Chapter 3

REVIEW OF LITERATURE

The main thrust of the present study is to examine the challenges and opportunities
faced by the insurance companies while dealing with prospective customers of health
insurance and to find out the reasons for lack of awareness related to health insurance.
Concerned review of literature has been done for the purpose of the study.

3.1) DEMOGRAPHIC FACTORS AND HEALTH INSURANCE

M. Gyasi and R. Philips (2020) states that Socio-Economic Status (SES) is directly
linked with health services and health care schemes. Married women are less likely to
utilize formal and traditional health care services but married men accessed formal
healthcare services predominately.

• Rambabu and Maloth (2019) states that there is a significant relationship and
influence of demographic factors as well as satisfaction level of the customers on
the health insurance coverage and health insurers must concentrate on the
problems related to health insurance for making a better competitive environment
in the health insurance market.

• Ramesh Bhatt, Jeanna Holtz, and Carlos Avila (2018) states that the urban poor
are excluded from affordable health insurance markets. They also studied the
condition of urban poor people and the role of the government in light with the
National Health Protection Scheme (NHPS) 2018, for providing them better
opportunities for health care.

• Anindita Chakrabarti & Anand Shankar (2015) suggests that richer households
have a higher probability of enrolling in health insurance. Particularly vulnerable
are those from the scheduled tribe background in both rural and urban regions and
the Muslim community residing in an urban area because they do not have proper
coverage of health insurance.

• Mahal, Debroy, et al (2010) analyzed socio-economic inequalities in inpatient care

utilization of older adults, contrasting two countries with different models of
health service delivery, Brazil and India. There are similarities between the
countries on many dimensions, with both currently experiencing rapid

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 epidemiological and demographic transitions. Both have similar publicly
sponsored social security measures for the elderly people aside from those related
to the healthcare system, with the mainly public funded services in Brazil
contrasting with a large proportion of services paid by out-of-pocket payments in
India.

3.2) AWARENESS RELATED TO HEALTH INSURANCE IN INDIA

• Neena Elizabeth Philip, Srinivasan Kannan and Sankara P. Sarma (2016) suggest
that there is an immediate need for rigorous measures to increase awareness about
insurance among the beneficiary population and provide complete information
regarding various benefits under the scheme. Their study also suggests that the
government needs to monitor and redesign the insurance model.

• Tanja Ahlin, Mark Nichter and Gopalkrishna Pillai (2015) identifies six key
factors responsible for broad-based application of health insurance scheme in the
region of South India which is public awareness and understanding of insurance;
misunderstanding of insurance and how this influences health care utilization;
differences in behavior patterns in cash and cashless insurance systems; impact of
insurance on quality of care and doctor-patient relations; (mis)trust in health
insurance schemes; and health insurance coverage of chronic illnesses,
rehabilitation and OOP expenses.

• Dr. Suresh Chandra Jain and Priya Jain (2015) in their study on “A Comparative
study on private and public health insurer” comes up with the main reason to
open the health insurance market for private player was its lower penetration and
slow development. Alone public insurers were not sufficient to deepen the
penetration since they were in a monopoly situation. Now a layer of competition
has been set among the player of the market with the entry of private players who
are aggressive, prompt and up to date in using technology. Following the private
sector players, public players have made several changes in their strategies, set up
and processes to sustain the competition, coming from private players. Yet still the
public players are on market leader position but at the cost of decreasing market
share.

• Devadasan (2013) conducted a survey among the households of Patna district of

Bihar, India, to analyze the extent to which RSBY contributes to universal health

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 coverage and reducing OOP payments. Despite being under the RSBY scheme
which covers charges for medicine and diagnostics, the patients (60 per cent) were
made to make OOP payments. This finding suggests that the RSBY though
managed to include the poor under its umbrella; it was made only partial financial
coverage. The study suggested that better monitoring of the scheme is essential to
enhance effective financial coverage of the RSBY.

• Venkatesh (2013) in his paper titled “Trend Analysis in Insurance Sector in

India” suggests that Indian insurance sector is having increasing growth rate.
India is also improving it density percentages year to year and hoping that that
India can also improve in insurance sector.

• J. Kalaisigamani and A. Sangameshwaran (2013) opined that Indian Health

insurance or medical insurance sector has been growing, since the country's
economic reforms. The reason why mediclaim insurance, or the erstwhile
mediclaim, has grown is that it ensures good medical care from reliable health
care institutions. Health insurance is new in Indian context and is slowly catching
up with the consumers. Consumers understand the objective of health insurance
and it’s offering to cover the ever-rising medical expenses.

• Nilay Panchal (IJAR, 2013) reasoned that respondents' information and certainty
about medical coverage was great. Further research has demonstrated that
mindfulness about the presence of medical coverage was fine yet preferring is
normal. Most respondents' think about medical coverage, however some of them
don't have any strategy in view of low mindfulness or absence of data with respect
to medical coverage. Research inferred that there were clear conceivable
outcomes for medical coverage advertise in India; there were additionally
potential outcomes for people in general and private health care coverage
organizations, happen to respondents assumes an essential job for buying medical
coverage.

• Yellaiah and G. Ramakrishna (2012) conclude that the main determinants of

demand for health insurance are occupation, income, health expenditure and
awareness. The other variables such as age and education are positively associated
but are not statistically significant. This study is limited to the city of Hyderabad.

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• Subir Sen (2012) in his paper titled “Growth of Indian Insurance Industry and
Determinants of Solvency” concludes that Solvency of a life insurer is heavily
dependent on the returns received from total investible funds and the interest rate.
The non-life insurers’ solvency is affected by the interest rate. One of the
investment performance predictors, investment yield has the expected sign and
strongly suggests that returns available from total investments or investment
decisions contributes to overall non-life insurer solvency status.

• Acharya et al., (2012) examined the impact of nationally sponsored health

insurance schemes for the poor in India. According to the study, social health
insurance did not have much impact on the health status of the individuals.
However, health insurance schemes increased the healthcare utilization in terms of
outpatient visits and hospitalization suggesting that individuals were prompted to
avail the medical facilities as it was within their reach, which otherwise would not
be possible for them. Further, health insurance did not tend to reduce the out-of-
pocket health expenses, especially among the poorest. The main objective of the
government funded insurance schemes was to enhance the health status of the
poor by providing financial safety net. This study however could not find much
support either for widespread scaling up of social health insurance schemes as a
means of increasing financial protection from health shocks or for improving
access to health care. The study has recommended comprehensive designing of
the health insurance schemes to promote the health care utilization by the
beneficiaries. At the same time, lack of awareness and distance to healthcare
facilities acts as major non-financial barriers that prevent equitable access to
healthcare, such concerns should be addressed.

• Dr. Sabita Mahapatra (2012): He stated that financial inclusion refers to the
process of ensuring fair, timely and adequate access to saving, credit, and
insurance services, payment and remittance facilities, at an affordable cost in a fair
and transparent manner by the mainstream institutional players. Studies at national
and international level suggest that while opening of bank accounts can be the first
step towards financial inclusion of the poor, keeping them connected with the
banking system remains a challenge. The present paper attempts to carry a
feasibility study in one of the most underdeveloped state in India, to understand

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 the awareness and acceptance of financial service among people below poverty in
order to design a customized micro financial product covering health insurance.

• Rohit Kumar, K Rangarajan, and Nagarajan Ranganathan (2011). ―Health

Insurance in India—A Study of Provider’s Perceptions in Delhi & the NCR,
Journal of Health Management sponsored by Indian Institute of Health
Management Research. Its findings suggest that the awareness level regarding
policy terms and condition is low among the insured population and most of them
do not care for the cost of treatment. The providers increase their rates frequently
and prefer middle income group for extending cashless benefit. A long-term
relationship between the preferred healthcare providers by using technology and
by understanding each other’s roles in serving common clients.

• Bawa and Ruchita (2011, IJHSJ) found that to the extent there is a lower
dimension of attention to medical coverage. Notwithstanding that, individuals
have less eagerness to join for medical coverage.

• Kumar, A. K. et al (2011): They have analyzed the challenges and opportunities

related to healthcare finance in India. It notes that the problems in the health
financing system have led to the insufficient provision and access to quality
healthcare and inadequate financial protection against diseases. It examines
financial protection in the country, in which the data from the 2005-2006 National
Family Health Survey showed that 10% of households had at least one member
medically insured. Measures to address health financing problems are mentioned,
one among them is innovative cash transfers.

• Sbarbaro (2010, WHO) recommended that the lower pay level gathering is the
gathering that faces the most extreme wellbeing related issues.

• World wellbeing association (2010) has considered medical coverage a vital

source to accomplish all inclusive social insurance inclusion.

• Honest and Enkawa (2009), in this article found that how monetary procedures
impact consumer loyalty. The investigation inspected the different effects of
monetary development and financial desires for apparent esteem, quality desires
and consumer loyalty. The outcomes had appeared solid connection between
monetary desires and (generally and industry-explicit) quality desires.

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• David H. Peters and V.R. Muraleedharan, (2008), have stated that India has a
comprehensive legal and regulatory framework and large public health delivery
system which are disconnected from the realities of health care delivery and
financing for most Indians. In reviewing the current bureaucratic approach to
regulation, an extensive set of rules and procedures can be found, though it is
argued that it has failed in three critical ways, namely to (1) protect the interests of
vulnerable groups; (2) demonstrate how health financing meets the public
interests; (3) generate the trust of providers and the public.

• Bhattacharya et al (2008): In their survey they suggest that over the past five to
ten years, the amount of health insurance premiums collected has grown at an
average rate of 34 percent in India and 43 percent in China. A variety of public
and private insurance schemes play important roles in enabling health care
provision for unique populations in these two countries.

• Insurance company heading diploma in insurance services and its title is “Recent
Trends in insurance sector’. In this literature it was found that with the
development of human life style, the insurance facilities have created a new
opportunity for insurance business and welfare.

• Randalle P.Ellis, Moneer Alam, Indrani Gupta in their paper “Health Insurance in
India Prognosis and Prospectus” comes up with a series of recommendations
including improvements in delivery of health care and its financing, efficient
functioning of the ESIS and the CGHS, amending the Medi claim system to tap
the huge market potential, modification of the benefits and claims system of
Mediclaim policies, alterations in the exclusion clause, enhanced competition and
the possible privatization of health insurance within a strict regulatory regime.

• Amit Banerji and Vishnu Ramdeo, (2007): They stated that the health insurance
market in India is very limited covering about 10% of the total population. The
existing schemes can be categorized as:
(1) Voluntary health insurance schemes or private-for- profit schemes;
(2) Employer-based schemes;
(3) Insurance offered by NPOs / community-based health insurance,
(4) Mandatory health insurance schemes or government run schemes (namely
Employees’ state insurance scheme, central government health scheme).

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• Ayesha De Costaa, Vinod Diwana, (2007) states that they examined in their
paper empirically the dominant heterogeneous private health sector and the overall
disparity in healthcare provision in rural and urban areas. It argues for a new role
for the public health sector, one of constructive oversight over the entire health
sector (public and private) balanced with direct provision of services wherever
necessary. It emphasizes the need to build strong public private partnerships to
ensure equitable access to healthcare for all.

• Dror David M (2007), has examined that very few studies have tried to analyze
the reasons for low penetration of health insurance in India. The earlier researches
have tried to analyze the issues and challenges faced by the community-based
health insurance sector in India. These studies have tried to present an overall
picture of the health insurance sector in India, though they have failed to illustrate
empirical evidences that have gone into the analyses of innovation and access
to micro-health insurance in India. Therefore, micro- insurance is now recognized
as the terrain where innovation in (access) insurance can be, and indeed is being
experimented, both at the initiative of established insurers and by players that are
closer to the grassroots’ situations, exploring the access to micro- insurance by the
poor.

• Reshmi et al., (2007) investigated the awareness of health insurance in the urban
population of South India. Awareness about health insurance was prevalent
among 64 per cent of the urban samples. Media has been found to play a role in
spreading the awareness as 45 per cent of respondents responded that came to
know about health insurance through the media. Further, government health
insurance perhaps due to its reliability has been favored by the middle and low
socioeconomic groups when compared to private health insurance. These
respondents suggested that government should introduce a policy that involves
contribution from the public towards insurance, thus avoid unnecessary OOP
expenditures and better utilization of health care facilities.

• Devadasan, et al (2006) have stated that the Indian health system is mainly funded
by out-of-pocket payments. More than 80% of health care expenditure is borne by
individual households. Only about 3% of the population, mostly those in the
formal sector, benefit from some form of health insurance. Several Indian Non-
Governmental Organizations (NGOs) have initiated Community Health Insurance
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 (CHI) schemes within their existing development programmes. This article
describes the principal features of the design and functioning of a selection of 10
CHI schemes and presents a brief overview of the current landscape of CHI in
India. The schemes explicitly target the poorest and most vulnerable households in
Indian society, scheduled tribes, scheduled castes and poor women. Three CHI
management models can be distinguished. The first model consists of local NGOs
acting as both insurer and provider. In the second model, the NGO is the insurer
but does not itself provide care, which is then purchased from a private provider.
In the third model, the NGO neither does provide health care nor acts as an
insurer: the NGO, on behalf of a community, links with an insurer and purchases
health care from a provider. The benefit packages generally include both primary
and secondary care and most of the providers are in the private sector. Most of the
schemes require external resources for financial sustainability. There is currently
little information on the impact of CHI schemes on the performance of local
health systems and more research is warranted in that respect.

• Gupta Setal (2001) have estimated the impact of public spending on the health
status of the poor in over 70 countries. It provides evidence that the poor have
significantly worse health status than the rich and that they are more favorably
affected by public spending on healthcare. An important new result is that the
relationship between public spending and the health status of the poor is stronger
in low-income countries than in high-income countries. However, the results
suggest that the increased public expenditure alone will not be sufficient to meet
international commitments for improvements in health status.

• IRDAI product list during 2010-17.

There are around 99 health insurance products provided by private and public
companies which are in the IRDAI list. IRDAI meeting was held on 29th June 2018
and the Authority decided to reconstitute the Health Insurance Forum. In quarterly
journal of IRDAI (Jan –March 2017) it is depicted that on July 12th, 2016, IRDAI has
notified a revised health Insurance Regulations. The Regulations primarily intend to
achieve its main objectives i.e., General Insurers or Health Insurers are permitted to
offer pilot products to give scope for innovation. Encouraging the wellness and
preventive habits of the policyholders. Health Insurers can offer Combi-Plans which
could be a hybrid of Health and any Life Plan to further enable Insurers to leverage on

46
the strengths of each other. It allows insurance companies to offer Loan/Credit Linked
Group Health / Personal Accident Insurance products to enable the insured to repay
the loan in case the insured falls ill and is not able to repay the loan. Encouraging
renewal by simplifying the renewal procedures. To provide a permanent identity card
(Smart Cards) to avail cashless facility which is valid as long as the policy is renewed
with the company. In a nutshell, the Authority’s constant endeavor is to bring greater
accountability of insurers internally, to encourage innovation in product design, to
promote wellness habits among the policyholders, to create a policyholder friendly
environment and to bring about robust growth of the Health Insurance sector.

3.3) IMPORTANT FACTORS AFFECTING HEALTH INSURANCE

• This case-study, Rural and Urban Area geographical wise classification and
Population of 68.84% and 31.16% respectively is referred from Census of India
2011, Office of the Registrar General & Census Commissioner, India – Ministry
of Home Affairs. Percentage of persons covered under any health insurance
scheme, which is 14.1% and 18.1% in rural and urban areas respectively. Health
insurance service provider details are referred from Insurance Regulatory and
Development Authority of India (IRDA). To understand Government of India
initiations with respect to National Health Insurance Schemes for people of India
is referred National Health Portal, The Ministry of Health and Family Welfare,
Government of India. State Government initiations for their people to improve
healthcare access of Below Poverty Line (BPL) and Above Poverty Line (APL) is
referred from Wikipedia and Jeevandayee websites.

• Many studies have considered income as one of the important determinants to

study the motivation for purchase of health insurance (Scotton, 1969; Cameron,
Trivedi, et al., 1988; Savage and Wright, 1999). Income has been found to have
positive association with health insurance purchase decision consistently in
different studies conducted in different countries: Propper (1989) in UK, Trivedi
et al., (1988) in Australia, Hurd and Garry (1997) in USA, Liu and Chen (2002) in
Taiwan, Trujillo (2003) in Colombia, Kirigia et al., (2005) in South Africa, Bhat
and Jain (2006) in India, Yamada et al., (2009) in Japan and Chen and Jin (2012)
in China.

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• The role of education in health decision making has been well documented by
Grossman (1972) and Muurinen (1982). Education has been found to be having
positive and significant impact on the probability of having insurance cover (Deb
et al., 1996; Vera-Hernandez, 1999; Liu and Chen, 2002, Trujillo, 2003; Coasta
and Garcia, 2003; Kirigia et al., 2005; Chen and Jin, 2012).

• Healthcare expenditure is another important variable affecting health insurance

purchase (Kronick and Gilmer, 1999; Bhat and Jain, 2006). Relation of health
insurance purchase decision and health expenditure already incurred by the family
is based on the premise that families which have higher chances of requiring
hospitalization will have higher probability of buying health insurance.

• Another set of factors which are found important in the literature of health
insurance are demographic and socio-economic variables. These variables are age,
household size, marital status, gender and employment. The decision to purchase
insurance was positively correlated to age (Grossman, 1972; Trivedi et al., 1988;
Savage and Wright, 1999; Trujillo, 2003; Liu and Chen, 2002; Kirigia et al., 2005;
Bhat and Jain, 2006; Yamada et al., 2009), household size (Deb et al., 1996; Vera-
Hernandez, 1999; Kirigia et al., 2005), marital status (i.e., being married)
(Cameron and Callum, 1995; Rhine and Ng, 1998; Liu and Chen, 2002; Trujillo,
2003; Kirigia et al., 2005), gender (Bhat and Jain, 2006), being employed in
executive positions (Butler, 1999; Savage and Wright, 1999; Vera-
Hernandez, 1999; Kirigia et al., 2005).

• Feldstein (1973) argued that as the price of health care increases, the demand for
insurance will also increase as this causes an increase in the risk of net worth
depletion resulting in an increase in the demand for insurance. Healthcare
expenditure largely depends on healthcare costs. This argument has put forward
by Chernew et al., (1997), who attributed higher health care costs to the secular
changes in health insurance coverage.

• For the primary knowledge of insurance activities and development of Insurance

business in India some books are studied. One among them is “Insurance Principle
and Practice” by M.N. Mishra & S.B. Mishra published by S. Chand & Company
LTD year 2009.And second one is “Theory and practice of Insurance” by M. Arif
Khan. These books have given brief of the development and expansion of

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 insurance business in India and how they are important for the social welfare of
Indian Society.

3.4) IDENTIFICATION OF RESEARCH GAP

For the purpose knowing the gap between the previous research done on the topic of
health insurance and present study, an extensive literature review has been done.
Though health insurance is a widespread concept in most of the developed countries
and most of the researches have been conducted on the part of studying consumer
perception regarding health insurance, working and framework of various health
insurance schemes in other countries but in a country like India especially Uttar
Pradesh, there is a lack of such studies.

Therefore, it is one of the major research gaps which can be highlighted that studies
and research related to insurance sector is not enough in Uttar Pradesh in order to
develop this sector. Health insurance is not a much talked and discussed topic in Uttar
Pradesh, most populated state in India, inspite of a major need of health care
expenditure and services. There are some studies related to health insurance in other
states like Kerala, Maharashtra etc. is also reviewed during the literature review
process but in the context of Uttar Pradesh, there is a shortage of similar studies.

On the other hand, in this study reasons for lack of health insurance coverage is
studied from the point of view of insured or customers as well as from the point of
view of insurance companies also. In previous studies, only customer or insured
perspective and perception regarding health insurance has been kept in mind and very
less or no emphasis has been given on challenges faced by the health insurance
providers while dealing with prospective customers of health insurance. Therefore,
with the relevant literature review, these gaps have been pointed out and within this
study the above-mentioned points are covered and researched.

***

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