases. He is advised that mediclaim health insurance cover is more comprehensive, but the aam aadmi does not think so. He is looking for an affordable and holistic benefit package. He sees most insurance products as excluding conditions that are of significance to him. He is concerned and confused. If there are so many “permanent exclusions” from every near affordable package, then what is it that he being persuaded to purchase? To address his questions we need to go back to the drawing board, with experts, to chart out for the entire country: (a) who needs to be covered, and (b) what should be covered.

There is concern that the teeming millions are not enthused by the numerous health insurance products with fancy titles offered in the market. The fact is that while the aam aadmi prioritises health care for himself and family, he does not fully comprehend the plethora of insurance products being offered in the market.

Answers to the first question tread upon that holy cow, the subject of permanent exclusions. We need to dwell upon how diabetes, a permanent exclusion, was brought within the ambit of health insurance. It becomes clear that we need to reiterate these examples to press home the need for a change of mindsets.

Reproductive Health and Health Insurance

Within reproductive health, pregnancy is excluded. However, with the Janani Suraksha Yojana (a programme for ensuring safe delivery), public provisioning for a dedicated safety net is getting institutionalised. Nevertheless, this remains a grey area.

Then again, sexually transmitted diseases continue to be excluded from individual insurance cover. Statistical data on these diseases is widely available; treatment protocols are well honed; and outcomes are reliable.

Twenty years ago STDs were viewed as immoral and hence, somehow, merited this exclusion. Surely, we have moved on. However, every single nongroup mediclaim policy in India permanently excludes hospitalisation expenses incurred for any STDs, including AIDS. We need to re-examine these initial premises, and continued misgivings.

AIDS and Health Insurance

From the point of view of the health insurance industry, HIV/AIDS as a disease is relatively new (not older than 30 years), with no certified cure, and there is not enough data available on the average cost of treatment. Treatment is expensive, outcomes are uncertain, and on this basis, insurance companies justify the exclusion of hospitalisation expenses incurred towards any sexually transmitted disease, including AIDS.

But it is well known that AIDS is also attributed to factors other than unprotected sex. Anti-retroviral treatment commenced in India in April 2004, and we have over 250 ART Centres. Data is now more easily accessible on how many people get affected by the disease, the average cost of treating this disease, and the eventual outcomes. An insurance cover for AIDS need no longer be prohibitively expensive

It is becoming clear that somewhere, the domain of health insurance is locked into a mindset which is not congenial to reaching out. Do insurance companies continue to have valid reasons to exclude hospitalisation expenses for pregnancy, sexually transmitted diseases and AIDS?

Health Insurance for the Elderly

A large number of people are denied health cover once they cross 50 years of age. Both fees and tests get stiffer with age, immediately after 50 years of age. The IRDA has directed insurance companies:

• (i) to increase to 65 years, the entry age for health cover;
• (ii) to discontinue refusing health insurance on grounds of age; and,
• (iii) to stop loading senior citizens with extra premium.

Among the more recent health insurance products in the market is the Top Up Plan offered by United India Insurance. Yet again, this covers spouse and children, but does not cover parents. The aam aadmi continues to question how he should handle the increasing health costs of the elderly, and why our home grown insurance companies find this so alien a concept. Several group insurance schemes also exclude health cover for parents above the age of 70 years.

Answers to the second question are drawn from numerous empirical studies. It is now clear that any effective financial protection against the cost of illness include in the package of benefits, cover for consultation fees, tests and medicines, in addition to hospitalisations.

Conclusion

Health insurance has emerged as the natural and most cost effective vehicle for delivery of health services across the world. Our short-term objective is to press for inclusion of (i) health conditions / diseases and (ii) population segments, not included so far in nongroup mediclaim health insurance.

Given the huge numbers of uninsured, one route to expediting appropriate outcomes is to persuade government to set up a common reinsurance pool. After all, government has made a similar commitment for terrorism cover.