Current Scenario

TOPIC: HEALTH INSURANCE

NAME: YATRI SHAH TYBBI ROLL NO-534

1) Introductory

2) Origin

3) Meaning & Definition

4) Why Health Insurance Is Must

5) Indian Scenario 6) What Are The Issues And Concerns

7) Licensing Of Health Insurance In India

8) Health Sector Financing

9) What Are The Opportunities And Challenges

10) Need For Priorities

11) Government Based System(CGHS) & (ESIS)

12) Employer Managed System

13) NGO System

14) Market Based System

GIC Mediclaim Coverage

LIC Coverage

15) Mediclaim

16) Overseas Mediclaim

17) MICRO Health Insurance

18) Health Insurance For The Poor

19) Healthcare Products

20) Third Party Administrators

21) Future Issues Relating to Health Insurance

22) News Related To Health Insurance

23) Conclusion

INTRODUCTIONIndia is the first largest country in terms of purchasing power parity and is considered one of the fastest emerging economics in the world. However, its health status remains a major concern. Infant mortality rate of India is as high as 54.6 while it is around 23 for China. Similarly life expectancy at birth for India is around 64.7 while it is in the range of 77.80 for many countries. Insurance generally comprises of life and non-life (general) insurance. Health Insurance in India comes under general insurance. The development of health insurance in India therefore, has to be seen in the backdrop of the development of insurance in general. Healthcare, with global revenue of over Rs. 2.75 trillion is the largest industry in the world. The nation of India with a population of 1000 million experiences a vast inequity that exists sin the healthcare industry with barely 3 percent of the population covered by some form of health insurance, either social or private. Health insurance schemes are increasingly recognized as preferable mechanisms to finance health care provision. The option of insurance seems to be promising alternatives as its pools and transfers risk of unforeseeable health care costs for a pre-determined fixed premium. We do not social security system, appropriate Health Insurance Schemes for different sections of the society particularly underprivileged and the poor is an urgent need of the hour. Insurance penetration being very low and health insurances share being minimal in the existing situation, the vast majority of the populations are outside the existing Health Insurance System. With the opening up of the insurance market for private entry and the accompanying hype it is being hoped that in the days to come, the teeming population of India can look for health coverage from an array of insurance providers that too at an affordable price. The present series on health and group insurance therefore attempts to trace the significance of health insurance and its basic tenets in preserving the economic value of the lives of the citizens.ORIGIN OF HEALTH INSURANCEThe concept of health insurance was proposed in 1964 by Hugh the Elder chamberlen form the Peter Chamberlen family. In the late 19th century, early health insurance was actually disability insurance, in the sense that it covered only the cost of emergency care for injuries that could led to a disability. This payment model continued until the start of the 20th century in some jurisdictions (like California), where all laws regulating health insurance actually referred to disability insurance. Patients were expected to pay all other healthcare costs out of their own packets, under what is known as the fee for-service business model. During the middle to late 20th century, traditional disability insurance evolved into modern health insurance. It is not an easy task to regulated health insurance. Some countries including the US had to launch war-like operation to unearth large scale frauds. Malpractices in health Insurance range from excessive billing to exaggerating severity of hospital patient conditions.

In India, Health Insurance is not of recent origin. Concern for loss resulting from accident and illness can be traced to ancient civilizations. In fact, one of the earliest forms of health insurance may have been based on the ancient custom of paying the doctor while in good health and discontinuing payment during periods of illness. This custom existed in South East Asian countries including India. The development of health insurance in existing form in India is based on pattern followed in Europe and America. Health Insurance or medical insurance schemes had developed in India due to industrial relations problems between the employer and the employees. The Corporate Houses used to offer core and non-core benefits to the employees. The insurance policies were granted to large Corporate Houses purely on an accommodation basis. The cover usually offered to the employees was in the nature of hospitalization and domiciliary treatment for dental and non-surgical eye treatment. The benefits used to be for very small amount. There was no scheme for individuals and families.

In 1981, the Apex Body of Public Sector Insurance Companies i.e. GIC designed a limited cover for individuals and families for covering their hospitalization needs. This was replaced by a mediclaim policy in the year 1986 under a market agreement to provide insurance benefits to individuals and groups under a group mediclaim policy. The scheme so introduced was modified in 1991 and 1996 in the light of experience and suggestions received from the insuring public and medical fraternity. The benefit provided under the policy was on reimbursement basis on occurrence of a major calamity in the form of accident/sickness to an insured person. The first Mediclaim Insurance Scheme was introduced by GIC in 1986 for people not covered under the above scheme. Prior to 1986, cover against sickness and diseases were provided by extension of Personal Accident Policy. It is interesting to note that even after nearly two decades of health insurance, the population covered by health insurance is only 1% of the total population. The following table demonstrates the progress of health insurance in India::

MEANING AND DEFINITION

Health insurance insures you and your family against sudden medical expenses. A medical emergency can arise due to sudden illness or injury. With medical expenses rising, a health insurance policy would help you sail through a bad patch. Your medical expenses will be taken care of by the Insurance company provided you pay your premium regularly.World health organization defines health as complete physical, mental and social well being and not merely the absence of disease and injury. As per WHO, a countrys Health Systems comprise of all the organizations, institutions and resources that are devoted to produce health actionsNew India Assurance Company Limited, stressing on the social security aspect of health insurance, in their written note, stated; Basically the philosophy behind the concept of Health Insurance is to provide protection against uncertainty of illness /accident by spreading the risk based on the principle that what is highly unpredictable for an individual is predictable for a group of individuals. Thus, insurance is a system by which Healthcare expenditure of few unfortunate individuals, who suffer from illness/injury, is shared by many fortunate ones who are insured and exposed to the same risk but remain healthy. Oriental Insurance Company, emphasizing the financial security aspects of health insurance, in their written note, stated; Health insurance is a financial mechanism that exists to provide protection to individuals and households from hospitalization expenses incurred as a result of unexpected illness or injury. Under the mechanism, the insurer agrees to compensate or guarantees the insured person against loss by specified contingent event and provide financial coverage for which the insured party pays a premium. The case for health insurance rests on three grounds: a) Illness can not be predicted; b) Financial burden of hospitalization is high and cannot be planned; c) The proportion of people requiring hospitalization due to illness or injury in any large population is small thus enabling risk pooling. Pooling of risks, resources, and benefits is the hall mark of any insurance system. Form Scheme Beneficiaries in lacs

Social /Mandatory Schemes The Employees State Insurance Scheme

Central Government Health Scheme

State Sponsored Schemes

(This figure may be enhanced with the recent coverage extended by Assam Government to its undeserving population) 253.

43.

5.

Employer based Schemes

Railways Health Scheme

Defense employees

Ex-Serviceman

Mining & Plantations (Public Sector)

Employers run facilities/reimbursement schemes of private sector/public sector.80.

66.

75.

40.

60/80.

Commercial Schemes Pubic Sector Non-Life Companies

Private Sector non-life Companies

Health Segment of Life Insurance companies 100.

8.

2.3

Community Schemes Community health schemes by NGOs and others 30.

WHY HEALTH INSURANCE IS A MUST?Health insurance has become a necessity today because it plays a major role in health care. This is because one never knows when illnesses may strike. And in such cases hospitalization and medication expenses can be unaffordable. Health insurance can prove to be a source of support by taking care of the financial burden of your family may have to go through.

Advancement in science and technology has brought about a revolutionary change in mans life. It has reduced mortality rates and increased his life span but at the same time has given rise to a number of other ills. Increasing pollution levels especially in metros, stress and strain at workplace, cut throat competition taking its toll are some of the harsh realities.

Pollution levels in certain areas are unimaginably high and the areas are nothing short of gas chambers. An individual going to his place of work has to spend long hours in queues, inhaling the vehicular emissions of poisonous carbon monoxide gases affecting his health in the long run. Besides accidents on roads are common features.

In such instances timely affordable medical help is the need of the hour. But this may be easier said than done. Treatment for major illnesses or accidents can be unaffordable and may leave you poorer by thousands of rupees.

It is especially worse when the patient needs specialized care. Expenses are exorbitant and the situation leaves you mentally devastated also burning a deep hole in your pocket. The family balance is affected, all those comforts of life have to be given up and your family has to make up with bare minimum necessities only.

Health insurance takes care of you in such circumstances. It will help you tackle such situations with ease by providing you with timely and adequate medical care. The financial burden of footing huge medical bills is taken care of by health insurance. Besides if the accident causes life long disability to the patient, the earning member of the family, the insurance company will come to the rescue. Primary health care - a basic necessity and right of every individual, is today only a distant dream. The government has done precious little in this regard for the masses and hence the private sector has taken up the challenge to exploit the potential of the 92,400 crore healthcare industry.

With educational levels going up people are becoming increasingly aware of the need of timely healthcare facilities. But at the same time the high costs of private health care is a major deterrent. The need of the hour is affordable health care for all in order that even the people in remote villages can have access to it. INDIAN SCENARIOIn India, presently the health insurance exists primarily in the form of Mediclaim policy offered to the individual or to any group, association or corporate bodies. The government spending is less than 25 percent against the average spending of 30-40 percent in other developing countries. There is need for regulation for the self-funded health plans by major employers who may not find insurance as a cost effective alternative. According to WHO figures (2002), total health expenditures represent 6.1% of Indias GDP, but most of this amount, representing 4.8% of GDP is the share of private expenditures and only 1.3% of GDP is public expenditure. Of the 4.8% private expenditure, 98.5% are out-of-pocket spending of users. In other words, 77.5% of total expenditure for health care costs is paid by individuals or households (WHO, 2005) and this huge expenditure does not pass through any pooling mechanism. Access to health care in India is still low and with only less than 1% of GDP allotted to public health, there is lack of adequate health infrastructure.

.Penetration of Mediclaim is currently done by state-owned insurance companies, covering only about 2.5 million people i.e. less than 0.50 percent of the countrys population. There are some health insurance schemes issued by four public sector general insurance companies, namely, National Insurance Company Limited (NICL), New India Assurance Company Limited (NIACL), Oriental Insurance Company Limited (OICL) and United India Insurance Company Limited (UIICL). Besides these four companies, Life Insurance Corporation (LIC) of India also offers a few health covers in a limited manner. At present, 82.44% of the entire commercial health insurance business in the country is shared between public companies, while private firms manage the rest 17.56%. Paradoxically, the medical professionals are resisting standardization in treatment coding known as ICD and cost cutting measures for making the medical treatment affordable to the ailing. They tend to forget that that future growth of healthcare in a country like India would depend upon the development of health insurance model. The need for support from the health domain members/players and the ministry of health both at the centre and the state cannot be overemphasized. However given the state of affairs of regulations in the healthcare sector in India, it is doubtful whether full fledged insurance companies would like to take healthcare risks manageable so that insurers may find it worthwhile to move into the sector in a big way.ISSUES AND CONCERNSAll over the world, insurance coverage is being extended through 3 basic models: i) public financing and public delivery as practiced in the UK until its recent reforms, ii) private financing and public delivery as the model practiced in the US, Singapore, and Taiwan and iii) public financing and private delivery as the Bismarck model, idealized national (public or social) health insurance scheme practiced in Canada, Germany, France, Japan and China. Health care insurance is one such alternative that covers the risk of payment for health care. William C Hsiao (1992) of the Harvard University undertook a comparative study of the three models and concluded that "public financing and private delivery" of health care as practiced in Canada is the best among the 3 models in terms of performance, health outcome, public satisfaction and access to health. There is however, a school of thought that doubts the suitability of this model to Indian conditions on the grounds that:

i. The size of the population is far more than any of the countries where it is being currently practiced efficiently.

ii. The level of the per capita income is far lower than in other countries.iii. The type of federal set up India has is different from the rest.

True, these apprehensions cannot simply be shunned off but one redeeming feature of the Indian system is that it has the necessary infrastructure - sizeable public hospitals, not-for-profit voluntary organizations plus highly skilled professionals in different kinds of medical services and decades of experience in managing insurance business. What is therefore needed is a better link-up of these available resources with the ordinary consumer at an affordable price. With the opening up of the insurance market for private entry and the accompanying hype it is being hoped that in the days to come, the teeming population of India can look for health coverage from an array of insurance providers that too at an affordable price. The common negative factors which evolve after looking at various health coverage phase are

1. Quality of service when facilities are owned by the plan giver. ESIS, CGHS is grossly inferior Reimbursement delays in case out of pocket spending and or rejections of claims

2. Limitations of services Either monetary restriction on the amount available per year or non-comprehensive care of certain pre-existing & chronic ailments.

3. Inadequate information regarding health, ailment, procedures & treatments, cost and outcome

4. Provider malpractices

5. Coatings for comprehensive total care

6. The Low Level of Medical Penetration in IndiaHealth care spend in India is considerably lower than that in other countries..

USUKMexicoBrazilChinaIndiaAccess to health care service providers and availability of physicians is one part of the issue

Financing for health care is the other aspect of the issue

Life expectancy (avg. # of years)77.478.372.671.472.564.0

# of Physicians per 1,000 people2.71.91.71.21.70.4

Healthcare spend (USD per capital536530363362366232

Healthcare spend (% of GDP)13.28.45.57.55.05.3

LICENSING HEALTH INSURANCE IN INDIAHealth insurance is one of the most regulated forms of insurance business in those countries where it plays a dominant role in financing of health expenditures. Spiraling healthcare costs and rapid technological advances in the medical field have triggered the need for cost-containment by the health insurers without sacrificing the interest of the policyholders or claimants. The nature of loss in health insurance might result in differences of opinion. All these call for intervention by regulatory authorities to protect the consumers

However, under the Insurance Regulatory Development Authority (IRDA) in India, the powers of licensing and regulatory insurance, including health insurance, has been mandated under an act parliament.

Despite such a regulatory authority, very little has been done by IRDA to lay down ground rules for hospitals which run health plans and may be required to register themselves as insurers or hospital managed organizations (HMO). It may be pertinent to note that in similar situation, the US federal and state health insurance regulation prescribe elaborate legal framework to ensure quality standards for rate regulation, cost containment, etc.

HEALTH SECTOR FINANCINGOne of the major goals for the future health system in India is to ensure good health for the population through access to high quality services. To achieve this goal, there is a need to enlarge coverage and rationalize the current mechanisms for collective health financing. There are at least six dimensions of the choice of health financing policies:

Identification of beneficiaries

Benefits covered by insurance source(s) of financing

Methods for provider payment institutions that pay providers

Role of public and private sectors in the delivery of service

Using central/state revenue for health

Compulsory premium contributors to health

Channeling loans, grants etc. to healthcare

Payments to health are providers for service

Premium contributions towards health supportTax-based and out-of-pocket expenses are direct expenses related outlays

Health Ins. Involves a fund pool for future healthcare

HEALTH INSURANCE AS A HEALTH FINANCING TOOLAttracting additional money for health additional resources may be available through insurance because firstly, consumers are more enthusiastic about paying for health insurance than paying general taxations, the benefits are specific and viable and secondly, consumers are more able and prefer, to pay regular, affordable premiums rather than paying fees for treatment when they are ill. Getting better value for money (or increasing efficiency)

Improving the quality and targeting of healthcare (increasing effectiveness)

1. A greater explicitness and viability of spending on health services occurs as a result of insurance.

2. The third party institution can specify in contracts the kinds of healthcare that to be provided and can therefore concentrate on providing cost effectiveness

3. Consumers, and their representatives, will demand better quality care because they can see a definite link between their payments and servicesOPPORTUNITIES AND CHALLENGESThe total percentage of population covered under any sort of medical coverage is in single digits which is woefully inadequate. Further, most of these covered persons belong to the organized sector mainly in sectors like Railways, Defence, Central Government, etc. Within this, only a negligible percentage of the persons are covered under private health insurance. If we are seriously looking at a problem is by resorting to alternative avenues like private health insurance. It is usually mentioned that it is difficult to bring the rural, illiterate folk under the umbrella of insurance. When it comes to health insurance, this argument would not hold any credence as many of the so-called educated people themselves do not understand the importance of having such protection. Thus, there is a monumental task of convincing different classes of the society about insurance in general and health insurance in particular.Let us take a look at how health, as a class, has been performing in the Indian insurance market. A commercial health insurance policy has been introduced in the market in the late 1980s; and thus it remains one of the youngest classes to be introduced in the industry. In spite of that, it is third largest class in terms of gross premium(Rs.78,831 lakh) earned for the quarter-ended June 2006, after Motor (2,39,117) and Fire (Rs. 1,63,286). Further, even if one considers the growth percentage of any class, health has grown by about 44% for the one-year period (June 05 to June 06). In absolute terms, it has registered a growth of Rs.25, 303 lakh from Rs. 53,528 lakh. This compares very favorably with the overall performance of the industry which registered a growth of Rs.1,24,906 lakh, from Rs.5,38,084.32 to Rs.6,62,900.78; which is around 23%. In the process, it has overtaken more conventional classes of insurance like marine and engineering. Looking at in isolation, it has a commendable performance. But when one looks at the percentage of the population who actually go for commercial health insurance, particularly in the rural areas; one could easily realize that something grossly wrong with the way private health insurance is being accessed in the country. On the contrary, it is commonplace to observe some member or the other in many families to be hospitalized in a nearby town and in most of these cases; they end up paying huge amounts of hospital hills. Going further, the funding for such casualties is provided by the ubiquitous moneylender; and thus they become unfortunate victims of a debt trap. Looking at the importance of providing healthcare for the masses, any amount of hard work should not be deterrent. In accomplishing this huge task, there is a role for everyone to contribute in whatever manner they can. NEED FOR PRIORITIESFurther, there is a huge emphasis on curative care- both in the case of healthcare management of the country as also when it comes to providing commercial health insurance. Over a period of time, we have managed to eradicate some of the killer diseases like smallpox. Further, we have also been able to spread awareness about the maladies of afflictions like polio; and promote the administration of vaccinations against such invalidating conditions by promoting strong campaigns. This augurs well for the health of the country, at least on the area of preventing such diseases. But when compared to some of the other third world countries, we are way behind in tackling diseases like malaria, water-borne infections etc. there is a certain need to achieve better progress in this area; and given the means, it is not impossible altogether; it is just that the right focus and direction is to be targeted.HEALTH CARE PRODUCTS

The following are brief descriptions of some of the major health care products available in world markets today. Capital Disability Policies

Disability benefits cover the financial risk to the insured of his/her becoming disabled and are expressed either as occupational disability or the inability to pursue any activity for a living. Benefits are payable in the form of a lump sum or as an income.

Permanent Health Insurance Policies

Disability income benefits pay a regular income should the insured experience a loss of income upon becoming fully or partially unable to follow their own or similar occupation. The benefit usually pays an income either until the insured has recovered sufficiently from the temporary disability to return to work, or has died or until normal retirement age. A waiting period is usually imposed prior to the commencement of the benefit payment.

Dread Disease (or Critical Illness Policies)

A Dread disease benefit offers a payment (sometimes an accelerated death payment) on a confirmed diagnosis of a dread disease. This benefit is usually valid in the case of a limited number of listed diseases, which often include the following diseases: Heart attack, Stroke, Coronary artery disease requiring surgery, Cancer, Kidney failure, Surgery for a disease of the aorta, Replacement of a heart value, Organ transplant, Coma

Other diseases can also be included and the percentage of the sum assured paid for each disease may be related to the severity of the disease. Long Term Care Policies

This policy provides financial security against the risk of needing either home or nursing-home care as an elderly person. Premiums will be paid regularly and will cease either when benefit payments commence or earlier (e.g. at a given age). A group version of this product would enable an employer to provide long term care to retiring employees and their spouses.

Hospital Cash Policies

Hospital Cash policies usually provide the insured with a daily cash amount for the duration of an insureds stay in the hospital. Further benefits are often added in order to cover the additional costs associated with any visit to the hospital. These would often be in the form of a major medical expense policy

Major Medical Expense Policies

Major Medical Expenses policies often complement a hospital cash policy. The policy would cover the costs associated with specified medical procedures. These would include the cost of any surgery or follow-up visits to a Doctor. The actual benefit would normally be based on a pre-determined fee scale for various different procedures.

GOVERNMENT/STATE BASED SYSTEMSThe best documented and largest system of health care delivery in India is the diverse network of hospitals, primary health Centres, community health centres, dispensaries and speciality facilities financed and managed by the Central and State local Governments. These facilities are officially available to the entire population either free or for nominal charges. Along with some other networks of village health workers, maternal and child health programmes and speciality disease prevention programmes these public facilities carry out a central role in Indias primary health care system short of durgs and essential supplies and that they sometimes suffer from low morale and inadequate motivation. The health facilities made available to the public are managed and operated under the authority of central and state agencies. The state governments mostly own and mange the public sector delivery system and have to bear the costs of operation. But the Central Government plays a major role on the planning, financing and transfer for resources that determine new investment in health facilities and specialized programmes. Much of the funding for health facilities originates from the Union Ministry of Health and Family Welfare and is channeled to the state governments, which retain considerable authority for the spending decisions. Over the years, the Central Government have been the main source of funds for the primary health care facilities, whereas the states bear the major responsibility of recurrent costs, especially the costs of running hospitals. This system has added to the overall inefficiency of public heath facilities.CENTRAL GOVERNMENT HEALTH SCHEME The Central Government Health Scheme (CGHS) was introduced in 1954 as a contributory health scheme to provide comprehensive medical care to the central government employees and their families. It was basically designed to replace the cumbersome and expensive system of reimbursements (Ministry of Health and Family Welfare, Annual Report 1993-94). Separate dispensaries are maintained for the exclusive use of the central government employees covered by the scheme. Over the years, the coverage has grown substantially with provision for the non-allopathic system of medicines as well as for allopathic. In addition, the CGHS reimburses patients for part of their out of pocket costs on treatment at the government hospitals and some other facilities. The list of beneficiaries includes all categories of current as well as former government employees, members of parliament and so on. The CGHS has been in the recent past, widely criticized from the point of view of quality and accessibility. EMPLOYEES STATE INSURANCE SCHEME Established in 1948, the Employees State Insurance Scheme (ESIS) is an insurance system which provides both the cash and the medical benefits. It is managed by the Employees State Insurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a compulsory social security benefit for workers in the formal sector. It benefits 33.4 million workers with income less than Rs.6500/- a month along with their families. Since 1989 the schemes has been expanded, and it now includes all such factories which are not using power and employing 20 or more persons. Mines and plantations are explicitly excluded form coverage under the ESIS Act.

EMPLOYER-MANAGED SYSTEMSEmployer-managed health facilities and the reimbursement of health expenses by employers are the other means of health insurance in India. Generally, the public sector undertakings and big industrial houses have their own dispensary and hospitals and provide medicines, etc, across the counter, usually within the company premises township. These include defence services, educational institutions, particularly universities also provides medical services to their employees.In addition, there are various medical reimbursement plains offered by employees for private medical expenses in the private sector including commercial banks and autonomous institutions. Also, in some organization we may find a self-insurance system known as medical benefit or medical allowance scheme. Under this scheme, employees incurring medical expenses are required to submit their claims to their employees for reimbursement, and reimbursements are not linked to their individual contribution. Such coverages generally vary according to the employees salary or designation. Overall, the performance of these systems in India has been satisfactory.

NGO SYSTEMSHealth facilities are also provided by voluntary and charitable or Non-government organizations (NGOs). Some of the important NGOs are Child In Need Institute (CINI),

Self-employed Womens Association (SEWA), Streehitkarni and Parivar Seva Sanstha. The health care facilities offered by these organizations are a part of their main objectives. Though, these are not exactly health insurance programmes, yet they have potential to generate awareness and associate themselves with the major health insurance.MARKET BASED SYSTEMSA. GIC Mediclaim Coverages

The GIC holds a major share in the market-based health insurance segment. It introduced the standard Mediclaim health insurance scheme in 1986, and become operational in 1987. This product was later on modified in 1997 to allow for premium differentials for various age group meant for both individuals and groups. As on date, the GIC and its subsidiaries offer the following products:

A.1 Mediclaim or Hospitalization Benefit Insurance Policy

Suitability

Anyone in the age group of 5 to 80 years can take the policy. Children in the age group below the age of 5 years can also be covered from the age of 3 months onwards provided one or both of the parents are covered concurrently. Higher limits are permitted of the policy is in renewal for the preceding three years. Suitable for persons of any nationality but treatment should be availed of within the country and the claim is paid in Indian currency/foreign currency.Salient Features

Provides cover, which takes care of medical expenses following hospitalization from sudden illness or accident Cover extends to pre-hospitalization and post-hospitalization for periods of 30 days and 60 days respectively.

Domiciliary hospitalization is also covered

Benefits

Reimbursement of medical expenses

Discount in insurance premium is allowed on family package, cumulative bonus and health check. In case of family package cover, a single member can avail of the entire policy limits.

The premium paid by a cheque upto a maximum of Rs. 10,000 is totally exempt from income tax.

Domiciliary Hospitalization

The term means that a patient can be treated at home when he is not in a fit condition to be moved to the hospital or where is no accommodation in the specialist hospital provided

The treatment was for a period not less than 3 days.

The sub-limits of sum insured towards domiciliary hospitalization are furnished in the sum insured and premium schedules.

Exclusions

The facility is not available if any illness is contracted within 30 days from the commencement of risk except in case of an accident.

Any pre-existing diseases

Treatment for contracts, benign prostatic hypertrophy, hydrocele, congenital internal diseases, fistula in anus, piles sinusitis and related disorders for 1st year of policy AIDS or conditions of similar kind

Requirements

A completed proposal form. If the prosper is a Diabetic, a separate questionnaire completed by the family physician.A.2 BHAVISHYA AROGYA INSURANCE POLICYSuitability

Bhavishya Arogya is a life term policy where medical benefits are made available after retirement of the insured. Therefore, by paying premiums during the earning period, one can make a provision for medical benefits after retirement. Persons in the age group- of 25 to 55 years are eligible for this policy.

Salient Features

The policy provides hospitalization benefits for lifetime after retirements age of the insured.

Premiums can be paid in equated annual installments up to the age of retirement

Premiums can also be remitted in lumpsum on one time basis. Discount is offered for one time payment

Benefits

The policy comes into force after retirement and provides for hospitalization and domiciliary hospitalization benefits, following an accident or sickness.

Other conditions

The minimum sum to be insured is Rs. 50,000 and can be increased in multiples of Rs.10, 000 as a unit, thereafter. For every Rs. 10,000 increase of sum insured, the premium is loaded by 20%

Maximum sum insured is Rs. 2 lakh.

After commencement of the risk (i.e. after retirement) cumulative bonus @ 5% for every successive claim free year is added upto a maximum of 50%.

In case of death of insured before retirement, refund of premium will be at a pre-determined scale and it is payable to nominee/assignee.

In the event of voluntary cancellation of the policy, the refunds will be75% of the set scales applicable for death claims, provided there is no claim under the policy.

Requirements

A completed proposal form

Proof of age is necessary as the payment of premium depends on the ageA.3 JAN AROGYA BIMA POLICY

This policy was introduced in the year-1998. It is designed to provide hospitalization insurance to poorer sections of the society. The coverage is along the lines of the individual mediclaim policy except that cumulative bonus and medical check up benefits are not included. The sum insured per insured person is restricted to Rs. 5000/-. Premium up to Rs. 10000/- qualifies for tax benefit under Section 80D of the Income Tax Act. Service tax is not applicable to the policy. The premium payable as per the following table Age of the personUp to 45 years46-5556-6566-70

Head of the family70100120140

Spouse70100120140

Dependent child up to 25 years190250290330

For family of 2+1 dependent children190250290330

For family of 2+2 dependent children240300340380

The policy is available to individuals and family members by duly completing the proposal form. The age limit is 5 to 70 years. Children between the age of 3 months and 5 years can be covered provided one or both parents are covered concurrently.B. LIC COVERAGES

The Life Insurance Cooperation of India introduced a special insurance programme in 1983 which covered medical expenses for only four dreaded diseases. It was withdrawn and introduced subsequently in 1995. At present the modified versions are available in the form of two products viz. Jeevan Asha and Asha Deep

I. Jeevan Asha

Features

Open ended scheme

Covers many surgical procedure

Fixed benefits for surgical treatment can be availed twice (subject to conditions)

Exclusive Double/Triple accident benefit.

Option to switch over from existing Jeevan Asha plan

Suitable forThe Jeevan Asha II plan is apt for people who whose family history tends to show hereditary lineage of maladies and afflictions that have required major or minor surgery from time to time. Special Features

Under the Jeevan Asha plan, the major surgical procedures covered for are:

Nervous system (non-malignant causes)

Respiratory system

Cardiovascular system

Haemic and lymphatic system

Endocrine & Ocular systemII. Asha Deep

Features

Cover the risk of four major ailments namely, Cancer (malignant), Paralytic stroke resulting in permanent disability, renal failure of either kidneys or Coronary artery diseases where by-pass surgery has been done.

Suitable for:

The Asha Deep II (with profits) policy is best suited for people if they anticipant or have a family history of serious diseases like Cancer, Paralysis, Renal failure and Coronary disease.

Special Features

During the term of the policy, if the life assured is afflicted by any of the major ailments listed above and the same is established as per rules (in case of Coronary artery disease, the life assured must have undergone the by-pass surgery), the policyholder will be eligible for the following benefits, the policy is in force for the full sum assured. Immediate payment of 50% of the sum assured

Payment of an amount equal to 10% of the sum assured, every year commencing from the policy anniversary falling on or after the date of affliction and ending with the policy anniversary preceding the date of maturity or the date of death of the life assured whichever is earlier.

Payment of balance 50% of the sum assured and vested bonuses on the date of maturity or on death of life assured, whichever is earlier. The bonuses will be calculated on the full sum assured even though 50% of the sum assured would have been paid earlierA lien for a period of one year will be imposed on all policies on all policies under this plan. If the life assured does not get afflicted by any of the diseases mentioned above, the full sum assured and vested bonuses will be paid on the date of maturity or on death of the life assured, whichever is earlier.

Benefits

1. Survival Benefits

2. Sum Assured and vested Bonus on maturity.

Death Benefits

Natural: If the life assured is not afflicted by any of the specified ailments, the legal heirs get the full Sum assured + accrued bonus

Accidental: Accidental benefits available to the life assured whether afflicted or not afflicted by any of the specified ailments.MEDICLAIM - AT A GLANCE

The Policy basically covers reimbursement of expenses of hospitalization and domiciliary hospitalization for illness, diseases or injuries sustained. This Policy is available to persons between the age of 5 and 80 years (children between the age group of 3 months to 5 years can be covered if one or both their parents are also covered concurrently).

Basic Cover

Pre hospitalization Benefits

Post hospitalization Benefits

Sponsored Health Check Ups

Discount in Premium for family cover

Basic Cover

The insured person can claim reimbursement for the following expenditures, provided they are reasonable and necessary incurred: Room expenses

Nursing expenses

Surgeon, anesthetist, consultants, specialists fees

Artificial limbs, cost of organs, O.T charges, medicines and drugs and similar expenses

Note: Under no circumstance will the reimbursement exceed the sum insured. In case of a Family Mediclaim Policy, the claim cannot exceed the sum insured specified against each person in the proposal form

Any relevant medical expense incurred within 30 days prior to hospitalization will also be covered under this policy

Post Hospitalization Benefits

Sponsored Health Check Ups

A person insured under this scheme is eligible for reimbursement of the cost of a complete medical check up (subject to 1% of average sum insured). This benefit can be availed once at the end of a block of every four underwritten - claim free years. To be eligible for this benefit you must ensure that the policy is renewed within a week from its expiry.

Discount in Premium- for family cover

If you take a Mediclaim Policy to cover yourself and one or more of the following persons in your family, you get a 10 % discount in the total premium payable.

Spouse

Dependent children

Dependent parents

OVERSEAS MEDICLAIM

At a glance you need Videsh Yatra Mitra Policy if you are going abroad on business or holiday. The benefits under policy include:I. General Insurance Plan

Personal Accident Cover

Medical Expenses and Repatriation

Cover Loss of Checked in Baggage

Cover Delay of Checked in Baggage

Cover Loss of Passport

Personal Liability CoverII. Special Insurance Plans for:

Corporate Frequent Travelers

Overseas Journey Business and holiday

What's more, while you pay the premium in Indian Rupees, the claims(while abroad)are paid in foreign currency!1. Personal Accident CoverIf the insured person suffers any bodily injury during the overseas trip and such injury, within 12 months of its occurrence, is the sole cause of death, loss of sight or limbs of the insured, the Insurance Company will pay up to US$ 50,000 as compensation.

Note:No claim will be satisfied in excess of US$ 2000, on death of the insured person, if he/she was less than 16 years of age at the time of affecting the insurance.

2. Medical Expenses & Repatriation The cover provided by the Insurance Company extends to US$ 500,000 (for worldwide travel including USA & Canada) and US$ 250,000(for worldwide travel excluding USA & Canada). It is paid to the insured in respect of any permissible and necessary medical expenses that are borne by him outside India on account of any injury or sickness suffered during the period of insurance.

If "Mercury" recommends that continued treatment in India is appropriate, then (notwithstanding anything specified above), the insurance is extended to cover medical expenses incurred in India also. These expenses will be paid only towards treatment undergone within 90 days from the date on which the injury or illness first manifested itself.

Medical Expenses Covered Physician's services, hospital and medical services and local ambulance services.

Up to US$ 225 per dental service taken only for immediate relief of toothache. Dental care rendered necessary as a result of an accident that is covered, shall be reimbursed subject to the limit of cover under Personal Accident. Expenses incurred for emergency medical evacuation including transportation and medical care en route.

If the insured person dies abroad, the expenses incurred for the preparation and air transportation of the remains to India or an equivalent amount for their local burial or cremation.

Specific Conditions Claims will be reimbursed only to the extent they are reasonable and customarily incurred whether in case of medical or dental attention or transportation.

"Mercury" and their Medical Advisors must approve medical evacuation and transportation in advance.

Medical expenses that could have been postponed till the insured returned to India will not be reimbursed. The attending physician and the Medical Advisors shall decide which expenses can be and which can't be delayed.

US$ 100 is the deductible amount and any expense below this amount will have to be borne by the insured person. Further, it also means that from every claim this amount will be deducted before making settlement.

Claims in respect of cosmetic surgery will not be paid unless it is rendered necessary as a result of a covered accident.

Routine physical examinations and any other examinations that are not undertaken as result of impairment of normal health shall not be covered.

Pregnancy and related complications are not covered under this policy.

Where the insured person is unable to present himself or herself for the medical examination (where one is called for by the Insurance Company), the limit of indemnity will be reduced to US$ 10,000. This limit will be utilized only towards physician's services, hospital and medical services and local emergency transportation. Further, the insurance cover will be restricted to cover only illness or diseases contracted abroad and not cover accidents.3. Covers Loss of Checked in Baggage

The insured will receive US$ 1,000 from the Insurance Company in the event of total loss of baggage that has been checked in by an International Airline for an international flight. The insurers however reserve the right to either replace or pay the intrinsic value of the lost article. Specific Conditions:

The Insurance Company will not reimburse partial loss or damage of baggage

No claim will be paid for items whose value exceeds US$ 100, unless the proof of ownership is presented to Mercury, in the event of submission of claim.

Valuable items are not covered by the policy since they should at all times be carried by the insured person and not be packet as part of checked in baggage.

Any recovery from the airline under the terms of the Warsaw Convention shall become the property of the insurers.

4. Covers Delay of Checked in Baggage The Insurance Company will pay up to US$ 100 towards necessary purchases, to replace items, in the event of more than 24 hours delay (from the scheduled arrival time) in delivery of checked in baggage. The baggage should have be checked into an International Airline on an international flight from India.

Specific Conditions: The proof of purchase must be provided for all items reimbursed under this cover Any payment made by the Insurance Company for delay of baggage will be offset against a claim arising for loss of the same baggage.5. Covers Loss of Passport

In the event of loss of passport, the Insurance Company will pay up to US$ 250 towards expenses reasonably and necessarily incurred by the insured person in obtaining a fresh or duplicate passport.

US$ 30 is the deductible amount and any expense below this amount will have to be borne by the insured person. Further, it also means that from every claim this amount will be deducted before making settlement.

Specific Conditions: Loss or damage to the passport due to confiscation or detention by customs, police or other authority will not be covered under this policy.

Claims for loss of passport will not be entertained if the theft of passport was not reported to any police authority within 24 hours of discovery. An official report is also to be obtained from them. No claim shall be paid for loss or theft of the passport if it was left unattended by the insured person. However, if the passport was left in a locked room or apartment and the insured person could not have stored it in a safety deposit box, the claim will be satisfied.

6. Personal Liability Cover The Insurance Company will pay up to US$ 200,000 in case the insured person, in his or her personal capacity, become legally liable to pay third parties for accidental personal or property damage, arising from an incident during the overseas journey.

Specific Conditions: US$ 200 is the deductible amount and any expense below this amount will have to be borne by the insured person himself or herself. Further, it also means that from every claim this amount will be deducted before making settlement. This deductible applies only to third party property damage.

The Insurance Company shall meet no claims arising from Employers or Contractual liability.

No claims arising from liability to any family members, traveling companion, friend or colleague of the insured, shall be met.

Claims arising directly or indirectly from the following shall not be paid.

Animals belonging to the insured person or in their care, custody or control.

Any willful, malicious, or unlawful act.

Pursuit of a trade, business or profession, employment or occupation.

Ownership, possession, or use of vehicles, aircraft, watercraft, parachuting, hand gliding,air ballooning or use of firearms.

Legal costs of any proceedings that result from any criminal or illegal act.

Insanity, use of alcohol, drugs (except as medically described) or drug addiction.

Supply of goods or services.

Any form of ownership or occupation of land or buildings (other than occupation only of any temporary residence)7. HijackThe Insurance Company will pay up to a sum of US$ 300 (US$ 30 per day). This sum will become payable by the Insurance Company, if the insured is held hostage for more than 24 hours.II. Special Insurance Pan

Insurance Plan for Corporate Frequent Traveler

This is a one-year cover issued to employees of companies who have to travel abroad frequently

Features: Each trip should not exceed 30 days. This period can be extended by 7 days without any extra charge, if the delay is beyond the control of the insured person. The Monetary Compensations offered in each case:

BENEFITLIMIT (in US$)REMARKS

Medical Expenses500,000Deductible: US$ 100

Personal Accident25,000-

Loss of Checked in Baggage1,000-

Delay of Checked in Baggage100Delay > 12 hrs

Loss of Passport250Deductible: US$ 30

Personal Liability200,000Deductible: US$ 200

The insured person can be between 18 and 70 years of age. The age limit can be extended to 75 years at the option of the Insurance Company and after such person undergoes a thorough medical check up. The Medical Reports should be authorized by an M.D. in Cardiology and should include, ECG Reading, fasting blood sugar/Urine sugar & Treadmill test in case of medical history

Where the insured person is unable to present himself or herself for the medical examination (when one is called for by the Insurance Company), the limit of indemnity will be reduced to US$ 10,000. This limit will be utilized only towards physician's services, hospital and medical services and local emergency transportation. Further, the insurance cover will be restricted to cover only illness or diseases contracted abroad and not cover accidents. The medical certificate is a must for persons above 60 years.

Overseas Journey - Business or Holiday

This is the ideal Policy for persons traveling abroad on business or holiday. There are two plans that are offered - (i) Worldwide Travel Excluding USA & CANADA and (ii) Worldwide Travel Including USA & CANADA

Features:

Any individual between the age group of 6 months to 60 years can be covered. The age limit can be extended to 75 years at the option of the Insurance Company and after such person undergoes a thorough medical check up. The Medical Reports should be authorized by an M.D. in Cardiology and should include, ECG Reading, Fasting blood sugar/Urine sugar, treadmill test in case of medical history The insurance cover for persons on holiday is a maximum of 30 days and on business is a maximum of 180 days. ECG, urine test and fasting blood sugar reports have to be submitted in case of persons above 40 years for overseas travel including USA & Canada and persons above 60 years for overseas travel excluding USA & Canada. The Monetary Compensations offered in each case: BENEFITLIMIT (in US$)REMARKS

Medical Expenses

Includes USA & Canada

Excludes USA & Canada500,000250,000 Deductible: US$ 100

Personal Accident25,000-

Hospital BenefitUS$15 per day

Max of US$150

Hospitalized for not less than 24hrs

Loss of Checked in Baggage1,000-

Delay of Checked in Baggage100Delay> 12 hrs

Loss of Passport250 US$ Deductible: 30 US$

Personal Liability200,000Deductible: US$ 200

HijackUS$30 per dayMax of US$300Held hostage for not less than 24hrs

MICRO HEALTH INSURANCE IN INDIA

Health risks and resulting catastrophic financial losses are probably significant threats to the people, particularly persons belonging to lower income groups as these people will be excluded from private health insurance. A health shock leads to direct expenditures for medicine, transport and treatment but also to indirect costs related to loss of wages. Since studies have found a very strong link between health and income poor are the most susceptible to a health shock. Given the problem with public health delivery system, the access to and utilization of these facilities remain problem. Strategy to improve the access by developing insurance system to private providers has been one such area. For low-income people in rural and informal sector market based insurance such as Mediclaim can not meet the requirements because of its high cost. Insurance companies and healthcare providers face high transaction costs and also they do not have local information available with them. This makes their job of providing health insurance to this segment very difficult and schemes which are of local origin have more chance of attracting more members because of high level of trust with them. Several community based organizations in India have focused on developing community based insurance schemes during the last decade. Most of these community based insurance schemes (CBHI) are also known as micro health insurance schemes. Micro insurance is a form of health, life or property insurance, which offers limited protection at a low contribution (hence micro). It is aimed at poor sections of the population and designed to help them cover themselves collectively against risks (hence insurance). More specifically micro insurance and CBHI are different in term interchangeably. In India, community health insurance started way back in Kolkata in 1952 which was part of a students movement. This scheme, which is called the Students Health Home (SHH), caters to the schools and universities students of West Bengal. Currently there are more than 20 documented CBHI programmes, of which five were initiated in the past three years community based health insurance schemes is different from normal market based schemes like Mediclaim. Though the basic principle of covering future risks by paying premium in advance is same in all health insurance schemes, CBHI schemes are tailored for local needs and provide health insurance at low cost. CBHI schemes in India can be divided in three broad categories. Table 1 indicates that these three categories are quite distinct from each other in terms of the function of the agency. An agency here can be a NGO, Trust, Hospital or Cooperative etc. their role can vary from performing as intermediary where both treatment and insurance are provided by intermediary itself or where the treatment and insurance are provided by third party.

Micro health insurance as mechanism of providing healthcare to the poor, the role of these CBHI schemes will be very crucial. The success of many of these schemes though at a smaller level at present, provides important lessons for the policy makers. One important point to remember here is that CBHI schemes have their own problems which are non-availability of good providers, lack of professional management, financial sustainability issues and non-recognition by IRDA. These problems need to be taken into account while assessing their benefits. Though at present CBHI schemes in India are serving a very small population, it lessons learnt from each of these schemes can be used to design more of such schemes in different parts and at much larger level they can be beneficial.MICRO HEALTH INSURANCE SCHEMESUNIVERSAL HEALTH INSURANCE SCHEME (UHIS)YESHAVINI CO-OPERATIVE FARMERS HEALTH SCHEME (KARNATAKA)

Marketed through public insurance companies

Covers only Hospitalization expenses (upto Rs. 15,000)

Premium

Individual: Rs 165/subsidy Rs. 200

Family upto 5 members:

Rs. 240/subsidy Rs. 300

Coverage (2005): 1,10,000

Targets people in the age Group (3 months to 65 years)

Exclusion: Pre-existing diseases, delivery, pregnancy-related illness Marketed through the cooperative movement

Covers only surgical procedures

upto Rs. 100,000 per year

Premium: Rs. 120 per/person/per

year(Rs.90 for children under 18)

Cashless services

Hospital network(169)

In-house model (No Insurance company)

Coverage (2006); 1,830,000 TPA (Family health Plan)

Second largest in the world

INDORE MUNICIPAL CORPORATION HEALTH INSURANCE SCHEME (MADHYA PRADESH)NAANI FOUNDATION SCHOOL HEALTH PROGRAMME

(ANDHRA PRADESH)

Public Department (IMC)

Targets Senior Citizens (60 to 80 years old)

Covers Hospitalization costs upto Rs.20,000

Premium: Rs. 475/Per Person/Per year.

TPA (MD India):Partner-Agent Model Hospital Network: 14 Private hospitals Coverage (2006); 49,419 NGO/Private Trust

Targets young children (6 to 14 years-old) enlisted in public schools (Hyderabad City)

Premium: Rs. 120 per child per year

Services provided by nodal health clinics + base hospital + referrals

Coverage (2006); 60,000.

SCHEMESNO OF BENEFIC.TYPE OF

SCHEMETYPE OF

COVERAGETYPE OF BENEFITTYPE OF SUBSIDY

YESHASVINI1,83,000IN- HOUSETERCASHL.DIRECT

DHARAMST.400,000P. AGENTSEC.CASHL.

SEWA174,000P. AGENTSEC.REIMB.INDIRECT

KARUNA118,000P. AGENTPER/SEC.REIMB.IND/DIRECT

PREM108,000In- HouseSEC.CASHL/

REIMB.INDIRECT

NAANI60,000In- HousePER+SEC+TERCASHL.IND/DIRECT

AROGYA60,000P. AGENTSEC.CASHL.INDIRECT

INDORE49,000P. AGENTSEC.CASHL.DIRECT

ASHWINI12,000P. AGENTPER/SEC.CASHL.IND/DIRECT

THIRD PARTY ADMINISTRATORS.Its an institution which facilitate a system of cash-less settlement of medical bills for the insured under health insurance has been introduced in India as recently as 2001. The first set of companies was given licenses in March, 2002. Today, there are 25 licensed Third Party Administrators (TPAs). Covered medical expenses are paid by the TPAs directly to the hospital. Administrator It acts a link between the insurer and the hospital. TPAs basically are professional organizations servicing health insurance policies sold by insurance companies by way of facilitating cash less treatment to insured individuals through institutional arrangements with insurance companies and networked service providers i.e. hospitals and nursing homes, etc. The TPAs are registered with and licensed by the IRDA and regulated by IRDA regulations, 2001 as amended from time to time. They will provide quality health care and services at affordable costs, which hitherto was unheard of. The role of TPAs will particularly be beneficial to those sections of society for whom quality healthcare has always remained a dream.

By processing claims with due diligence, TPAs are expected to control claims costs for the insurers. In the long run, TPAs are expected to bring in greater professionalism in the health insurance industry, which would augure well for the growth of this segment of insurance business. TPAs are licensed by the Insurance Regulatory and Development Authority. The criteria for licensing are Only a company with a share capital and registered under the Companies Act, 1956 can function as a TPA.

Company shall not engage itself in any other business.

The minimum paid up capital shall be Rupees One Crore in equity shares. FURTHER ISSUES RELATING TO HEALTH INSURANCE POLICIES

The Legislative Environment

A fine balance between government imposed regulation and self regulation by the industry needs to be found. It a particular industry is over regulated it stifles innovation and development. On the other hand under regulation can result in unwanted practices and fly by night operations.

Socio-Economic Environment

The socio-economic environment has a significant impact on the type of health insurance policy that consumes will look to buy. If will also have an impact on the claims patterns of consumers. For instance, in a relatively poor society, product demand will be for products that cover day-to-day basic medical care. This will tend to be products which have high frequency of claims where the average claim sizes are relatively low. Post Retirement Benefits

Another challenge for the insurance industry is how to deal with post retirement medical benefits. One possible way of dealing with these is to use some form of endowment product ( where premiums are paid during the working life of the insured) to provide a lump sum at retirement date which can be used to pr-fund medical expenses (or a future Medical Expense Policy).

IT SystemsThe measurement and manipulation of data is of essential importance in operating an effective health care management system. There is a vast quantity of data that must be stored and manipulated for the various aspects of health care management. In addition this data should be readily available and easily updateable. In short the system should be robust!

Investment Strategy

Due to the frequency and level of the contribution received for most health insurance products, providers have large amounts of funds that need to be invested in appropriate vehicles. Certain countries (e.g. South Africa) have also introduced reserving requirements, which will result in significant reserves building-up over time for health Insurance products. This has introduced the additional complication of matching assets and liabilities. This is an area where actuarial judgement is essential. Cross Subsidies

The issue of cross-subsidies is another item which needs to be carefully considered by any insurer. There often tends to be cross-subsidies in health insurance policies and in particular in medical expenses policy. Even when legislation does not force cross-subsidies, it is quite common for there to be cross-subsidies in health Insurance products. The insurance company needs to examine the level of the cross-subsidies and ensure that the style of their products is such that anti-selection will not result in abuse of these cross-subsidies.

Risk Management

The success of any health insurance policy is crucially dependent on appropriate management of the underlying risks which can be best attained by

Setting of appropriate premiums

Measurement and control of expenses

Appropriate use of reinsurance avoidance of anti-selection

Investment strategy and subsequent measurement Effective underwriting effective claim control

Appropriate reserving

Internal operational control

AIDS

The challenges that faces health insurers is how to deal with AIDS claims, and what product can be designed that meet the needs of AIDS suffers. This is a challenge that has not, in any market, to my knowledge, been fully addressed. In some Southern African countries, insurance companies are offering certain anti-retroviral treatments in order to extend the expected life span of their policy holders. This is one area where health Care Management can be used to delay the payment of insured benefits (normally Life Insurance) and also add the expected life of the insured, thus benefiting all parities concerned.

Medical Savings Account:

One example of a new product introduced to relieve the risk of rising costs is the introduction of medical Savings Account (MSA) as a component of a Medical Expense Policy. The account holder, at each ill health incident, has to take a conscious decision whether or not to draw on savings and deplete his wealth. MSAs can be encouraged fiscally by providing savers with tax breaks not available to savers for other purposes. The funds in an MSA could be used to pay health premiums, deductibles or other medical bills not covered by insurance. An MSA minimizes moral hazard. There are two main kinds. One is a short term scheme which can be used at the discretion of the account holder for day-to-day expenses; the other is long term, where the savings are intended to build up to a substantial sum for either major expenditures or for old age. Capitated Arrangements:

A further innovation in some progressive markets, including the South African market is the use of a capitation arrangement for Medical expense Policies. A capitation arrangement involves identifying certain service providers usually doctors who will provide given services to their patients. The services provided are usually doctors consultations. The doctor is paid a fixed fee per policyholder under its care. The doctor is then responsible for providing whatever care is necessary to that patient. By linking up a provider network through a capitation arrangement the risk of over servicing and hence higher costs is placed in the hands of the doctors. It will then be up to the doctor to ensure that members receive appropriate service which will costs the doctor and not the insurer more.INFORMATION ON HEALTH INSURANCEThe domestic health insurance market is set for a transformation with foreign players setting their sights on it. Deutsche Krankenversicherung AG (DKV), a Munich Re group's health insurance firm, is entering the under-explored health insurance market through a joint venture with Apollo Hospitals Enterprise.

US-based United Health Group, too, is keen on India debut but prefers to wait till the foreign holding limit in the country is raised to 49 per cent from the current 26 per cent. Apollo Hospitals informed the Bombay Stock Exchange that its board of directors authorized Chairman Prathap C Reddy to sign a JV agreement with DKV on Wednesday. DKV is the leader in the European health insurance market.

United Health Group International, a division of United Health Group and the largest and most diverse healthcare services company in the US, intends to set up a standalone health insurance firm in India. We are informally looking for partners. The minimum capital requirement of Rs 100 crore (Rs 1 billion) is too high, and if regulatory changes lower it to Rs 50 crore (Rs 500 million), it will be more sustainable.

Leonardi said, "The regulatory challenges in health are the costs involved in setting up a health insurance company. Health insurance is not regulated as a separate line of business. There needs to be clarity in minimum benefits. B D Banerjee, insurance ombudsman for Maharashtra and Goa, said, "Health insurance products offered by insurers lack versatility with certain exclusions and limits, pre-existing diseases are excluded from coverage. There is no major plan for preventive treatment and cost of insurance is prohibitive for the average middle class."

Reliance General launches health plan

BS Reporter/Mumbai December 28,2006

Reliance General Insurance has launched Reliance Health wise- a health insurance policy covering hospitalization expenses, day care treatment and critical illness along with a cover against hospitalization expenses incurred by a donor in case of major organ transplant. Available in three plans- Standard, Silver and Gold the premium for a couple for a cover of Rs 1 lakh would be Rs 820 (Standard Plan), Rs 900 (Silver) and Rs 1,000 (Gold). Depending on the plan opted by the policy holder, Reliance Health wise Policy will offer variable features.

Pre-existing diseases are covered from third year onwards in Gold and Silver plans. In case the insured person contracts any of the nine critical illnesses mentioned in the policy, the sum insured under the policy is doubled to meet hospitalization expenses. If a person wishes to cover his entire family, he can choose the Family Floater Option. In case of an emergency, the sum insured is made available to each member. This is unlike policies where the total cover may be, say Rs 4 lakh, but is spread as Rs 1 lakh on four members and no individual member can avail benefit beyond Rs 1 lakh.

Other benefits present in the policy are daily hospitalization allowance for a maximum period of seven days, nursing allowance for a maximum period of five days, reimbursement of charges towards local road ambulance services, recovery benefit of Rs 10,000 in case of hospitalization for more than ten consecutive days, allowance towards expenses of an accompanying person at the hospital/nursing home for a maximum of five days and reimbursement of cost of health check-up at the end of a block of four years, provided there were no claims reported.IMPLEMENTATION OF HEALTH INSURANCE SCHEME (HIS)FOR HANDLOOM WEAVERSThe Government of India was implementing a Health Package Scheme since the year 1992-93 as a welfare measure for the benefit of handloom weavers. Now in its place, the Government of India has introduced a Health Insurance Scheme for Handloom Weavers from the Current Financial Year i.e. 2005-06 in collaboration with ICICI Lombard General Insurance Company Ltd.

The Health Insurance Scheme aims at financially enabling the weaver community to access the best of healthcare facilities in the country. The scheme is to cover not only the weaver but his wife and two children, cover all pre-existing diseases as well as and keeping substantial provision for OPD. Contribution by the : Govt. of India

Contribution by the : Handloom weaver

Total premiumRs.800/- per annum

Rs.200/- per annum

Rs.1000/- per annum

FUNDING PATTERN Release of funds: 1. The Central Govt. share of premium will be released to the ICICI Lombard directly for coverage of weavers under the scheme in installments.

2. Service Tax of 10.2% over the annual insurance premium of Rs.1000/- will be borne by the Government of India

3. In the event the claims ratio including all related costs is below 70%, with the view to incentives the scheme, the surplus shall be rolled over to the next policy period. ESIC to enhance benefits for employees New Delhi , Dec. 23

The Employees' State Insurance Corporation (ESIC), which earned the highest revenue ever this year, has decided to enhance its scale of benefits to employees, but at no additional cost to employers. The ESIC will ask the Government to increase expenditure on medical benefits from Rs 900 per insured person family per annum to Rs 1,000.

The corporation has also decided to increase the exemption limit from paying employees contribution from Rs 50 to Rs 70, thus exempting 5.7-lakh employees from paying their contribution.

Benefits Enhancement

The organization also wants to increase sickness benefits, disablement benefits and the existing limit for reimbursement of funeral expenses, estimating a total liability of Rs 61 crore from these enhancements of benefits. The announcement was made at the ESIC's annual meeting, chaired by the Minister of State for Labour and Employment, Mr Oscar Fernandes, to approve its annual report.

Announcing a revenue income of Rs 2,410.61 crore for the year 2005-2006 in a press release, the ESIC stated that the scheme had been implemented in 10 new centres and 90 new geographical areas, covering additional 1.48-lakh employees this year. The corporation has been able to distribute 31.44 lakh cash benefit payments to the tune of Rs 273.73 crore over the year.

Health insurance premium may vary from one location to another Radhika Menon Geography, a key differentiator for pricing products: IRDA

Mumbai , March 30

Can the health insurance premium paid by a Mumbai resident be more than that paid by a Chennai resident, on the strength of the geographical location, other things being equal? A report on `Innovations in health insurance policies' by the Insurance Regulatory and Development Authority (IRDA), recently submitted to the Finance Ministry as well as insurance companies, says it can.

According to the report, geography would be one of the key differentiator for prices of products since healthcare costs vary in different parts of the country. "The healthcare costs in Chennai, for example, are lesser than the costs incurred in Mumbai. This should be used as a differentiator for prices for products being offered in various parts of the country," said the report. Thus, there could be restrictions in terms of where the treatment can be availed.

`Pool' concept

The IRDA constituted committee has also strongly recommended the concept of a `pool', which will be maintained by the regulator for covering pre-existing illnesses like congenital ailments and conditions like AIDS. The funding of the pool would be from the contributions of insurance companies, voluntary contributions from corporates, grants from Central and State governments and aid from international bodies such as World Bank and WHOStar Health policy targets Gulf NRIs

`With strict control over expenses, it would be possible for Star to make profits on the product'.

Chennai , Jan. 12 The country's only standalone health insurance company, Star Health Insurance, has launched a new product that has several unique features. First, it will cover pre-existing diseases. Second, it will provide cover for `parents' regardless of their age. Third, there is no waiting period for commencement of coverage. Fourth, it will pay for doctors' consultation fees too, including out-patient consultation.

But where is the catch? Mr V. Jagannathan, Chairman and Managing Director of the company, told Business Line on Friday that to avail himself of the cover, the patient will have to be admitted into one of the "designated hospitals". If the patient goes to other hospitals, Star's liability will be capped at 50 per cent of the final admissible claim, subject to a maximum of 50 per cent of the sum insured.

Mr Jagannathan believes there would be a good demand for this product, which is for now open to NRIs in West Asia. Star intends to extend the policy to resident Indians also, but over time. There are 4 million Indians in West Asia, many of whom are concerned over the health (expenses) of their parents, for whom no insurance company would offer coverage. For a sum assured of Rs 1 lakh, the gross premium is Rs 1,751 (including tax). Star charges Rs 438 additionally for including one child and Rs 875 for one more adult. How will it work for Star? Mr Jagannathan says that with strict control over expenses, it would be possible for Star to make profits on the product.

ICICI Lombard plans biometric health cards Radhika Menon Launch in Manipal for group insurance policy holders

The Features

Authorizes transactions based on the customers fingerprints treatment at hospitals without having to make advance cash payment Covers head of family, 3 dependents

It's now the turn of insurance companies, after banks, to introduce biometric cards in rural and semi-rural areas. ICICI Lombard General Insurance Company plans to offer family biometric cards to group health insurance policyholders. The card will enable policyholders to get hospital treatment without making any advance cash payment. Biometric cards authorise transactions based on the customers' fingerprints.

To begin with, ICICI Lombard will launch these cards for health insurance policyholders in Manipal, Karnataka. This family card will cover the head of the family and three other dependants, said Mr Pranav Prashad, Head, Rural and Agriculture business, ICICI Lombard. The insurer plans to introduce these cards to 7,000-10,000 policyholders by month-end. ICICI Lombard has tied up with Financial Information Network & Operations Pvt Ltd (FINO) to create this card. ICICI Bank, the parent company, has a 20 per cent stake in the newly launched FINO- a company that provides financial institutions with technological solutions to reach the underserved in the country. ICICI Lombard's family card will contain a smart chip, which carries biometric information, personal details as well as the photograph of the policyholder and three dependants. Mr Rishi Gupta, CFO, FINO, said the `smart card' would also load the sum insured that the policyholder is entitled to. So, when the customer presents the card at the hospital, the balance in the card can be immediately ascertained.

Tie-up with hospitals

ICICI Lombard will tie up with neighborhood hospitals so that hand-held machines that read these cards can be installed. Mr Prashad said the card would reduce administrative hassles for the customer and would eventually drive down distribution costs. If the experiment works in Manipal, it may extend this service to other rural health and motor insurance policyholders. ICICI Lombard would have to tie up with garages in the case of motor insurance.

In rural areas

Collecting biometric information in rural areas is, however, ridden with its own set of problems. "The fingerprints of people in the rural areas are not very clear as they perform intense manual labour. So, we take the impression of all the fingers and choose the best two prints of each hand," he said. The card has the capacity to load as many as 15 applications and FINO is in talks with several other finance providers and government agencies. So, besides cash withdrawal, deposits and insurance premium payments, the urban and rural poor may also use this card at the neighborhood kirana store and the post office. Among banks, ICICI Bank has introduced biometric cards and Citibank has set up biometric ATMs. Several PSU banks are also on the verge of introducing similar technology for micro-finance customers.

CONCLUSION

The Government of India, in one of its economic survey reports, has proclaimed that human development is the ultimate goal of India's developmental plans. It is also being realized that sound long-term development of social sectors, such as education, and health is crucial to sustain economic growth in an increasingly integrated world economy. The government can intervene in the health insurance market in two ways: by directly providing subsidizing insurance or by regulation. These two forms of intervention do not lead to identical results. Provision of partial public insurance, even supplemented by the possibility of opting out, can lead to second beat equilibrium. Regulation of the private insurance market by imposition of a standard contract or by restricting premium rates, on the other hand, can exacerbate the problem of adverse selection and lead to chronic market instability.

There is yet another criticism about the Indian health delivery system: urban bias in the allocation of resources. As of 90-91, 66.96 percent of the resources spent on health care had gone to the urban sector which accounts for 25.7 percent of the total population, while only 33.04 percent of the resources had gone to the rural sector, which accounts for 74.30 percent of the total population. The per capita expenditure on health care of the urban sector was said to be around Rs.152 as against Rs.26 of the rural sector.

The Government being the central player in the health care delivery, the system is suffering from financial constraints and inefficiency in allocating whatever resources available. It is slowly being realized that sole reliance on the public health care system is no longer desirable. The world Health Organization has defined possible approach to financing of health expenditure

Tax funded

Social

Security

Externally funded

Public

Total health

Expenditure

Out-of-

Pocket

Private

Health Ins

Externally sourced

Private

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