HEALTH INSURANCE

A Project submitted to

University Of Mumbai for partial completion of the degree of

B.Com. (Banking and Insurance)

Under the faculty of Commerce

By

Dwivedi Priya Mahendra

Roll No. 19

Under the guidance of

Prof. Jeenal Gandhi

Vidyavardhini

Annasaheb Vartak College of Arts,

Kedarnath Malhotra College of Commerce,

E.S. Andrades College of Science,

Vasai (West), Dist. Palghar, Maharashtra – 401202

March 2022
 HEALTH INSURANCE

A Project submitted to

University Of Mumbai for partial completion of the degree of

B.Com. (Banking and Insurance)

Under the faculty of Commerce

By

Dwivedi Priya Mahendra

Roll No. 19

Under The Guidance of

Prof. Jeenal Gandhi

Vidyavardhini

Annasaheb Vartak College of Arts,

Kedarnath Malhotra College of Commerce,

E.S. Andrades College of Science,

Vasai (West), Dist. Palghar, Maharashtra – 401202

March 2022
 Vidyavardhini

Annasaheb Vartak College of Arts,

Kedarnath Malhotra College of Commerce,

E.S. Andrades College of Science,

Vasai (West), Dist. Palghar, Maharashtra – 401202

March 2022

CERTIFICATE

This is to certify that Miss. Dwivedi Priya mahendra has

worked and daily completed her Project work for the degree of

B.Com. (Banking and Insurance) under the faculty of

Commerce in the subject of Project Work and her project is
entitled, "HEALTH INSURANCE under my supervision I
further certify that the entire work has been done by the learner
under my guidance and that no part of it has been submitted
previously for any Degree or Diploma of any University. It is
her own work and facts reported by her personal findings and
investigation.
PROF. JEENAL GANDHI
 Internal Examiner

Date of Submission:

External Examiner

DECLARATION
I the undersigned Miss. Dwivedi Priya Mahendra here by,
declare that the work embodied in this project work titled,
"HEALTH INSURANCE forms my own contribution to the
research work carried out under the guidance of Prof. Jeenal
Gandhi is a result of my own research work and has not been
previously submitted to any other University. Whenever
reference has been made to previous works of others, has been
clearly indicated as such and included in bibliography.
I here by further declare that all information of this document
has been obtained and presented in accordance with academic
rules and ethical conduct.

DWIVEDI PRIYA MAHENDRA

ROLL NO: 19
CERTIFIED BY

PROF. JEENAL GANDHI

 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and depth is
enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University Of Mumbai for giving me chance to
do this project.

I would like to thank my Principal, Dr. Arvind Ubale for providing the necessary
facilities required for the completion of this project.

I take this opportunity to thank our Project In-Charge Prof. Dipti Patil, and our
Coordinator Prof. Bhavana Chauhan for their support and guidance.

I would also like to express my sincere gratitude towards my Project Guide, Prof.
Jeenal Gandhi whose guidance and care made the project successful.

I would also like to thank my College Library, for having provided various reference
books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my Parents and Peers who supported
me throughout my project.
 RESEARCH METHODOLOGY

Research Methodology is the Procedures used making systematic observations

or otherwise obtaining data, evidence, or formation as part of research project
or study

Research in common parlance refers to a search fist knowledge Research can

be defined as a scientific and systematic search for pertinent information on a
specific topic. In fact, research
is an art of scientific investigation. The advanced Lemer's dictionary of
English lays down the meaning of research is "a careful investigation
inquiry especially through search facts any branch of knowledge.

These are Types of Data Collection Methods

PRIMARY DATA SOURCE

SECONDARY DATA SOURCE

PRIMARY DATA: Primary data are connected by the investigator half

for a specific purpose. The primary data is a fresh and first-hand data
which is collected for the first time and is original character. Which are
methods available for primary data collection.

SECONDARY DATA: Secondary data is the data that have been

already collected and readily other sources. My project is based on
secondary data. Information related with the project is collected from various
web sites, books and newspaper and it is made available in the project war.
This paper is hand on the secondary data and drained from al reports of
health insurance. The data in collected from of Finance Production and Store

The Project is based on Secondary Data

 EXECUTIVE SUMMARY

In Healthcare financing he mentioned that in country with tax based or

insurance based systems, people supplement their entitlement with private
insurance, Private insurance can also be an alternative to public system

Private insurance effected to cover co payments /deductibles required under the

public system or cover services which are fully not covered under public system

He further elaborated on the various Healthcare cod and the comes that leading
to an increase in the Healthcare costs

He then talked about the current Indian economic in the health insurance sector

He briefed about the various determinants of demand for health insurance

 OBJECTIVE OF THE STUDY

 To describe the profile of health insurance services, companies providing

health insurance their customers and other related groups
 To study the awareness level of consumers towards health insurance
services
 To study the personal and social factors influencing health insurance
purchase
 To study the purchase patten, pre and post purchase behaviour towards
health insurance policies
 To discuss the opinion of consumers about the various practices of health
insurance marketing
 To measure and critically evaluate the level of customer satisfaction
towards health insurance
 To recommend or suggest strategies for improvement Suggestions to
Improve Services of Health Insurance.
 INDEX
CHAPTER PAGE
NUMBER CHAPTER NAME NO.

1 Introduction of health insurance 1-3

1.1 Need for health insurance 3
2 Evaluation in health insurance 4-6

3 Need for health insurance 7-11

3.1 Indian scenario 8-9
3.2 Health care production 9-11

Type of health insurance 12-13

4

5 Guideline of IRDA 14-18

5.1 Guidelines on standardization in health insurance 14-15
5.2 Terminilogy used in health insurance policies 16-18

Facing health insurance professional and health 19-21

6
care sector
6.1 Challenges faced by health insurance professionals 19
6.2 Impact of health insurance on healthcare sector 21

Major health care challenges india in facing right 22-25

7
now
7.1 22-25
Major health care
8 Comparasion 26-33

9
India health care system 34-37
 Government interventions in health insurance
10 38-53
sector
Government interventions 38
10.1
Consumer protection 41
10.2
Nature of government interventions 45-53
10.3
. 54
SUGGESTION

.
CONCLUSION 55

.
BIBLIOGRAPHY 56
 CHAPTER NO. I
INTRODUCTION OF HEALTH INSURANCE

Health insurance is insurance that covers the whole or a part of the risk of a
person in cutting medical expenses, spreading the risk over a large number of
persons. By estimating the overall risk of health care and healthy system
expenses over the risk pool, an insurer can develop a routine finance structure,
such as a monthly premium or payroll tax, to provide the money to pay for the
health care benefits specified in the insurance agreement. The benefit is
administered by a central organization such an government agency, private
business, or notfor-profit entity. According to the Health Insurance
Association of America, health insurance is defined as "coverage that
provides for the so benefits as a result of sickness or injury. It includes
insurance for losses or accident, medical expense, disability, or accidental
death and dismemberment.
Health insurance gives you coverage against hefty medical expenses that
may arise due to sickness and accidental injury. In most of the cases, health
insurance is offered to people in the age group of 5 to 80 years. In some
cases, children under five years are covered it their parents are also
covered.

Health insurance is a broad term which majorly covers the following types
of policies:

 Personal health insurance Health insurance policies bought by an

individual for himself herself or family.
 Group health insurance policies li mainly includes insurance policies
offered by an organization to his employees.

Many of us aren't aware of what is Health insurance? Alternatively referred

to an, medical insurance or simply medictalin, it is basically a type of
insurance coverage that covers the cost of un individual's medical and

1
surgical expenses. The individual, also known as the insured, pays a fixed
sam (premium, every year for the health cover.
In case of a medical problem that necessitates surgery hospitalization the
insured is reimbursed by the health insurance company either directly in
cash or indirectly through payment to the hospital/clinic.
Taking health insurance is one of those things an individual cannot ignore
given the rising costs of treating health problems Inflation in medicare or
medical treatment is a lot higher
than general inflation or inflation in other categories like food and clothing.
While inflation in most categories is in single digits, inflation in medicare is
often higher.
Take cancer treatment, the cost of which today could vary in the region of
Rs 2 lakhs to upwards of Rs 4 lakhs per round/cycle, depending on the
stage of type of cancer
Even if we take the base treatment rate of Rs 2,00,000 prevailing today, we
could well be looking at over Rs 3.22,000 after five years assuming 10%
annual increase (CAGR) in
cost of treatment. Cast escalation of this nature could also prevail in other
forms of treatment/surgery like heart surgery are or knee replacement surgery

Arranging large sums of money at the last moment to treat medical

emergencies is difficult if not impossible for individuals. Hence being
prepared is the only way out. One way to plan for medical emergencies
better is by opting for health insurance plans. Health insurance offers
considerable in terms of disease coverage. Certain health insurance plans cover as
many as 30 critical illnesses and more than 80 surgical surgery procedures. The
health insurance plan disburses payment towards treatment regardless factual
expenses The policy continues even after the benefit payment on selected illnesses

Health insurance is an insurance product which covers medical and surgical

expenses of uninsured individual. reimburses the expenses incurred due to
illness injury or pays the care provider of the insured individual directly.

2
1.2 Need for Health Insurance

Medicare or medical costs are rising year on year. As a matter fact, inflation
in Medicare is higher than inflation in food and other articles. While
inflation in food and clothing is in single digits, Medicare costs usually
escalate in double digits.

For an individual who hasn't saved that mach money, arranging for funds
at the eleventh hour can be a task. This is particularly daunting ailments
strike at an advanced age. seniors, given that most
One way to provide for health-related / medical emergencies is by taking
health insurance. Health insurance offers considerable flexibility in terms of
disease ailment coverage. For instance, certain health insurance plans cover
as many as 30) critical illnesses and over 80 surgical procedures. The
insurance plan disburses the payment towards surgery/illncis regardless of
actual medical expenses. The policy continues even after the benefit
payment on selected illnesses.
With health insurance, you are issured of a more secure future both health-
wise and moneywise. This makes health insurance policies critical for
individuals, especially if they are responsible for the financial well-being of
the family.

3
 CHAPTER 2
EVOLUTION OF HEALTH INSURANCE

Health care expenses and lost labour cummings due to illness represent a
major source of risk for individuals and families Exposure to such risks is
costly in itself (individuls risks averse
also have long term effects especially on the poor. Selling meets withdrawing
children from
school to care for ill parents and exiting, the labour market an leave low
incomes families
trapped in poverty

Protection against the risks of ill health can be achieved by reducing the
size amt variability of the underlying stochastic process, for instance by
improving public ground that affect
health outcomes (pollution , etc., and by spreading risks across individuals
This paper will address the second of these risk reduction strategies, with
particular emphasis on the design and organization of the relevant
institutions in Latin America.

Given its income, Latin America is on average a relatively healthy part of

the world For example, Figure I she das from 157 countries that reported
information on GDP per capita
and life expectancy in 1997 (Latin American countries are represented as
squares, the other as diamond 2) Visual inspection of the simple logarithmic
regression indices that most Latin
American countries have life expectancias a birth equal o significantly
above thour predicted by their income levels, Health outcomes asured by
infant monalityrutes are less positive
however, as shown in Figure 2. Similarly, the distribution of health care services
within Latin
4
American countlesis to the better off Recent analysis undertaken by
PAHO UNDP: 3 and the World Bank, . (1999)) indicates wide disparities
in both health needs and access to
medical care as income groups. This with incomplete and fragmented
insurance coverage, led several countries in the region un adopt wide
ranging health sector reforms in the lattice part of the 1980s and the 1990s
that continue today.

large scale changes in health insurance and health care markets inevitably
involve significant public intervention. The purpose of this paper in first, in
section 2, to examine the argument
in favour of such intervention from a public economics perspective. Having
identified market failure and redistribution rationales for public intervention,
section 3 addresses the important
issue of how the government should intervene. This is effectively a question
of organizational design, incorporating ideas from industrial organization.
contract theory, and the theory of the firm. In this light, Section 4 undertakes
a detailed examination of the reforms perused in
Colombia, Argentina, Brazil, and Chile. These countries reject a variety of
routes towards the goals of expanding formal insurance coverage and
improving the efficiency of service delivery in their health systems.

5
6
 Chapter 3

NEED FOR HEALTH INSURANCE

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 me I help is the need of houBut 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
7
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.

3.1 INDIAN SCENARIO

In 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 India's 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 country's
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

8
commercial health insurance business 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.

3.2 HEALTH CARE PRODUCTS

The following are brief descriptions of some of the major health care products
available in world markets today.
1. 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.

9
2. 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.

3. 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.

4. HOSPITAL CASH POLICIES

Hospital Cash policies usually provide the insured with a daily cash amount for the
duration of an insured's 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 Expense's 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.

10
11
 CHAPTER NO. 4

TYPES OF HEALTH INSURANCE

4.1 TYPES OF HEALRH INSURANCE

1. PPO Health Insurance Plans,

2 HMO Health Insurance Plans,

3. HSA-Qualified Health Insurance Plans, and

4. Indemnity Health Insurance Plans

12
The plan type that is best for you depends um what you and your family want, and
how much you are willing to spend. Here's a brief review of each type of health
insurance plans.

1) PPO HEALTH INSURANCE PLANS

PPO or Preferred Provider Organization plans are the most common Employees
covered under a PPO plan need to get their medical care from doctors or hospitals on
the insurance company's list of preferred providers in order for claims to be pant at
the highest level.

2) HMO HEALTH INSURANCE PLANS

HMO stands for Health Maintenance Organization. HMO plans wide range of health
care services through a network of providers that contract exclusively with the HMO,
or who agrees to provide services to members. Employees participating in HMD
plans will typically need to select a primary care physician (PCP) to provide most of
their health care and refer thest on to a HMO specialist as needed.

3) HSA-QUALIFIED HEALTH INSURANCE PLANS

HSA-qualified plans are typically PHO plans designed specifically for use with
Health Savings Accounts (HSA) An HSA is a special bank account that allows
participants to save money-pre-tax-to be used specifically for medical expenses in the
future. HSAS can be used alongside Health Reimbursement Arrangements (HRAS),
if the HRA is designed correctly

4) INDEMNITY HEALTH INSURANCE PLANS

Indemnity plans allow members to direct their own health care and generally visit any
doctor or hospital. The insurance company then pays a set portion of the total charges
Employees may be required to pay for some services up front and then apply to the
insurance company for reimbursement.

13
 CHAPTER NO.5

GUIDELINE OF IRDA

5.1 GUIDELINES ON STANDARDIZATION IN HEALTH

INSURANCE

Health insurance addresses a major res o l' public concerns. Although it is rapidly
growing access to health insurance still remains limited and add to it com plaints
especially due to variable interpretations of key policy terms are enormous. In order
to address the expectation of public more effectively, the Authority propose to
stipulate the

following in respect of all health Insurance policies issued by and general insurers in
the country.

1. STANDARD DEFINITION FOR 46 COM M ONLY USED TERMS IN

HEALTH INSURANCE POLICIES:

Standard terms would reduce ambiguity, enable all stakeholders to provide better
services and enable customers to interact more effectively with imorers IPAS and
providers All instars shall adhere to the stipulased definitions, mecsed at Annesare 1,
while defining these 45 core ma in all health insurance policies

2. STANDARD NOMENCLATURE AND PROCEDURES FOR CRITICAL

ILLNESSES:

In view a Isolving the difformes in the definitions of terms on Critical illnesses

adopted by the different insurers which are creating confusion in the minds of
consumers and the industry especially at the time het inners and re-inputers have to
arrive at a point where lurp suns payment is made, 11 Critical have been
standardized to be adapted uniformly across industry, If offered under the product.
All products offering the critical illness coverage shall ensure that definitions of the
stated 11 in line with the stipalced definitions annexed at Annexure II.

3. STANDARD PRE-AUTHORIZATION AND CLAIM FORM:

14
A common industry wide pre-authorization and claim form will significantly
streamline processes at all stages. This will enhance the ability of providers to obuin
a timely prior authorization. By implementing it in an optical character recognition
(OCR) format, the ability to transfer data from a hand written paper bused form to IT
systems has been enhanced thus reducing the dacaenury issues for TPAs and insurers.
Every com party shall attach set of claim forms along with policy. policyholder The
forms are attached at Annesure III. and conditions to the

4. STANDARD LIST OF EXCLUDED EXPENSES IN HOSPITALIZATION

INDEMNITY POLICIES;

Hospitalization indemnity products are the commonest products in the Indian market
and account for most of the health insurance sold in the country. The standard listing
o 199 excluded items, un arca which has otherwise been fairly variable in its
interpretation and implementation, has been finalized. The same is annexed at
Annexure IV. However, Insarers may include these excluslans if the product design
allows for, or if the insurer wants to include these as part in /hompitalization
expenses

5. STANDARD FILE AND USE APPLICATION FORM, DATABASE SHEET

AND CUSTOMER INFORMATION SHEET:

The existing F&U) fom tased by the non-life insurers in designed keeping in view
largely the characteristics oNas Life products other than Health With this, the essent
information like the vem insured, the minimum and maximum age, tens of the
product etc that gets captured in the 1&U form is very minimal. In order to capture
the relevant product design information, the muffied File and Use Application form
along with the Database sheet and Customer information then as anneaed in the
Annexure: V, VI and VII respectively shall be submitted under Fife and Use
procedure by the inters

6. STANDARD AGREEMENT BETWEEN TPA & INSURER AND

PROVIDER (HOSPITAL) & INSURER:

The insurers enter into agreements with the TPA s for health services under health
insurance contracts and with the Providers (Hospitals) for health care services under
health insurance contracts The Service Level Agreement shall include the minimum
standard clauses annexed in Annexure: VIII and IX, as applicable:

This is issued under section 14(2) of IRDA Act, 1999 and shall be effective from 1st
July 2013 for group products and list October 2013 for other products.

15
5.2 STANDARD DEFINITIONS OF TERMINOLOGY USED IN
HEALTH INSURANCE POLICIES

1. ACCIDENT
An accident is a sudden, unforeseen and involuntary event caused by external
and visible means

2. CO-PAYMENT
A co-payment is a cost-sharing requirement under a health insurance policy that
provides that the policyholder/insured will bear a specified percentage of the
admissible costs. A co-payment does not reduce the sum, imsored

3. DAY CARE TREATMENT

Day care treatment refers to medical treatment, and/or surgical procedure which is
undertaken under General or Local Anesthesis in a hospital day care contre in
less than 24 hrs because of technological advancement, and Which would
have otherwise required a hospitalization more than 24 hours Treatment
normally taken on an out-patient basis is not included in the scope of this
definition.

4. DEDUCTIBLE

A deductible is a cost-sharing requirement under a health insurance policy that

provides that the Insurer will not be liable for a specified rupee amount of the
covered expenses, which will apply before any benefits are payable by the insurer. A
deductible does not reduce the sum insured.

5. DEPENDENT CHILD

16
A dependent child refers to a child (natural or legally adopted), who is financially
dependent on the primary insured or proposer and does not have his/her independent
sources of income.

6. DOMICILIARY HOSPITALISATION

Domiciliary hospitalization means medical treatment for an illness/disease/injury

which in the normal course would require care and treatment at a hospital but is
actually taken while confined at home under any of the following circumstances:

- the condition of the patient is such that he/she is not in a condition to be removed to
a hospital, or the patient takes treatment at home on account of non availability of
room in a hospital.

7. EMERGENCY CARE

Emergency care means management for a severe illness or injury which results in
symptoms which occur suddenly and unexpectedly, and requires immediate care by a
medical practitioner to prevent death or serious long term impairment of the insured
person's health.

8. GRACE PERIOD

Grace period means the specified period of time immediately

faliowing the premium duc date during which a payment can be made
to renew or continue a policy inforce without loss of comtiniaity
benefits such as waiting periods and coverage of pre-existing disemes.
Coverage is not available for the period for which no premium is
received

9. HOSPITAL

17
A hospital means any institution established for in-patient care and day care treatment
of sickness and / or injuries and which has been registered as a hospital with the local
authorities, wherever applicable, and is under the supervision of a registered and
qualified medical practitioner AND must comply with all minimum oriceria as under

has a least 10 inpatient beds, in those towns having a pogulation of less than
10,00,000 and 15 inpatient beds in all other places

 has qualified nursing under its employment round the clock;

 has qualified medical praitioner (s) in charge round the clock: has a fully
equipped operation theatre of its own where surgical procedures are
 carried out

 Maintains daily reds of patients and will make these accessible to the Inumince
Company's authizedpurusel

10. INTENSIVE CARE UNIT

Intensive care unit means an identified section, werd or wing ofaberpital

which is inder the constant supervision of a dedicated medical
practitioners, and which is specially equipped for the continuues
monitoring and treatment of paticists who are in a critical condition
require life support facilities and where the level of care and supervision
is considerably more sophisticated and intensive than in the ordinary and
other wands.

18
 CHAPTER NO. 6

FACING HEALTH INSURANCE PROFESSIONALS &

HEALTH CARE SECTORS

6.1 THE TOP 5 CHALLENGES FACING HEALTH INSURANCE

PROFESSIONALS

1. HEALTH CARE REFORM

Health care reform aka the Affordshie Care Ac, PPACA, Obama Care), ranks as the
amber one challenge for many health insurance professionals. At the core of this
challenge is uncertainty about the role of producers and understanding all of the
shifting deadlines and requirements

How can you overcome this challenge? Understand health care reform, educate and
service clients, and recommend products to help your clients in this new market. This
may include shifting inno a "consaltirit role in addition to policy sales

2. BALANCING SALES VS. RELATIONSHIPS

The pressure to sell and the pressure to develop long term client relationships is
another big challenge we hear from health insurance professionals

19
How can you overcome this challenge? Succestal agents and brokers balance short
term production goals with long-term business developesemativnies meet sales
expectations today, and grow the business into the future.

3. LACK OF DEMAND

There's no doubt the market is shifting and this can be frustrating Businesses
anbeying the same products in the same way. At the same time, new markets are
opening up.
For example, while more small and medium sized employers are terminating group
health insurance to send employees to the individual market, nuny are not doing
health benefits altogether. Rather, they are using defined contribution health, plans
reimburse for individual health insurance. Berk can thrive off of this shit by ding off
their individual policy lines, and partnering with a defined comituin software
provider to offer this solution.
The trend toward definest contribution also opens up afgemarketfeealth in
professionals small businesses who could not ufford health insurance in the past.
There are over 23 million US small businesses in this situation and are adopting new
products such us defined contribution.
How can you overcome this challenge? Successfal agents and brokers and taking
advantage of these opportunities, and selling the right solutions to the right prospects.

4. TECHNOLOGY IS REPLACING HEALTH INSURANCE

PROFESSIONALS

In the past, prospects would reach out to sales professionals as they were researching
options and learning. Now, prospects have usually deme extensive research in he son
even speak to them. Some health insurance professionals fear technology is replacing

them This challenge a challenging. The internet is here to stay, and companies of all
are using internet and technologies to improve benefits and increase efficiency Ostmp

20
of this, major carriers, major online private exchanges, and the public exchanges are
utilizing the internet to reach consumers directly How can you overcome this
challenge? Despite information at their fingertips and new direct-to-consumer
models, businesses still need personal advisors.

5. KEEPING UP WITH DIVERSE COMMUNICATION AND MARKETING

CHANNELS

Similar to 14, it can be hard to get your message out there in a saturated market oc
producers are competing for marketing space with large carriers, paid advertising,
savs SEO, and a sea of competition.

How can you overcome this challenge? The most successful agents and brokers are
overcoming this challenge by using social media e-newsletters word-of-mauth
campaigns, and other creative forms of content to strengthen their efforts. They are
also carving out a nibe for themselves to set them apart from the competition.

6.2 IMPACT OF HEALTH INSURANCE ON THE HEALTH CARE

SECTOR

• Growth of health insurance-opportunity to improve health care standards especially

health care infrastructure and accessibility to quality care

.Will promote uniform standards of health care across the length and bread of the
country Growth of health insurance means increased standardired data resulting in
greater use of information technology in health care sector. . Stimulated growth in
pharma sector.

• Employers are worried about increasing health care costs and are forcing insurers
30 be risk managers than risk distributors

• Insaratice companies will look at control which would mean utilization reviews

21
• Cast control involves profiling of providers, doctors and physician education
programs.

22
 CHAPTER NO.7

7.1 MAJOR HEALTH CARE INDIA IS FACING RIGHT

NOW

MAJOR HEALTHCARE CHALLENGES INDIA IS FACING

RIGHT NOW

Late last year, after the new government come to power. PM Modi was seen to be
much inclined towards the of better healthcare

He not only stressed upon the importance of cleanliness and hygiene, hut on many
occasions said how his government wanted to effectively help health carry policies to
reach poorest of the poor Indians Meanwhile, it wouldn't be outlandish to say that
Indian healthcare system has had s share of victories over the last few decades. In
fact, India was declared polie-hee in 2014.) Undeniably, this is seen as a notable
achievement since the country accounted more than 50% of the world's polio cases in
2009.

23
The life expectancy in India may have improved frim 32years of age a few decades
ago, to over 65years of age in the present day scenario, healthcare India is still the
least discussed topic. There may be endless debates on news channel or enough hue
and cry over the turbid drinking water, healthcare challenges in India full to become
history. In fact, closer examination reveals the emergence of dangerous fault lines
that if remain unaddressed for longer period of time, put the health of one-sixth of
human population at critical risk.

Early this year, the World Health Organization (WHO) maintained that for India to
achieve Universal Health Coverage (UHC), the country should re-organize its
healthcare delivery system with the right mix and distribution of services. At the

24
same time, we cannot deny that Indian economy is brimming, opening up avenues of
growth for the Indian middle-class, and giving an entire generation an easy access to
technology and knowledge. Unfortunately, the glowing effects of a nourishing
economy are not to be found in the system of healthcare in India. While successive
governments may have committed to numerous developmental goals, there is a dearth
of a dedicated program with focus on resolving India's healthcare challenges. It may
not come as a surprise if we say that the substandard regulatory scenario, knowledge
and infrastructure deficit, and incompetent public healthcare expenditure made India
stand at a meager 112 rank out of 190 on the WHOs world health report ranking

All is not lost, though. The primary aim of the National Health Poliey, 2015, is to
inform, clarify, strengthen and prioritize the role of the Government in shaping health
systems in all its dimensions investment in health, organization and financing of
healthcare services, prevention of diseases and promotion of good health through
cross sectorial action. access to technologies, developing human resources,
encouraging medical pluralism. building the knowledge base required for better
health, financial protection strategies and regulation and legislation for health. This
paragraph outlining the vision of government is the part of National Health Policy
2015 draft.

Reducing out-of-pocket expenditure

According to the Ministry of Health, nearly 63 million people are faced with poverty
every year due to
"catastrophic" expenditure they incur over healthcare. In addition to this, only a very
small percentage of Indians have health insurance policies in India. And until the
right mechanisms are put in place, ensuring that out-of-pocket healthcare expenditure
incurred by people comes down, the OOP expenditure will continue to disengage all
the economic progress made by the Indians.

Lack of resources

25
Despite being a rapidly growing economy. India spends meager resources on its
healthcare needs. In fact, the overall expenditure on public healthcare in India has
contracted over the time given that India spends only about 1 percent of its GDP on
public health. In fact, if experts are to be believed India must spend substantial funds
to reach the global acceptable levels of child and maternal mortality rates.

The government may raise the resources in numerous ways right from reallocating
subsidies to optimizing welfare budgets and in particular, by working in harmony
with the state governments.

Recognizing the importance of skills

The lesser number of skilled and well-learned medical graduates, in particular in rural
India is turning out to be the biggest roadblock facing the healthcare system in India.
In fact, its effect has been such that no fresh graduates are inclined to serve the rural
community thanks to abject living conditions. At the same time, this is the area where
investments by government can do wonders. Dedicating resources towards training
and education of skilled workforce, competitive pay and creating standard living
conditions will make sure that public healthcare in India is in the hands of well-
qualified people.

26
 CHAPTER NO.8

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 underperforms 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.

Health Expenditure per capita, OECD Statistics 2013

27
Life Expectancy of the total population at birth from 2000 until 2011 among several
OECD member nations. Data source: OECD's Library The Commonwealth Fund
completed its thirteenth annual health policy survey in 2010. A study of the survey
"found significant differences in access, cost burdens, and problems with health
insurance that are associated with insurance design". Of the countries surveyed, the
results indicated that people in the United States had more out-of-pocket expenses,
more disputes with insurance companies than other countries, and more insurance
payments denied; paperwork was also higher although Germany had similarly high
levels of paperwork.

AUSTRALIA

28
Main article: Health care in Australia

The Australian public health system is called Medicare, which provides free universal
access to hospital treatment and subsidized out-of-hospital medical treatment. It is
funded by a 2% 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

organizations. The largest of these is Medibank Private Limited, which was, until
2014, a government-owned entity, when it was privatized and listed on the Australian
Stock Exchange.

Some private health insurers are for profit enterprises such as Australian Unity, and
some are non-profit organizations such as HCF and the HBF Health Fund (HBF).
Some, such as Police Health, 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, Compare the Market, iSelect
Ltd., Choosi, Comparing Expert and You Compare. These comparison sites operate
on a commission basis by agreement with their participating health funds. The
Private Health Insurance Ombudsman also operates a free website which allows
consumers to search for and compare private health insurers' products, which
includes information of cover. price and level

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 periods, in particular for preexisting

29
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.

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 I
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 percent 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 (in the
2011/12 financial year $80,000 for singles and $168,000 for couples) and who do not
have an adequate level of private hospital cover must pay a 1% surcharge on top of

30
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 subsidizes the premiums for all
private health insurance cover, including hospital and ancillary (extras), by 10%. 20%
or 30%, depending on age. The Rudd Government announced in May 2009 that as of
July 2010, the Rebate would become means-tested, and offered on a sliding scale.
While this move (which would have required legislation) was defeated in the Senate
at the time, in early 2011 the Gillard Government announced plans to reintroduce the
legislation after the Opposition loses the balance of power in the Senate. The ALP
and Greens have long been against the rebate, referring to it as "middle-class
welfare".

CANADA

Main article: Health care in 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
31
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, 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 core issues of supply and demand and the impact of wait times.

32
CHINA
Main articles: Healthcare reform in the People's Republic of China and
Pharmaceutical industry in the People's Republic of China

FRANCE
Main article: Health care in 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
nationalization 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 modical 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 reimbursement and benefits.

The government has two responsibilities in this system.

The first government responsibility is the fixing of the rate at which medical expenses
should be negotiated, and it does so 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 reimbursement 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 organisations.

33
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 (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 804) 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 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.

34
GERMANY

Main article: Healthcare in Germany

Germany has the world's oldest national social health insurance system, with origins
dating back to Otto von Bismarck's Sickness Insurance Law of 1883.

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 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).

35
 CHAPTER NO. 9

INDIA'S HEALTH CARE SYSTEM

Now that the 2014 general elections are in the rear view mirror, Prime Minister
Narendra Modi and his ministers face the challenge of expectations set by the media
and all his supporters. One of the key challenges his team will be facing is:
Healthcare.
With the World Health Organization's 2000 World Health Report ranking India's
healthcare system at 112 out of 190 countries, some key questions in his mind should
be: How should the country transform its healthcare system? What are its current
pain points? What could be achieved during his tenure?
For those living in urban areas, healthcare is merely a political issue. They argue that
the country faces bigger challenges such as economic development, infrastructure,
jobs, and border disputes with Pakistan. I believe that the 2014 elections have
presented India with a unique opportunity to take a fresh look at its healthcare
landscape. I was happy to browse through the PM's campaign website which had a
section on his achievements in this sector.

But here are 5 things you should know about India's healthcare system.

1. Rural Versus Urban Divide: While the opportunity to enter the market is
very ripe, India still spends only around 4.2% of its national GDP towards healthcare
goods and services (compared to 18% by the US), Additionally, there are wide gaps
between the rural and urban populations in its healthcare system which worsen the
problem. A staggering 70% of the population still lives in rural areas and has no or
limited access to hospitals and clinics. Consequently, the rural population mostly
relies on alternative medicine and government programmes in rural health clinics.
One such government programme is the National Urban Health Mission which pays
individuals for healthcare premiums, in partnership with various local private
partners, which haveIn contrast, the urban centers have numerous private hospitals
and clinics which provide quality healthcare. These centers have better doctors,

36
access to preventive medicine, and quality clinics which are a result of better
profitability for investors compared to the not so-profitable rural areas.
2. Need for Effective Payment Mechanisms: Besides the rural-urban divide,
another key driver of India's healthcare landscape is the high out-of-pocket
expenditure (roughly 70%). This means that most Indian patients pay for their
hospital visits and doctors' appointments with traight up cash after care with no
payment arrangements. According to the World Bank and National Commission's
report on Macroeconomics, only 5% of Indians are covered by health insurance
policies. Such a low figure has resulted in a nascent health insurance market which is
only available for the urban, middle and high income populations. The good news is
that the penetration of the health insurance market has been increasing over the years;
it has been one of the fastest growing segments of business in India.

Coming to the regulatory side, the Indian government plays an important role in
running several safety net health insurance programmes for the high-risk population
and actively regulates the private insurance markets. Currently there are a handful of
such programmes including the Community Health Insurance programme for the
population below poverty line (like Medicaid in the US) and Life Insurance Company
(LIC) policy for senior citizens (like Medicare in the US). All these plans are
monitored and controlled by the government-run General Insurance Corporation,
which is designed for people to pay upfront cash and then get reimbursed by filing a
claim. There are additional plans offered to government employees, and a handful of
private companies sell private health insurance to the public.
3. Demand Basic Primary Healthcare and Infrastructure: India faces a
growing need to fix its basic health concerns in the areas of HIV, malaria,
tuberculosis, and diarrhoea. Additionally, children under five are hom underweight
and roughly 7% (compared to 0.8% in the US) of them die before their fifth birthday.
Sadly, only a smallpercentage of the population has access to quality sanitation,
which further exacerbates some key concerns above.

For primary healthcare, the Indian government spends only about 30% of the
country's total healthcare budget. This is just a fraction of what the US and the UK
spend every year. One way to solve this problem is to address the infrastructure

37
issue... by standardising diagnostic procedures, building rural clinics, and developing
streamlined health IT systems, and improving efficiency. The need for skifled
medical graduates continues to grow, especially in rural areas which fail to attract
new graduates because of financial reasons. A sizeable percentage of the graduates
also go abroad to pursue higher studies and employment.

4. Growing Pharmaceutical Sector:According to the Indian Brand Equity

Foundation (IBEF), India is the third-largest exporter of pharmaceutical products in
terms of volume. Around 80% of the market is composed of generic low-cost drugs
which seem to be the major driver of this industry.

The increase in the ageing population, rising incomes of the middle class, and the
development of primary care facilities are expected to shape the pharmaceutical
industry in future. The government has already taken some liberal measures by
allowing foreign direct investment in this area which has been a key driving force
behind the growth of Indian pharma.

5. Underdeveloped Medical Devices Sector: The medical devices sector is the

smallest piece of India's healthcare pie. However, it is one of the fastest-growing
sectors in the country like the health insurance marketplace. Till date, the industry
has faced a number of regulatory challenges which has prevented its growth and
development.

Recently, the government has been positive on clearing regulatory hurdles related to
the import-export of medical devices, and has set a few standards around clinical
trials, According to The Economic Times, the medical devices sector is seen as the
most promising area for future development by foreign and regional investors, they
are highly profitable and always in demand in other countries.

38
.

39
 CHAPTER NO.10

10.1 GOVERNMENT INTERVENTION IN HEALTH

INSURANCE SECTOR

The theoretical literature on the performance of insurance markets is well developed.

However, not all of the market failures that may arise in such markets necessarily
justify public intervention. This section examines the efficiency and equity reasons
for intervention in health insurance markets, paying specific attention to the
informational constraints facing governments.

10.1.1 REASONS FOR GOVERNMENT INTERVENTION

HEALTH SECTOR

Market failure in the health insurance sector

It is useful to briefly review sources of inefficiency in the delivery of health

insurance, and to examine the extent to which public intervention can correct the
associated market failures. The inefficiencies derive mainly from information
asymmetries and imperfect competition, and less from standard public goods and
externality characteristics.

Asymmetric information - moral hazard

The role of information in the performance of insurance markets has been widely
appreciated. In the health insurance literature, Feldstein (1973), Pauly (1968), and
Zeckhauser (1970) showed how asymmetric information at the ex post stage that is,
after an insured event has occurred - can reduce the efficiency of equilibrium
insurance contracts. This moral hazard occurs when insurance contracts are written
on the basis of endogenous incurred expenses and not on the basis of exogenous

40
health needs. This kind of insurance leads to over-consumption of care, the
distortionary costs of which are offset by reducing the level of insurance.

A similar inefficiency results from "ex interim" moral hazard, when precautionary
actions can be taken after the insurance contract is signed, but before uncertainty
isresolved. In this case, the inability to make insurance contracts contingent on such
actions reduces the optimal level of insurance. In both cases, the individual optimally
exposed to some risk, second-best

Within a partial equilibrium model neither source of moral hazard argues for public
intervention, unless one assumes unrealistically that the government has better
information than private insurers. On the other hand,Greenwald and Stiglitz (1986)
showed that, taking a general equilibrium approach, there may be a role for
government intervention, even when the government does not have an information
advantage visfl vis private insurers. Their argument is simply that, through its powers
of taxation and subsidization, the government can encourage desirable ex interim
actions by altering the prices of goods and services that have non-zero cross
elasticity's of demand with such actions. Thus, taxing cigarettes may reduce the
(assumed unobservable) ex interim action of smoking, thus mirroring an efficient

Insurance contract. The scope for such Pareto improving intervention becomes more
limitedas private insurance contracts become more sophisticated, eg, by disallowing
benefits to smokers.

Asymmetric information-adverse selection

While moral hazard derives from asymmetric information that is generated after
contracts are signed, adverse selection occurs in markets when information is held
asymmetrically at the date of contracting. A competitive insurance market in a
population with heterogeneous ex ante risk characteristics may perform inefficiently
if insurance contracts cannot be differentiated on the basis of these risks.

When only a single insurance policy is available, Akerlof's (1970) lemons problem
may emerge, with a proportion of individuals choosing not to purchase insurance. On

41
the other hand, if multiple contracts are available, then even when risk characteristics
are unobservable it becomes possible for insurers to charge low risk individualslower
prices. All individuals will have some insurance in an equilibrium, (Rothschild and
Stiglitz. (1976)), but two problems may arise: first, the good risks will not have full
insurance, and second, an equilibrium may not exist.

Evidence of the lemons-type of equilibrium (in which a fraction of the population is

uninsured) has been provided in a number of studies (e.g., Cutler und Zeckhauser
(1997). and Cutler and Reber (1998)). The relevance of the Rothschild-Stiglitz
equilibrium is possibly more debatable, since it is typically high risk individuals who
have trouble obtaining full insurance against health risks, and not low risks, as their
model suggests. However, since risk is correlated with other determinants of
insurance coverage (such as income, education, etc.) it is probably imprudent to
dismiss the underlying model

Government intervention cannot easily correct these market failures. In both models,
niversal and iform coverage can he mandated, but the resulting resource and risk
allocations are not Pareto-comparable with the initial equilibrium.

Imperfect competition.
The models of adverse selection reviewed above identified failures of competitive
insurance markets. But even in the absence of adverse selection problems, insurance
markets may yield socially sub-optimal resource and risk allocations if firms have
market power. Such market power may derive from information imperfections on the
demand side, say contributing to switching costs (which make it difficult for new
firms to attract customers). Also, increasing returns in administrative costs suggest
that a somewhat concentrated industry is likely to be observed in equilibrium.

In standard industrial organization models, while market power typically leads to

allocative inefficiency, what competition there is generally welfare improving.
However, in insurance markets with information asymmetries, competition may
sometimes have negative effects on allocative efficiency. For example, when insurers
are faced with a heterogeneous risk population they will have incentives to sell

42
policies only to low risk individuals - i.e., those individuals to whom it is cheap to
provide insurance. If they cannot offer different policies to different risk types, then
they may lower the quality of the policies they do sell so as to make them sufficiently
unattractive to high risk individuals (Jack, forthcoming). This kind of selection
incentive might suggest public intervention to control the extent, or at least type, of
competition in the insurance market.

10.2 CONSUMER PROTECTION

> Quality of care

The examples of moral hazard above concentrated on the behavior of consumers
when they are at an informational advantage vis-fl-vis the provider of insurance. One
response by insurers is to try to improve the information they have about consumers,
by undertaking "utilization reviews" - essentially checking that doctors are not
providing "too much" care.

In order to motivate doctors, insurers may indeed give them stakes in the insurance
company, converting it to a managed care organization.

Such an organizational design is efficient, as long as the information asymmetry

removed that is, as long as information about health status (and the effects of medical
interventions and their costs) is held symmetrically by all parties. In practice the
physician is the primary source of this information, so that when acting as the
patient's agent he confers an information advantage on the patient vis-fl-vis the
insurer. However, when acting for the insurer, the physician may put the patient at a
disadvantage, and warranted treatments could be withheld. The usual competitive
forces that induce firms to keep quality high may not work well in this situation, and
quality of care could suffer. One can appeal to the literature on consumer protection
and safety standards in support of the role of government in markets with uninformed
consumers.

> Financial regulation

43
Insurance companies perform similar functions to banks. Banks facilitate inter-
temporal trades (saving and dissaving) implemented through contemporary inter-
personal trades (lending and borrowing), while insurance companies facilitate trades
between uncertain states of nature implemented through interpersonal pooling of
current risks.

The transformation function of banks (converting short-term savings into long-term.

project funds) results in a mis-match between the time profiles of assets and liabilities
in banks' balance sheets, introducing a moral hazard problem with regard to the
behavior of asset managers. Similarly, insurance companies tend to collect premiums
in advance ofthe resolution of uncertainty, and may optimally build up resources in
order to self insure against systemic risks. In this case, insurance company managers
must choose how and where to invest these funds. A feature of health insurance that
is not common to banks in this regard is the fact that the real value of the firm's assets
is a function of two factors: the quality of financial investments, and the costs of
providing medical services.

Dewatripont and Tirole (1994) use an incomplete contracts model to show that bank
managers can be given appropriate incentives to perform by transferring control from
equity holders (who have relatively weak incentives to interfere with management) to
debt holders (whose incentives to interfere are stronger) when bank performance as
measured by the value of assets is poor. This allocation of hority is in place of a more
sophisticated, but infeasible, explicit performance contract. The role of government is
then to act as a representative of small, uncoordinated, debtors, and the theory
rationalizes public take-overs of distressed banks as a means of providing incentives
to managers.

A similar role can be ascribed to the government with respect to health insurance
regulation. If the value of a firm's assets falls enough, the government may wish to
intervene and take over the administrative functions (maybe contracting out such
administration to another healthy insurer).

44
Life-time insurance and non-diversifiable risks

A final important failure of insurance markets is that they often do not provide life-
time insurance. Since individuals' health needs exhibit a degree of autocorrelation,
insurance that is actuarially fair only on an annual basis exposes the individual to a
high variance of medical costs over the lifetime. Part of the reason it is difficult to
provide lifetime insurance is that the future development of medical care prices is
itself uncertain, due mainly to the vagaries of technological and epidemiological
dynamics. These components of risk are systemic, so cannot easily be insured against
(except intertemporally, across generations).

Efficiency is a relatively uncontroversial goal of economic policy and organization.

However, in the health care and health insurance sectors, equity is equally, if not
more, important in shaping policy. This may be because individuals are more willing
to accept differences in general income levels than in health statuses across
individuals.

At a conceptual level, having high medical needs, or being at high risk of needing
medical attention, reduces an individual's available budget set. In consequence, the
government may wish to redistribute resources between individuals with identical
money incomes. In practice, the redistribution from healthy to sick is often attempted
by imposing uniform prices for health services and for health insurance across
individuals. Of course, charging uniform prices for doctor visits is not redistributive
if the sick must visit the doctor more often than the healthy.

On the other hand, in insurance markets, uniform pricing of insurance policies across
individuals is a feasible tool for redistribution from low risks to high risks. However,
requiring private firms to community rate may only exacerbate such adverse selection
and active selection problems that already exist.

It is important to note that, even if selection issues were unimportant, it would still be
only second best to require uniform insurance pricing. The first best policy, of course,
is to redistribute income (lump-sum) from low risks to high risks, and to require each

45
to buy insurance at the actuarially fair price (i.c., to allow price discrimination by
firms). Such redistribution is notoriously difficult, and even more so when income
inequality itself is high, as it is in many Latin American countries. Indeed, a social
welfare maximizing planner will likely wish to redistribute from rich to poor, and
from less risky to more risky. This multidimensional problem of redistributive
taxation is difficult, even when the government restricts itself to simple linear tax and
transfer systems (Jack (1999)).

Henriet and Rochet (1999) have recently analyzed the optimality of a uniform public
insurance system within the context of a similar multi-dimensional redistribution
problem. They find that, in the absence of moral hazard, a comprehensive insurance
policy providing full insurance to all individuals is part of an optimal tax and
insurance system. This result relies to some extent on the assumption that individuals
face the same distribution of losses, albeit with different probabilities. However, as
the demand for health care is income elastic, the financial cost of care consumed
when ill is an endogenous function of income (and is in fact limited by the
individual's available income). This suggests that the poor may prefer additional
income transfers and less extensive public insurance to being offered the same level
of coverage as the non-poor. Alternatively, the rich may be willing to pay somewhat
higher taxes in order to have more comprehensive insurance than the poor.

This discussion leads us to expect that in the presence of health risk and
incomedifferentials across the population, and in the absence of first-best
redistributive taxation, governments will likely wish to couple a progressive general
tax source (eg.. an income tax) with a system of health insurance (privately or
publicly supplied more on this later) that delivers subsidized insurance to the poor,
but allows coverage to increase with income.

One means of effecting such a graduated insurance profile is to have a mixed

public/private system of insurance, in which the government provides (or mandates) a
given base level of insurance, and individuals are permitted to top up their coverage
through private purchases, or to opt out of the public system and purchase private
insurance. For example, Besley and Coate (1991) have shown that public provision of

46
insurance (of low enough quality) can be used as a redistributive tool as long as
individuals have access to supplementary private coverage. Using a political
economic model with three classes of voters, Gouveia (1997) also establishes the use
of opting out as a means of implementing non-uniform insurance coverage in the
presence of a progressive income tax. Such a system is supported by the rich, since
the cost of purchasing their preferred level of (privately provided) insurance is less
that the taxes they would pay for a similar level financed through taxation. The poor
also support the mixed system because they have a lower demand for coverage- they
would prefer to save some of their taxes that would finance better coverage in order
to purchase other goods.

10.3 THE NATURE OF GOVERNMENT INTERVENTION

The arguments above have suggested that either due to market inefficiencies (mainly
alverse selection) and rodistributive concerns, governments may wish to control
individuals' choices about insurance in certain ways. What the discussion does not
tell us is how such control over choices should be effected. In this section we
examine the design of public interventions recognizing that the productive efficiency
of insurance is a function of the administrative costs incurred and the costs of
providing covered services Costs of provision of insurance and medical care can be
controlled through explicit contractual arrangements between insurer and provider,
organizational choices (e.g vertical integration), and competition. These three
avenues are considered in turn.

Motivating physicians

In many markets, providers of goods or services are paid on the basis of outputs, not
inputs, providing strong incentives for efficient production. It is well understood
however that insured medical services are nearly never compensated in this fashion.
For example, an insurance policy that reimburses incurred costs gives the provider no
incentive to choose an efficient input mix.

47
The underlying problem here is one of motivating physicians and hospital
administrators. When neither health output nor physician effort is directly
purchasable (ie, contractible) then effon incentives may be difficult to generate
without exposing the physician to undesirable risk. At two extremes are the salaried
physician and the decentralized fund holder. Under the first arrangement, an insurer
(possibly the government) pays the physician a fixed amount, independent of his
supply of effort, and reimburses non physician expenses (e.g., laboratory tests). In the
absence of ethical concerns of job satisfaction (which are likely to be significant in
many instances), doctors will tend to substitute out of personal effort and into
complementary inputs. On the other hand, a decentralized fund holder, who is given a
fixed budget to finance all incurred costs (including the cost of his own effort) will
have strong incentives to choose the right input mix The trade off, as in any moral
hazard problem, is between incentives and risk. A salaried physician faces little
personal financial risk associated with expensive cases, since he is reimbursed for
other costs. On the other hand, a fund holder with good effort incentives must bear
the full costs of treating expensive cases, and so might be exposed to considerable
risk. This generates a potential alternative source of inefficiency: if providers attempt
to reduce their risk exposure by inducing hard to treat patients to switch physicians,
then these active selection attempts can increase equilibrium costs, or reduce quality.
If instead the physician is provided with some insurance against hard-to-treat cases
directly by the payer, then his incentives to perform are weakened.

It should be clear from this discussion that the trade offs between risk and incentives
at the provider level are not specific to the public sector. Private insurance companies
also must induce physicians to implement insurance contracts at minimum cost, and
so face a similar optimization problem. Some endogenous differences across the
public and private sectors may emerge than imply different contractual relationships
between payers (the government, or insurance companies) and providers of medical
care. For example, if public insurance is aimed at the poor, then in the absence of
accurate eligibility tests selfselection constraints may require that the public system
provide a relatively low quality of service.
Inducing low effort from physicians who provide services to the public system (they
might still be in the private sector, not public sector employees) might be easier than

48
inducing the higher effort, and hence service quality. characteristic of private
insurance companies who, in equilibrium, serve the non-poor. One might expect then
to see relatively flat incentive schemes for physicians serving the public insurance
system, and steeper compensation schedules employed by private insurers.

Another reason that public and private insurance systems may provide different
incentive schemes to physicians is that physicians may represent a heterogeneous
group. If they differ in their aversion to risk, in their ethical priorities, or in their job
satisfaction, it may be optimal to offer one kind of compensation contract to one
group of physicians, and another kind to a second group.

Once again however, these arguments suggest reasons that we might see different
ways of paying physicians emerge in the delivery of health insurance, but they are
not necessarily the outcome of a public/private mix of insurance provision.

Purchaser-provider split versus vertical integration

The previous section examined issues of how to pay physicians, under the assumption
that such payment mechanisms were implemented through explicit contractual
agreements. Instead of writing a detailed contractual agreement between insurer and
physician, the two parties might decide instead to integrate into a single organization,
and to rely on bargaining protocols to determine the allocation of rents. Traditionally,
in many countries in Latin America and elsewhere, public insurance systems have
been vertically integrated to a significant degree. Recent reforms however have
focused on separating the functions of insurance and provision, through the so-called
"purchaser provider split. These reforms effectively require that explicit contractual
arrangements govern relationships between insurers and providers.

On the other hand traditionally, private insurance was of the fee-for-service type tie..
indemnity plans), whereby a physician would send a bill to the insurer for covered
services. This is one kind indeed a common one of explicit contract. Over time
however, private insurance companies have moved towards a more integrated
organizational structure, bringing physicians in-house, or at least adopting long-term

49
contractual relationships with them. This apparent anomaly between the evolution of
the organization of public and private systems can be understood in a number of
ways.

Soft budget constraints

First, both institutional developments might represent attempts to provide physicians

with stronger incentives, within constraints that differ between the public and private
sectors For example, it might be difficult for a government bureaucracy to commit to
funding a public sector employee prospectively, thereby making him the residual
claimant. Thus, if future renegotiation in the event of high costs makes it difficult to
credibly threaten punishment, endogenous soft budget constraints limit incentives
Conversely, if political pressure is likely to force governments to expropriate profits
(or to renegotiate future contracts) in the event of low costs, incentives will again be
dulled. By contracting explicitly with the private sectorie, by adopting a purchaser-
provider split- a public payer may be able to harden what would otherwise be an
endogenously soft budget constraint.

On the other hand, the easiest way for a private payer to provide a physician
withincentives might be to make him a shareholder in the insurance firm. (Of course.
there areobvious free-rider problems when physicians are paid on the basis of group
profits and not individual contributions thereto.)

Common agency in public institutions

A second way to understand the opposing directions of reforms in the public and
private sectors is to look more closely at the nature of the purchaser-provider split
arrangements. In particular, instead of contracting directly with individual physicians
(as we assumed in the preceding paragraphs), a public insurance system might sign
contracts with groups of physicians indeed often with managed care organizations.
This suggests that the function that is being contracted out from the public system is
the management of physician services. Having a formal arm's length contract
between the public sector and the manager of physician services might be an

50
effective way of improving the incentives of such a manager. For example, building
on the work of Williamson (1985) and Hölmstrom and Milgrom (1990), Dixit (1997)
has shown that when an agent (here the manager) reports to multiple non-cooperative
principals with heterogeneous objectives, a negative externality exists amongst the
principals that results in low powered incentives being provided to the manager. The
implicit side contracts that may easily exist in a political environment support such a
view of the constraints on incentives of public sector managers (hut less so for
individual physicians). Requiring an explicit contract could facilitate the cooperation
of the principals, removing the externality, and leading to higher powered incentives
being given to the manager.

Explicit arm's length contractual arrangements might also be a way of limiting the
scope of a manager's activities. The usefulness of limiting objectives of public sector
decision makers has been suggested by Tirole (1994) and formally elaborated in a
model of career concerns by Dewatripont, Jewitt and Tirole (1999). Providing a
manager with a well defined "mission again makes it easier to induce effort. In Dixit's
analysis the narrowing of a manager's objectives is effected by reducing the number
of competing principals to whom the manager answers.
Contractual incompleteness
An alternative literature examines issues of contracting out versus internal
provisioni... vertical integration-starting from the presumption that contracts are
necessarily incomplete. Even if choices are observable by both parties to a contract, if
they are not verifiable and if the contract is consequently unenforceable, then
institutional arrangements can have substantive effects on incentives. In particular,
ownership of productive assets can matter when explicit contracts are unavailable -
private contractors are those who own the assets they use to produce services (eg,
hospitals), while public servants do not have the implied control rights over asset use.

Hart, Shleifer, and Vishny (1997) present a model of service provision when quality
and Cost are noncontractible. by definition, public sector employees cannot retain
ownership of any quality innovations they generate, while private sector providers
can. Incentives for quality innovations are thus greater in the private sector. On the
other hand, incentives for cost reduction are also greater in the private sector, but cost

51
control is associated with lower quality. Thus the private sector will always (in the
model) produce at lower cost, but could produce higher or lower quality. When one
of the ways of reducing costs is to actively select easy-to-treat patients ahead of
expensive cases, the social aspects of quality can be severely affected by incentives to
control costs.

One might be willing to argue that innovations in medical care are very important,
while those in insurance administration are less so. This would argue in favour of
private provision of physician services, under the condition that active selection could
be controlled adequately. However, in countries with large sections of the population
uninsured against health needs that are susceptible to standard treatments, innovation
in insurance delivery may have high social payoffs, in which case public provision
may then be favored

COMPETITION

Competition within the public sector, in the private sector, and between the two, can
provide incentives for quality provision and cost-reducing effort on the part of
medical care practitioners. The important feature of competition is the disciplining
impact it allows consumers to have on service providers.

Competition within government: quasi-markets

Competition amongst suppliers should not necessarily be identified with private

supply. Indeed, the UK government has attempted to induce competition amongst
public providers by developing the so-called "quasi-market" (Le Grand (1991)). Even
when consumers do not face financial incentives to choose wisely between suppliers,
they might still induce effort and quality provision if their choices affect the payoffs
to providers. ThusHalonen and Propper (1999) model the impact of competition on
quality when providers are paid by a public sector payer on behalf of consumers who
are free to choose their supplier. The essential feature of their model is that when
providers' objectives are not coincident with consumers' (on average), allowing

52
consumer choice can help to realign providers' incentives. The benefits of
competition are of course limited by the elasticity of demand.

Private sector competition

Competition can improve incentives, but can also have negative effects. The
discussion above centered on public sector providers' incentives to attract patients
through quality improvements. An important aspect of quality is that, while it is
reasonable to assume that all individuals value more quality than less, the willingness
to pay for quality varies in accordance with health needs. In general, a hospital is
likely to face a higher elasticity of demand with respect to quality from patients with
high needs than from patients with low needs, assuming an alternative source of
supply exists. Competition can then result in a kind of "race to the bottom," in which
all hospitals try to deter high cost patients from seeking treatment by under-providing
quality, Such negative effects of competition would not arise if hospitals were able to
charge sufficiently higher amounts for treating expensive patients.Similar forces are
likely to be at work in private insurance markets.

In some private health insurance markets consumers are required to commit ex ante
to limit their ex post choices, thus weakening the competitive pressures they can exert
on physicians. This occurs under various managed care arrangements (1IMOS, PPOs,
etc.) These restrictions reduce ex post demand elasticities, allowing either prices to be
higher, or more likely, quality to be lower.

Public-private competition

A common argument in favour of large purchasing groups is the monopsony power

they can wield in negotiating supply contracts. However, as Propper and Green
(1999) have recently pointed out, there is no particular merit in such actions market
power is inefficient be it on the supply side or the demand side. They suggest that
under such arrangements staff will either be of poor quality (good staff will be driven
from the market by low wages), or employment contracts will permit outside
earnings with little or no monitoring, weakening incentives for performance of

53
primary job tasks. Introducing competition from the private sector may thus lead to
higher public sector wages and costs, but with a net welfare gain. The lesson from
this analysis is simply that focusing on budgetary impacts alone is not sufficient to
determine welfare effects, especially if rationing costs (i.e., waiting times, search
costs, etc.) are included (Danzon (1992)).

On the other hand, introducing public provision into a private market may be
beneficial, if it serves the purpose of making a minimum quality standard credible.
For example, Ronnen (1991) has shown in a model of vertical product differentiation
that a minimum quality standard can raise the quality provided by all market
participants (even those who would have met the standard in the absence of
regulation), and lower equilibrium hedonic prices (i.c., prices adjusted for quality).
An appropriately chosen standard, by restricting product differentiation and
intensifying ex post price competition, makes all consumers better off. Such a
standard could in principle be imposed by government, without recourse to public
provision. On the other hand, if quality is difficult to monitor and if lapses are costly
to penalize, public provision of the standard quality at a minimal price could act as a
substitute for direct monitoring. In equilibrium, private sector quality would be
higher than that in the public sector, and any increase in prices would not he enough
to outweigh the positive effects of higher quality.

The idea that public and private sector quality can act as strategic complements
should be viewed with some caution. Standard equilibrium analysis (Hammer (1997))
suggests the need to anticipate potential crowding out of private sector supply by
public sector provision. In the case of non-differentiated goods this is indeed
appropriate, and one expects that if the publicly provided quality level was too high
then private supply would dry up.

54
55
 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.

56
 SUGGESTION

SUGGESTIONS TO HEALTH INSURANCE CUSTOMERS

✓ Taking health policy at very young age and covering all members of the family.

✓ Customers should be fully aware of the various health coverages available.

✓ Customers should know about the various health insurance schemes and
companies. providing these schemes.

✓ The attitude of customers should be always towards the preventive health care.

✓ Customers should take decisions relating to the features of the policy, sum assured,
premium paid, persons covered, after careful analysis.

✓ They must be aware of the conditions and exclusions in the policy.

✓ They have to pay the premium in time and file the claims if any strictly as per rules
and regulations.

✓ Take at most care towards ethics in reveling the preexisting disease

✓Make use of the grievances cell in the case of any dissatisfaction relating to health
insurance.

57
 BIBLOGRAPHY

I. Wikipedia

2. www.izito.co.in

3. www.researchgate.net

4. www.indiaspend.com

5. www.cognizant.com

6. www.actuariesindia.org

7. www.apollomunichinsurance.com 8. www.businesstoday.in

9. www.nrias.net

10. www.irdai.gov.in

58