Final Health Insurance

8/2/2019 Final Health Insurance

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HEALTH INSURANCETHEORY AND PRINCIPLES

PRESENTED BY:

BHOOMI LALANI

SMIT DAVE

BHAKTI DHAROD

NEHA CHOUDHARY


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Introduction

Health insurance is management of risk of incurring medical

expenses among individuals.

The existing schemes can be categorized as:1. Voluntary health insurance schemes or private-for-profit schemes;

2. Employer-based schemes;

3. Insurance offered by NGOs / community based health insurance, and

4. Mandatory health insurance schemes or government run schemes


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Evolution of Health Insurance

In 1850 the "accident insurance" was first offered by the Franklin

Health Assurance Company in USA.

The origins of sickness coverage in the U.S. effectively date from

1890.

Later ,Hospital and medical expense policies were introduced

leading to development of Blue Cross Organizations during 1920s.

Today, most comprehensive health insurance programs cover the

cost of routine, preventive, and emergency health care procedures,

and most prescription drugs.


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Evolution in India

Phase I:

Health Insurance in India began with the introduction of the Mediclaim policy by the

four Public Sector Insurance Companies, in the year 1986.

Phase II:

This Mediclaim Policy was revised in 1991, wherein the quantitative sub limits under

each of the policy schemes were removed.

Phase III:

The year 2001 saw the advent of the Third Party Administrators.

Phase IV

The policy was altered in the year 2007, to bring back the sub limits.


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Present Condition

Indian health financing faces a number of challenges including:

Increase in health care costs

High financial burden on poor effecting their incomes

Need for long term and nursing care for senior citizens because ofincreasing nuclear family system

Increasing burden of new diseases and health risks

Limited government funding leading to negligence of preventive aswell as primary care and public health functions


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Health-Insurance funding pattern - India


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Growing health insurance coverage

Source: Mckinsey India Pharma 2015 Prescribed Growth, Aug 2007


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Analysis

Health insurance still remains largely untapped in India.

Health insurance penetration is low at about 14% of Indias 1.12 bn

population.

5% private health insurance and 9% state-run government

employee insurance schemes

Public financing in total health care is just about 1 percent of GDP.

80 percent of health financing is private financing, much of which isout-of- pocket payments.


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Future Outlook

However, healthcare insurance is slowly picking up pace in

India.

The total health insurance premiums written by non-lifecompanies and standalone health insurance companies grew by

25.2 percent in FY 2010 over FY 2009.

Source: 2010 statistics released by the IRDA (Insurance Regulatory Development Authority)


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HEALTH INSURANCE IN INDIA

HEALTH INSURANCE

PUBLIC

SECTOR

PRIVATE

SECTOR

PROFIT BASED

PREMIUM PAID

GIC

FOUR SUBSIDARY

COMPANIES


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PUBLIC SECTOR

LIC

JAN AROGYA BIMAPOLICY

NGOS AND COMMUNITYBASED FUNDS


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PRIVATE SECTOR

Bajaj Alliance

Icici Lombard

Max Bupa Tata Aig

Star Allied Health Insurance

Lic Health Insurance Appolo Munich


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COMPARITIVE ANALYSIS


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Government insurance Schemes

Government initiatives like the Rashtriya Swasthya Bima Yojna (RSBY),

Comprehensive Health Insurance Scheme (RSBY-CHIS), Kerala; Apka

Swasthya Bima Trust (ASBT), Delhi; Niramya Health Insurance Scheme,

Ludhiyana are now actively driving the health insurance market in India

RSBY may also be extended to National Rural Employment Guarantee Act

(NREGA) workers who worked under the scheme for 15 days in a year.

The initiatives can help address the needs of the people below poverty line

as well as the other vulnerable sections of the society.


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Emerging role of TPAs:

The TPAs (Third Party Administrators) have added to the

changing scenario of health insurance in India.

Their role is gradually changing from green field ventures toan established system.

Their wide spread network with hospitals and other healthcare

providers have certainly strengthened the health insurancestructure in India.


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Emerging role of TPAs:

To bring in uniformity and smooth functioning of the process, the IRDA (Insurance

regulatory and development authority) has directed the TPAs to formulate standardguidelines and formats for better communication and transparency in the system.


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Benefits

Visibility of health insurance in the hospitals and

amongst the patients could improve

Credibility of the health insurance practices will helpimprove driving more no of people into the system.

A formal structure will be created reducing theambiguity in the health insurance delivery


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Potential Benefits:

Private health insurance is the fastest growing segment of the Indian insurance market

Steady growth rates in health insurance leading to a CAGR in excess of 30% during the lastsix years

Indian banks are expected to enter the Indian health insurance market

There is a reasonable prospect for premiums to return to levels to fully reflect risk attributionin the longer-term

The development ofmicro-insurance products aimed at offering the high numbers of the lowpaid elements of society with a range of insurance cover could stimulate significant volumes

of new business.

The focus for insurers in the Indian general insurance industry will be on improving networkefficiency, product development and differentiation as well as cost controls in order tomaintain market share linked to the exceptional growth in the Indian economy.


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New Advancements in Health

Insurance

Indian Government is considering to cover all citizens with

Health Cover during Five year Plan (2012-2017).


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No. of

Families (in

crores)

Premium / Family

(in rupees)

Yearly Premium (in

crores)

BPL 6 750 4,500

Above Poverty Line but

Below Middle

8 1,500 12,000

Middle 5 4,000 20,000

Upper Middle 3 15,000 45,000

Higher Class 2 30,000 60,000

Total 24 141,500


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With growth in population, the figure can be Rs 225,000crores

which is 28 times the present size of health insurance or 7

times the size of general insurance industry.

This is going to give a big boost to healthcare industry and

generate employment opportunities.


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Reasons for poor health penetration in

India

Lack of regulation and control onprovider behaviour

Unaffordable premiums and highclaim ratios

Reluctance of health insurancecompanies to promote their products

Lack of innovation


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Too many exclusions andadministrative procedures

Inadequate supply of services

Co-variate risks


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Growth in Health Insurance in India

At present there are 3 operating stand alone Health Insurance

company's in India:

(1)Apollo DKV Insurance Company Limited

(2)Star health and Allied Insurance Company Limited

(3)MaxBUPA


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3 large names from USA have become interested in the

growing Indian Market and may enter the market soon.

These are

(1)United Health

(2)Aetna

(3)Cigna


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GROWTH DRIVERS FOR HEALTH

INSURANCE IN INDIA

Source: Emerging Market Report: Health in India 2007

PricewaterhouseCoopers


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Population Growth

One driver of growth in the healthcare sector is Indiasbooming population

By 2030, India is expected to surpass China as the worlds

most populous nation.

By 2050, the population is projected to reach 1.6 billion.


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Expanding Middle Class

India traditionally has been a rural, agrarian economy. Nearly

3/4 of the population still lives in rural areas.

Indias thriving economy is driving urbanization and creating

an expanding middle class, with more disposable income to

spend on healthcare.


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Increase in Purchasing Power

More women are entering the workforce as well, further

boosting the purchasing power of Indian households.

Between 1991 and 2001, the % of women increased from 22%

to 26% of the workforce, according to the latest Indian

government census.

Many of these women are highly educated: the ratio of

women to men who have a college degree or higher level of

education is 40:60


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Rise in Diseases

Another factor driving the growth of Indias healthcare sector

is a rise in both infectious and chronic degenerative diseases.

The troubling trend can be attributed in part to substandard

housing, inadequate water, sewage and waste management

systems, a crumbling public health infrastructure


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Some other growth drivers of Health

Insurance in India are:

Pharmaceuticals

Deteriorating Infrastructure

Healthcare Divide

Lack of Insurance


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Concerns & challenges

India is a low-income country with 26% population living

below the poverty line, and 35% illiterate population with

skewed health risks.

There no mechanism or infrastructure for collecting

mandatory premium among the large informal sector.

Much of the focus of the existing schemes is on hospital

expenses, along with a lack of awareness among people about

health insurance.


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Concerns & challenges

The growth of health insurance increases the need forlicensing and regulating private health providers anddeveloping specific criteria to decide upon appropriateservices and fees.

There is also a need to evolve criteria to be used fordeciding upon target groups who would avail of theState Health Insurance.

Schemes to address issues relating to whether indirectcosts would be included in health insurance.


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The way ahead

Implementing regulations would be one, but by nomeans the best mechanism to contain provider behaviorand costs.

There is an urgent need to document global and Indianexperiences in social health insurance.

The wide differentials in the demographic,

epidemiological status and the delivery capacity of healthsystems are a serious constraint to a nationally mandatedhealth insurance system.


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The way ahead

Undertake pilot projects to gather more informationabout the population to be targeted under aninsurance scheme and develop options for differentpopulation groups.

To undertake costing of health services for evolvingbenefit packages to determine the premium to belevied and subsidies to be given.

The success of any social insurance scheme woulddepend on its design, the implementation andmonitoring mechanisms which would be set in place


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THANK YOU

Final Health Insurance

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