INSURANCE

MEANING:
Insurance is a policy from a large financial institution
that offers a person, company, or other entity
reimbursement or financial protection against
possible future losses or damages.

Insurance is bought in order to hedge the possible

risks of the future which may or may not take place.
This is a mode of financially insuring that if such a
incident happens then the loss does not affect the
present well-being of the person or the property
insured. Thus, through insurance, a person buys
security and protection.

A simple example will make the meaning of

insurance easy to understand. A biker is always
subjected to the risk of head injury. But it is not
certain that the accident causing him the head injury
would definitely occur. Still, people riding bikes cover
their heads with helmets. This helmet in such cases
acts as insurance by protecting him/her from any
possible danger. The price paid was the possible
inconvenience or act of wearing the helmet; this ie
equivalent to the insurance premiums paid.

DEFINATION: In any contract of sale where payment

of money is assured or guaranteed on death or maturity or
on happening of any contingencies to insured against
payment of premium for a agreed term is called
INSURANCE.
 HEALTH INSURANCE
Health insurance is one of the types of insurance.

WHAT IS HEALTH INSURANCE?

Health insurance, like other forms of insurance, is
a form of collectivism by means of which people
collectively pool their risk, in this case the risk of
incurring medical expenses. The collective is usually
publicly owned or else is organized on a non-profit
basis for the members of the pool, though in some
countries health insurance pools may also be
managed by for-profit companies. It is sometimes
used more broadly to include insurance covering
disability or long-term nursing or custodial care
needs. It may be provided through a government-
sponsored social insurance program, or from private
insurance companies. It may be purchased on a
group basis (e.g., by a firm to cover its employees)
or purchased by an individual. In each case, the
covered groups or individuals pay premiums or taxes
to help protect themselves from unexpected
healthcare expenses. Similar benefits paying for
medical expenses may also be provided through
social welfare programs funded by the government.
DEFINATION:
Insurance against loss by illness or bodily injury. Health
insurance provides coverage for medicine, visits to the doctor
or emergency room, hospital stays and other medical
expenses. Policies differ in what they cover, the size of the
deductible and/or co-payment, limits of coverage and the
options for treatment available to the policyholder. Health
insurance can be directly purchased by an individual, or it may
be provided through an employer. Medicare and Medicaid are
programs which provide health insurance to elderly, disabled,
or un-insured individuals.
 IMPORTANCE OF HEALTH
INSURANCE

In the current scenario, medical expenses can not be

afford and in addition still going sky high in a rapid
force. In short, you can say it's already gone out of
the reach of common peoples budget. Here health
insurance is in, it saves money and covers
unexpected calamities. It covers you for
hospitalization expenses, pre and post hospitalization
expenses, day care procedures, etc.

People buy health insurance for several reasons.

Take a view of different reasons and consider in
which reason you need to apply for health insurance.
The following common reasons are explained :-

 The most common reason is that to protect from

the risk of medical bills of health care.
Without health insurance you may not be able to
afford high cost of medical services.

 Cashless hospitalization facility is provided at

network hospitals across country. In this,
insurance company will take care of your all kind
of medical bills.

 Health insurance pay you for your regular

medical services that you use during the policy
year.
CONT….

 If you requires more health care needs than

common peoples. Then you get more benefits
than other peoples, because you only pay an
average premium like others.

 If you have more dependents, then you need to

apply for family health insurance. In this your
entire family will cover in single amount of
premium.

 Generally, health insurance companies pays

lower amount to the hospitals and doctors than
you would pay by your own.

 As a tax benefit, it is more valuable. You don’t

have to pay tax on your health insurance
benefits.
 HISTORY AND EVOLUTION OF
HEALTH INSURANCE

 The concept of health insurance was proposed in

1694 by Hugh the Elder Chamberlen from the
Peter Chamberlen family. In the late 19th
century, "accident insurance" began to be
available, which operated much like modern
disability insurance. 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.

 Accident insurance was first offered in the

United States by the Franklin Health Assurance
Company of Massachusetts. This firm, founded
in 1850, offered insurance against injuries
arising from railroad and steamboat accidents.
Sixty organizations were offering accident
insurance in the U.S. by 1866, but the industry
consolidated rapidly soon thereafter. While there
were earlier experiments, the origins of sickness
coverage in the U.S. effectively date from 1890.
The first employer-sponsored group disability
policy was issued in 1911.
CONT….

 Before the development of medical expense

insurance, patients were expected to pay all
other health care costs out of their own pockets,
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 programs. Today,
most comprehensive private health insurance
programs cover the cost of routine, preventive,
and emergency health care procedures, and
most prescription drugs, but this is not always
the case.

 Hospital and medical expense policies were

introduced during the first half of the 20th
century. During the 1920s, individual hospitals
began offering services to individuals on a pre-
paid basis, eventually leading to the
development of Blue Cross organizations. The
predecessors of today's Health Maintenance
Organizations (HMOs) originated beginning in
1929, through the 1930s and on during World
War II.
 NEW IRDA GUIDELINES
(Insurance regulatory and
development authority)

 A Health Insurance company cannot refuse to

renew policy, except in cases of fraud, which
means a wrongful claim has been made to dupe
the insurance company.

 Just because you have been hospitalized for an

illness, and when you go back for renewal the
Insuring company cannot force you to move to
another plan. They will have to renew the one
you already have.

 A lot of insurers are very unclear in their

document about renewable dates and options.
Now, those Disclosures will have to be made
upfront. Also, right now,1 to 2 day delay in
paying your premium and kaboom! There goes
your medical insurance policy. They simply
refuse to renew it. Now, they will have to give a
15 days grace period to renew policy. These new
IRDA standards come into effect from June 1st
2009.

 You can Tag premium paying dates to important

events like or say before Christmas or before the
summer holidays.
CONT….

 One of the biggest areas of dispute between

insurance companies and policy holders has
been in dealing with pre-existing diseases. Now
all companies will have to insure pre-existing
diseases after 5 years of holding the policy,
though what exactly is pre-existing, IRDA yet
has to define.
TYPES OF HEALTH INSURANCE

• Health Maintenance Organization (HMO)

– Must choose a Primary Care Physician (PCP)
– Need to have a referral to see a specialist
– Typically do not have deductibles and co-pays
are nominal amounts

• Preferred Provider Organization (PPO)

– No PCP is necessary
– Can refer oneself to a specialist
– Usually higher deductibles and co-pays

• High-deductible PPO
– Catastrophic coverage
– Low premiums but high deductibles
 HEALTH INSURANCE
COMPANY’S

• Tata AIG
• HDFC Chubb
• Bajaj Allianz
• ICICI Lombard
• IFFCO Tokio
• Royal Sundaram
• Oriental Insurance
• Cholaman-dalam
• New India Assurance
• United India Insurance
• National Insurance

(eg)
ICICI PRUDENTIAL

Presenting a new health plan.

Trust us,
your customer will thank you for it!

ICICI PRU…health saver

That covers you today and

invests your money for tomorrow.
 PLAN

 A plan which provides guaranteed

reimbursement hospitalization cover till age 75.

 A plan which builds up a health fund and allows

claims for health expenses not covered in the
hospitalization cover.

 A plan which has flexibility in premium payment.

 A plan which gives complete tax benefit under

Section 80D

HOW DOES THE PLAN WORK?

Select the annual limit for the hospitalization cover

Select a suitable premium

`
Basis age and annual limit chosen, part of premium
will go towards the health cover and remaining
invested to build a health fund*

Hospitalisation Insurance Health Savings

Benefit Benefit

To cover you against To cover you against all

hospitalization expenses other health expenses
PRIVATE –FOR PROFIT SCHEMES

In private insurance, buyers voluntarily pay premium

to an insurance company that pools people with
similar risks and insures them for health expenses.
Premiums are based on an assessment of the risk
status of the consumers and the level of benefits
provided.

In the public sector, the General Insurance

Corporation (GIC) and its four subsidiary companies
(National Insurance Corporation, New India
Assurance Company, Oriental Insurance Company
and United Insurance Company) and the Life
Insurance Corporation(LIC) of India provide
voluntary insurance schemes. The Life Insurance
Corporation offers Ashadeep Plan II and Jeevan Asha
Plan II. The General Insurance Corporation offers
Personal Accident policy, Jan Arogya policy, Raj
Rajeshwari policy, Mediclaim policy, Overseas
Mediclaim policy, Cancer Insurance policy, Bhavishya
Arogya policy and Dreaded Disease policy etc. Of
these Mediclaim is the main product of GIC.
The insurance sector was opened to private and
foreign participation in the year 1999 with the
passing of IRDA bill. The Bill also facilitated the
establishment of an authority to protect the interests
of the insurance holders by regulating, promoting
and ensuring orderly growth of the insurance
industry. The bill allows foreign promoters to hold
paid up capital of up to26 percent in an Indian
Cont…

company and requires them to have a capital of Rs

100 crore along with a business plan to begin its
operations.

Few companies and their health insurance

schemes are listed below.

NGOs / COMMUNITY-
BASED HEALTH INSURANCE
Community based financing schemes are generally
based on three principals community co-operation
and local self reliance and are typically targeted
towards poorer population in the community who
primarily influence the contribution level and
collecting mechanisms as well as the content of the
benefit package, and allocating the schemes. The
premium is pre-paid and usually flat rate.
Such schemes are generally run by trust hospitals or
nongovernmental organizations (NGOs). The benefits
offered are mainly in terms of preventive care,
though ambulatory and in-patient care is also
covered. Such schemes tend to be financed through
patient collection, government grants and donations.
Increasingly in India, CBHI schemes are negotiating
with the for-profit insurers for the purchase of
custom designed group insurance policies.

A few larger non –profit SBHI schemes and their

base are listed below
Cont…
NAME LOCATION MEMBERS TYPE OF
INSURANCE
Self employed Gujarat 40,000 Integrated Insurance
women’s (Ahmedabad) Scheme, Health
association Insurance,
(SEWA) Life Insurance (with LIC),
Accident (with NIA), Asset
Insurance, Maternity
Benefit

Trivandrum Kerala 1,00,000 Craft & Gear fund (loan

district (Thiruvanant families basis),
Fisherman’s hapuram) Contingency fund (death,
federation (TDFF) accidents, loss of work)
Voluntary health Tamil Nadu 1,60,00 Health insurance
services medical
aid plan
Students health West Bengal 5,50,500 Health insurance
home
Society for Mumbai 1,200 Health insurance accident
promotion of area couples housing
resources centre (with OIC)
(SPARC)
Raigarh Madhya 75,000 Health insurance
Ambikapur health Pradesh
association (raigarh
(RAHA) Medical district)
insurance scheme
Mathadi hospital Mumbai 1,50,000 Health insurance
trust

GOVERNMENT RUN SCHEMES

Government has set up funds in the form of social
insurance with explicit benefits in return for
payment. It is usually compulsory for certain groups
in the population and the premiums are determined
by income (and hence ability to pay) rather than
related to health risk. The benefit packages are
standardized and contributions are earmarked for
spending on health services. The government-run
schemes include the Central Government Health
Scheme (CGHS) and the Employees State Insurance
Scheme (ESIS). Whereas the prominent state efforts
include Rajiv Gandhi Aarogyasri Scheme in Andhra
Pradesh, and the centrally sponsored Rashtriya
Swastha Bima Yojna. Such schemes have
contributed to the increase in penetration of health
insurance in the country.

CENTRAL GOVERNMENT HEALTH

SCHEME (CGHS)

It aims at providing comprehensive medical care to

the employees of Central Government, certain
autonomous and semi-government organizations,
MPs, judges, freedom fighters and journalists and
has been in place since 1954. The benefits offered
include all outpatient facilities and preventive and
developmental care in dispensaries as well as

Cont…
inpatient facilities in government hospitals and
approved private hospitals. The scheme also covers
non allopathic system of medicine. At present there
are 432,000 beneficiaries spread across 22 cities.
This scheme is mainly funded through Central
Government funds, with monthly premiums
ranging from Rs 15 to Rs 150 based on salary scales.
The CGHS has been criticized from the point of view
of quality and accessibility. Subscribers have
complained of high out-of-pocket expenses due to
slow reimbursement and incomplete coverage for
private health care.

EMPLOYEE AND STATE

INSURANCE SCHEME (ESIS)

This scheme provides protection to employees

against loss of wages due to inability to work due to
sickness, maternity, disability and death due to
employment injury. It offers medical and cash
benefits, preventive and developmental care and
health education. Also included is free medical care
of the employees and their family members.
The number of beneficiaries is over 33 million spread
over 620 ESI centres across states. Under the ESIS,
there were 125 hospitals, 42 annexes and 1 450
dispensaries with over 23 000 beds facilities. The
scheme is managed and financed by the Employees
State Insurance Corporation (a public undertaking)
Cont…
through the state governments, with total
expenditure of Rs 3300 million or Rs 400 per capita
insured person.
The monthly wage limit for enrolment in the ESIS is
Rs. 6 500, with a prepayment contribution in the
form of a payroll tax of 1.75% by employees, 4.75%
of employees' wages to be paid by the employers,
and 12.5% of the total expenses are borne by the
state governments.
Unsatisfactory nature of ESIS services, low quality
drugs, long waiting periods, impudent behaviour of
personnel, lack of interest or low interest on part of
employees and low awareness of ESI procedures
have attracted much criticism.

OTHER GOVERNMENT
INITIATIVES

Apart from running schemes the Government has

also brought under statutory provisions, social
security benefits for disadvantaged groups and has
undertaken initiatives to ensure fairer and equitable
access to public healthcare systems especially by the
underprivileged sections of the society. The National
Health Policy 2002 aims to evolve a policy structure
to address these. It also seeks to increase the
aggregate public health investment through
increased contribution from the Central as well as
state governments and encourages the setting up of
Cont…
private insurance instruments for increasing the
scope of coverage of the secondary and tertiary
sector under private health insurance packages.

A comprehensive increase in expenditure on health

amounting to 2% of GDP by 2010 with
central grants constituting ¼ of total public health
spending is on the cards.
Steps towards implementation of alternative system
of healthcare financing in the form of health
insurance to facilitate availability of essential need
based affordable healthcare services to all income
groups have been evolved with an aim towards the
protection of the needy population. In the 2002-
2003 budget, an insurance scheme targeted towards
the poor called Janraskha was introduced. With a
premium of Re 1 a day, it ensured indoor treatment
up to Rs 3000 per year at selected and designated
hospitals and outpatient treatment up to Rs 2 000
per year at designated clinics, including civil
hospitals, medical colleges, private trust hospitals
and other NGO-run institution.

Another initiative of community-based health

insurance, taken in the 2003-04 budget aimed to
enable easy access of less advantaged citizens to
good health services, and to offer health protection
to them. This policy covers people between the ages
of three months to 65 years. Under this scheme, a
premium equivalent to Re 1 per day (or Rs 365 per
year) for an individual, Rs 1.50 per day for a family
Cont…
of five (or Rs 548 per year), and Rs 2 per day for a
family of seven (or Rs 730 per year), would entitle
them to get reimbursement of medical expenses up
to Rs 30000 towards hospitalization, a cover for
death due to accident for Rs 25000 and
compensation due to loss of earning at the rate of Rs
50 per day up to a maximum of 15 days. The
government would contribute Rs 100 per year
towards the annual premium, so as to ensure the
affordability of the scheme to families living below
the poverty line.

The government also offers assistance by way of

Illness Assistance Funds, like National Illness
Assistance Fund (NIAF) was set up in 1997, which
have been set up by the Ministry of Health and
Family Welfare at the national level and in a few
states.

COMPARISONS
The Commonwealth Fund, in its annual survey,
"Mirror, Mirror on the Wall", compares the
performance of the health care systems in Australia,
New Zealand, the United Kingdom, Germany,
Canada and the U.S. Its 2007 study found that,
although the U.S. system is the most expensive, it
consistently under-performs compared to the other
countries. One difference between the U.S. and the
other countries in the study is that the U.S. is the
only country without universal health insurance
coverage.

Australia
The public health system is called Medicare. It
ensures free universal access to hospital treatment
and subsidised out-of-hospital medical treatment. It
is funded by a 1.5% tax levy on all taxpayers, an
extra 1% levy on high income earners, as well as
general revenue.

The private health system is funded by a number of

private health insurance organisations. The largest of
these is Medibank Private, which is government-
owned, but operates as a government business
enterprise under the same regulatory regime as all
other registered private health funds. The Coalition
Howard government had announced that Medibank
would be privatised if it won the 2007 election,
however they were defeated by the Australian Labor

Cont…
Party under Kevin Rudd which had already pledged
that it would remain in government ownership.

Some private health insurers are 'for profit'

enterprises such as Australian Unity , and some are
non-profit organizations such as HCF Health
Insurance and GMHBA Health Insurance. Some have
membership restricted to particular groups, but the
majority have open membership. Membership to
most health funds is now also available through
comparison websites like money time, I Select or the
decision assistance sites Help Me Choose and the
latest entry You Compare. These comparison sites
operate on a commission-basis by agreement with
their participating health funds.

Most aspects of private health insurance in Australia

are regulated by the Private Health Insurance Act
2007. Complaints and reporting of the private health
industry is carried out by an independent
government agency, the Private Health Insurance
Ombudsman. The ombudsman publishes an annual
report that outlines the number and nature of
complaints per health fund compared to their market
share .The private health system in Australia
operates on a "community rating" basis, whereby
premiums do not vary solely because of a person's
previous medical history, current state of health, or
(generally speaking) their age (but see Lifetime
Health Cover below). Balancing this are waiting

Cont…
periods, in particular for pre-existing conditions
(usually referred to within the industry as PEA, which
stands for "pre-existing ailment"). Funds are entitled
to impose a waiting period of up to 12 months on
benefits for any medical condition the signs and
symptoms of which existed during the six months
ending on the day the person first took out
insurance. They are also entitled to impose a 12-
month waiting period for benefits for treatment
relating to an obstetric condition, and a 2-month
waiting period for all other benefits when a person
first takes out private insurance. Funds have the
discretion to reduce or remove such waiting periods
in individual cases. They are also free not to impose
them to begin with, but this would place such a fund
at risk of "adverse selection", attracting a
disproportionate number of members from other
funds, or from the pool of intending members who
might otherwise have joined other funds. It would
also attract people with existing medical conditions,
who might not otherwise have taken out insurance at
all because of the denial of benefits for 12 months
due to the PEA Rule. The benefits paid out for these
conditions would create pressure on premiums for all
the fund's members, causing some to drop their
membership, which would lead to further rises in
premiums, and a vicious cycle of higher premiums-
leaving members would ensue.

Cont…
There are a number of other matters about which
funds are not permitted to discriminate between
members in terms of premiums, benefits or
membership - these include racial origin, religion,
sex, sexual orientation, nature of employment, and
leisure activities. Premiums for a fund's product that
is sold in more than one state can vary from state to
state, but not within the same state.

The Australian government has introduced a number

of incentives to encourage adults to take out private
hospital insurance. These include:

• Lifetime Health Cover: If a person has not

taken out private hospital cover by the 1st July
after their 31st birthday, then when (and if)
they do so after this time, their premiums must
include a loading of 2% per annum for each year
they were without hospital cover. Thus, a person
taking out private cover for the first time at age
40 will pay a 20 per cent loading. The loading is
removed after 10 years of continuous hospital
cover. The loading applies only to premiums for
hospital cover, not to ancillary (extras) cover.

• Medicare Levy Surcharge: People whose

taxable income is greater than a specified
amount (currently $70,000 for singles and
$140,000 for couples) and who do not have an
adequate level of private hospital cover must

Cont…
 pay a 1% surcharge on top of the standard 1.5%
Medicare Levy. The rationale is that if the people
in this income group are forced to pay more
money one way or another, most would choose to
purchase hospital insurance with it, with the
possibility of a benefit in the event that they need
private hospital treatment - rather than pay it in
the form of extra tax as well as having to meet
their own private hospital costs.

The Australian government announced in May 2008

that it proposes to increase the thresholds, to
$100,000 for singles and $150,000 for families.
These changes require legislative approval. A bill to
change the law has been introduced but was not
passed by the Senate. An amended version was
passed on 16 October 2008. There have been
criticisms that the changes will cause many people to
drop their private health insurance, causing a further
burden on the public hospital system, and a rise in
premiums for those who stay with the private
system. Other commentators believe the effect will
be minimal.

• Private Health Insurance Rebate: The

government subsidises the premiums for all
private health insurance cover, including
hospital and ancillary (extras), by 30%, 35% or
40%, depending on age. The Rudd Government
announced in May 2009 that as of July 2010, the

Cont…
Rebate would become means-tested, and offered on
a sliding scale.

Canada
Health care is mainly a constitutional, provincial
government responsibility in Canada (the main
exceptions being federal government responsibility
for services provided to aboriginal peoples covered
by treaties, the Royal Canadian Mounted Police, the
armed forces, and members of parliament).
Consequently each province administers its own
health insurance program. The federal government
influences health insurance by virtue of its fiscal
powers - it transfers cash and tax points to the
provinces to help cover the costs of the universal
health insurance programs. Under the Canada Health
Act, the federal government mandates and enforces
the requirement that all people have free access to
what are termed "medically necessary services,"
defined primarily as care delivered by physicians or
in hospitals, and the nursing component of long term
residential care. If provinces allow doctors or
institutions to charge patients for medically
necessary services, the federal government reduces
its payments to the provinces by the amount of the
prohibited charges. Collectively, the public provincial
health insurance systems in Canada are frequently
referred to as Medicare. This public insurance is tax-
funded out of general government revenues,

Cont…
although British Columbia and Ontario levy a
mandatory premium with flat rates for individuals
and families to generate additional revenues - in
essence a surtax. Private health insurance is allowed,
but in six provincial governments only for services
that the public health plans do not cover, for
example, semi-private or private rooms in hospitals
and prescription drug plans. Four provinces allow
insurance for services also mandated by the Canada
Health Act, but in practice there is no market for it.
All Canadians are free to use private insurance for
elective medical services such as laser vision
correction surgery, cosmetic surgery, and other non-
basic medical procedures. Some 65% of Canadians
have some form of supplementary private health
insurance; many of them receive it through their
employers. Private-sector services not paid for by
the government account for nearly 30 percent of
total health care spending.

In 2005, the Supreme Court of Canada ruled, in

Chaoulli v. Quebec, that the province's prohibition on
private insurance for health care already insured by
the provincial plan violated the Quebec Charter of
Rights and Freedoms, and in particular the sections
dealing with the right to life and security, if there
were unacceptably long wait times for treatment, as
was alleged in this case. The ruling has not changed
the overall pattern of health insurance across
Canada but has spurred on attempts to tackle the

Cont…
core issues of supply and demand and the impact of
wait times.

France
The national system of health insurance was
instituted in 1945, just after the end of the Second
World War. It was a compromise between Gaullist
and Communist representatives in the French
parliament. The Conservative Gaullists were opposed
to a state-run healthcare system, while the
Communists were supportive of a complete
nationalisation of health care along a British
Beveridge model.

The resulting programme is profession-based: all

people working are required to pay a portion of their
income to a not-for-profit health insurance fund,
which mutualises the risk of illness, and which
reimburses medical expenses at varying rates.
Children and spouses of insured people are eligible
for benefits, as well. Each fund is free to manage its
own budget, and used to reimburse medical
expenses at the rate it saw fit, however following a
number of reforms in recent years, the majority of
funds provide the same level of reimbursment and
benefits.

The government has two responsibilities in this

system.
Cont…
• The first government responsibility is the fixing
of the rate at which medical expenses should be
negotiated, and it does this in two ways: The
Ministry of Health directly negotiates prices of
medicine with the manufacturers, based on the
average price of sale observed in neighboring
countries. A board of doctors and experts
decides if the medicine provides a valuable
enough medical benefit to be reimbursed (note
that most medicine is reimbursed, including
homeopathy). In parallel, the government fixes
the reimbursment rate for medical services: this
means that a doctor is free to charge the fee
that he wishes for a consultation or an
examination, but the social security system will
only reimburse it at a pre-set rate. These tariffs
are set annually through negotiation with
doctors' representative organizations.
• The second government responsibility is
oversight of the health-insurance funds, to
ensure that they are correctly managing the
sums they receive, and to ensure oversight of
the public hospital network.

Today, this system is more-or-less intact. All citizens

and legal foreign residents of France are covered by
one of these mandatory programs, which continue to
be funded by worker participation. However, since
1945, a number of major changes have been
introduced. Firstly, the different health-care funds

Cont…
(there are five: General, Independent, Agricultural,
Student, Public Servants) now all reimburse at the
same rate. Secondly, since 2000, the government
now provides health care to those who are not
covered by a mandatory regime (those who have
never worked and who are not students, meaning
the very rich or the very poor). This regime, unlike
the worker-financed ones, is financed via general
taxation and reimburses at a higher rate than the
profession-based system for those who cannot afford
to make up the difference. Finally, to counter the rise
in health-care costs, the government has installed
two plans, (in 2004 and 2006), which require insured
people to declare a referring doctor in order to be
fully reimbursed for specialist visits, and which
installed a mandatory co-pay of 1 € (about $1.45)
for a doctor visit, 0,50 € (about 80 ¢) for each box of
medicine prescribed, and a fee of 16-18 € (20-25 $)
per day for hospital stays and for expensive
procedures.

An important element of the French insurance

system is solidarity: the more ill a person becomes,
the less the person pays. This means that for people
with serious or chronic illnesses, the insurance
system reimburses them 100 % of expenses, and
waives their co-pay charges.

Finally, for fees that the mandatory system does not

cover, there is a large range of private

Cont…
complementary insurance plans available. The
market for these programs is very competitive, and
often subsidised by the employer, which means that
premiums are usually modest. 85% of French people
benefit from complementary private health
insurance.

Netherlands
In 2006, a new system of health insurance came into
force in the Netherlands. This new system avoids the
two pitfalls of adverse selection and moral hazard
associated with traditional forms of health insurance
by using a combination of regulation and an
insurance equalization pool. Moral hazard is avoided
by mandating that insurance companies provide at
least one policy which meets a government set
minimum standard level of coverage, and all adult
residents are obliged by law to purchase this
coverage from an insurance company of their choice.
All insurance companies receive funds from the
equalization pool to help cover the cost of this
government-mandated coverage. This pool is run by
a regulator which collects salary-based contributions
from employers, which make up about 50% of all
health care funding, and funding from the
government to cover people who cannot afford
health care, which makes up an additional 5%.The
remaining 45% of health care funding comes from
insurance premiums paid by the public, for which

Cont…
companies compete on price, though the variation
between the various competing insurers is only
about 5%. However, insurance companies are free to
sell additional policies to provide coverage beyond
the national minimum. These policies do not receive
funding from the equalization pool, but cover
additional treatments, such as dental procedures and
physiotherapy, which are not paid for by the
mandatory policy.

Funding from the equalization pool is distributed to

insurance companies for each person they insure
under the required policy. However, high-risk
individuals get more from the pool, and low-income
persons and children under 18 have their insurance
paid for entirely. Because of this, insurance
companies no longer find insuring high risk
individuals an unappealing proposition, avoiding the
potential problem of adverse selection.

Insurance companies are not allowed to have co-

payments, caps, or deductibles, or to deny coverage
to any person applying for a policy, or to charge
anything other than their nationally set and
published standard premiums. Therefore, every
person buying insurance will pay the same price as
everyone else buying the same policy, and every
person will get at least the minimum level of
coverage.
Cont…

United Kingdom
The UK's National Health Service (NHS) is a publicly
funded healthcare system that provides coverage to
everyone normally resident in the UK. It is not
strictly an insurance system because (a) there are no
premiums collected, (b) costs are not charged at the
patient level and (c) costs are not pre-paid from a
pool. However, it does achieve the main aim of
insurance which is to spread financial risk arising
from ill-health. The costs of running the NHS (est.
£104 billion in 2007-8) are met directly from general
taxation. The NHS provides the majority of health
care in the UK, including primary care, in-patient
care, long-term health care, ophthalmology and
dentistry.

Private health care has continued parallel to the

NHS, paid for largely by private insurance, but it is
used by less than 8% of the population, and
generally as a top-up to NHS services. There are
many treatments that the private sector does not
provide. For example, health insurance on pregnancy
is generally not covered or covered with restricting
clauses. Typical exclusions for Bupa schemes (and
many other insurers) include:

Cont…
ageing, menopause and puberty; AIDS/HIV; allergies
or allergic disorders; birth control, conception, sexual
problems and sex changes; chronic conditions;
complications from excluded or restricted conditions/
treatment; convalescence, rehabilitation and general
nursing care ; cosmetic, reconstructive or weight
loss treatment; deafness; dental/oral treatment
(such as fillings, gum disease, jaw shrinkage, etc);
dialysis; drugs and dressings for out-patient or take-
home use† ; experimental drugs and treatment;
eyesight; HRT and bone densitometry; learning
difficulties, behavioural and developmental
problems; overseas treatment and repatriation;
physical aids and devices; pre-existing or special
conditions; pregnancy and childbirth; screening and
preventive treatment; sleep problems and disorders;
speech disorders; temporary relief of symptoms. (†
= except in exceptional circumstances)

There are a number of other companies in the United

Kingdom which include, among others, AXA, Aviva,
Groupama Healthcare, WPA and PruHealth. Similar
exclusions apply, depending on the policy which is
purchased.

Recently (2009) the main representative body of

British Medical physicians, the British Medical
Association, adopted a policy statement expressing
concerns about developments in the health insurance
market in the UK. In its Annual Representative

Cont…
Meeting which had been agreed earlier by the
Consultants Policy Group (i.e. Senior physicians)
stating that the BMA was "extremely concerned that
the policies of some private healthcare insurance
companies are preventing or restricting patients
exercising choice about (i) the consultants who treat
them; (ii) the hospital at which they are treated; (iii)
making top up payments to cover any gap between
the funding provided by their insurance company and
the cost of their chosen private treatment." It went
in to "call on the BMA to publicise these concerns so
that patients are fully informed when making choices
about private healthcare insurance." The NHS offers
patients a choice of hospitals and consultants and
does not charge for its services.

The private sector has been used to increase NHS

capacity despite a large proportion of the British
public opposing such involvement. According to the
World Health Organization, government funding
covered 86% of overall health care expenditures in
the UK as of 2004, with private expenditures
covering the remaining 14%.

United States
The United States health care system relies heavily
on private health insurance, which is the
primary source of coverage for most Americans.
According to
Cont…

the CDC, approximately 58% of Americans have

private health insurance. Public programs
provide the primary source of coverage for most
senior citizens and for low-income children and
families who meet certain eligibility
requirements. The primary public programs are
Medicare, a federal social insurance program
for seniors and certain disabled individuals,
Medicaid, funded jointly by the federal
government and states but administered at the
state level, which covers certain very low
income children and their families, and SCHIP,
also a federal-state partnership that serves
certain children and families who do not qualify
for Medicaid but who cannot afford private
coverage. Other public programs include military
health benefits provided through TRICARE and
the Veterans Health Administration and
benefits provided through the Indian Health
Service. Some states have additional programs
for low-income individuals.

In just three years, the Medicare and Medicaid

programs will account for 50 percent of all national
health spending. This has fueled an outcry for an
overhaul of the health care system in the United
States. The House of Representatives passed a
health care reform bill by a vote of 220-215 on
November 7, 2009. Currently the fate of the bill rests
on the Senate. The legislation once included changes
that would give the government the power to
negotiate policy premiums and to provide a public

Cont…

option, but in an effort to acquire the necessary

votes to prevent a Republican filibuster the public
option was eliminated from the bill. This would have
given citizens the option to buy into public programs
like Medicare for which current members pay only
$96.40 monthly. Instead the bill now requires that
all Americans purchase private health insurance or
be subject to fines. The insurance industry
represents a significant lobbying group in the United
States. The major health interests have spent an
average of $1.4 million per day to lobby Congress so
far this year and are on track to spend more than
half a billion dollars by the end 2009. On March 21,
2010, the House of Representatives passed a bill
proposed by President Obama, which will supposedly
offer a wide range of coverage and extend it to
roughly 32 million more Americans without coverage.

Germany
Germany has Europe's oldest universal health care
system, with origins dating back to Otto von
Bismarck's Social legislation, which included the
Health Insurance Bill of 1883, Accident Insurance Bill
of 1884, and Old Age and Disability Insurance Bill of
1889. As mandatory health insurance, these bills
originally applied only to low-income workers and
certain government employees; their coverage, and
that of subsequent legislation gradually expanded to
cover virtually the entire population.

Cont…

Currently 85% of the population is covered by a

basic health insurance plan provided by statute,
which provides a standard level of coverage. The
remainder opt for private health insurance, which
frequently offers additional benefits. According to the
World Health Organization, Germany's health care
system was 77% government-funded and 23%
privately funded as of 2004. The government
partially reimburses the costs for low-wage workers,
whose premiums are capped at a predetermined
value. Higher wage workers pay a premium based on
their salary. They may also opt for private insurance,
which is generally more expensive, but whose price
may vary based on the individual's health status.

Reimbursement is on a fee-for-service basis, but the

number of physicians allowed to accept Statutory
Health Insurance in a given locale is regulated by the
government and professional societies.

Co payments were introduced in the 1980s in an

attempt to prevent over utilization. The average
length of hospital stay in Germany has decreased in
recent years from 14 days to 9 days, still
considerably longer than average stays in the United
States (5 to 6 days). Part of the difference is that the
chief consideration for hospital reimbursement is the
number of hospital days as opposed to procedures or
diagnosis. Drug costs have increased substantially,
rising nearly 60% from 1991 through 2005. Despite

Cont…

attempts to contain costs, overall health care

expenditures rose to 10.7% of GDP in 2005,
comparable to other western European nations, but
substantially less than that spent in the U.S. (nearly
16% of GDP).
 BOTTOM LINE

 Something is better than Nothing

 This is your health; it is not a trivial

matter

 Health insurance is necessary

 BIBLIOGRAPHY

 www.google.com

 www.wikipedia.com

 www.insurehealth.com

 www.healthinsuranceindia.o
rg

 www.scribd.com