HEALTH INSURANCE

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WHAT IS INSURANCE?
Insurance is pooling of risks.

In contract of insurance ,the insurer (insurance

company) agree/undertakes, in consideration of a sum of money (premium) , to make good the loss suffered by the insured against a specified risk such as fire ,accident etc or any contingency. acts like the Insurance Act(1938), the Life Insurance Corporation Act(1956), General Insurance Business (Nationalization) Act(1972), Insurance Regulatory and Development Authority (IRDA) Act(1999).

The Insurance Policy India is regulated by certain

Why is Health Insurance important?

India has 16 per cent of the worlds population, 18 per cent of the worlds mortality, 20 per cent of the worlds morbidity and healthcare expenditure in the country is a miniscule one per cent of global expenditure. As one of the fastest growing economies in the world, we cannot afford to rank 171 out of 175 amongst countries surveyed by the WHO in terms of percentage of GDP spent in public sector on healthcare.

In the same survey, India ranks 17th in terms of private sector spending on health which now contributes 4.3 per cent of the GDP spent on healthcare in the country.
Amongst the BRIC countries India ranks the lowest with a 6.5 per cent of the GDP spent.

Population covered under some form of Healthcare Prepayment

16 14 12 10 8 6 4 2 0 14.3

Percentage (%)

3.4 0.9 Private Health Insurance Social Insurance

Employer Spend

Community Insurance

Total

Healthcare Type

Source: Mckinsey

HOW DOES HEALTH INSURANCE WORKS?

A health insurance policy is a contract between an insurance

company and an individual or his sponsor (e.g. an employer). The contract can be renewable annually, monthly or be lifelong. The type and amount of health care costs that will be covered by the health insurance company are specified in advance, in a member contract or "Evidence of Coverage" booklet. The individual insured person's obligations may take several forms:[8] Premium: The amount the policy-holder or his sponsor (e.g. an employer) pays to the health plan to purchase health coverage.

Deductible: The amount that the insured must pay out-of-pocket

before the health insurer pays its share. For example, policyholders might have to pay a $500 deductible per year, before any of their health care is covered by the health insurer.

 Co-payment: The amount that the insured person must pay

out of pocket before the health insurer pays for a particular visit or service. For example, an insured person might pay a $45 co-payment for a doctor's visit, or to obtain a prescription. A co-payment must be paid each time a particular service is obtained. Coinsurance: Instead of, or in addition to, paying a fixed amount up front (a co-payment), the co-insurance is a percentage of the total cost that insured person may also pay. For example, the member might have to pay 20% of the cost of a surgery over and above a co-payment, while the insurance company pays the other 80%. Exclusions: Not all services are covered. The insured are generally expected to pay the full cost of non-covered services out of their own pockets. Coverage limits: Some health insurance policies only pay for health care up to a certain dollar amount. The insured person may be expected to pay any charges in excess of the health plan's maximum payment for a specific service

 . In addition, some insurance company schemes have

annual or lifetime coverage maximums. In these cases, the health plan will stop payment when they reach the benefit maximum, and the policy-holder must pay all remaining costs. Out-of-pocket maximums: Similar to coverage limits, except that in this case, the insured person's payment obligation ends when they reach the out-of-pocket maximum, and health insurance pays all further covered costs. Out-of-pocket maximums can be limited to a specific benefit category (such as prescription drugs) or can apply to all coverage provided during a specific benefit year.
Explanation of Benefits: A document that may be sent by

an insurer to a patient explaining what was covered for a medical service, and how payment amount and patient responsibility amount were determined.

INDICATORS OF POOR HEALTH CARE INDUSTRY IN INDIA

Indias healthcare infrastructure is inadequate to meet the burden of disease. India has just 90 beds per 100,000 population against a world average of 270 beds India also has just 60 doctors per 100,000 population and 130 nurses per 100,000 population against world averages of 140 and 280 respectively Public spending on healthcare has also been near to 1% of GDP for the past thirty years Indias healthcare financing mechanisms are poor with 66% percent of healthcare expenditure being out of pocket Together, these factors result in a poor per-capita spending on healthcare at US$ 109 (Intl $, PPP, WHO Health Statistics 2010).

Comparison of Health insurance in US and India

Indian Scenario
India spends about 6.5% to 7% of GDP on Health care. Out of this 1.5% is in the Govt. Sector and 4.7% in private

sector. Provision of Health care in the Country is the shared responsibility of the Centre, State and Local Governments. Includes beneficiaries covered under ESIS,CGHS,Army, Railways,self funded,PSUs and Insurance products. Most of the health care providers in the country are in private sector and are on fee for service basis.
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HEALTH CARE IN US
16% of GDP is spent on health care

Total 2.2 trillion dollar is spent

1 trillion is spent through public programs 1.2 trillion is spent through private program

Annual costs of health per capita is also highest with 5711 $

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SITUATION IN 2001

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PRESENT SITUATION
%EXPENDITURE ON HEALTH OF TOTAL GDP
18 16 14 12 10 8 6 4 2 0

%EXPE

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Comparing Govt. and pvt. expenditure

100.00% 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

GOVT. EXPENDITURE PVT. EXPENDITURE

Comparison of Insurance products

US
Premium rates are higher
Different health products in

INDIA
Premium rates are lower
Same health products all over

different states Insurance portability Health policy consists of disability benefit Health policy mandatory Employees are covered under health insurance Covered even after cessation of employment

country No insurance portability yet Only accident policy covers disability benefit not mandatory Employees may or may not covered under health insurance Not covered after cessation of employment
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CURRENT SCENARIO
India spent nearly 6.5 percent of the GDP on healthcare, of which 4.7 percent was spent by the private sector valued at USD 22 billion, according to FICCI. Health insurance premium collections were US$ 1.75 billion in 2009-10 compared with US$ 893.76 million in the previous year, IRDA said in its annual report for 2009-10 .
As per a report by industry chamber FICCI, the Indian healthcare industry

will reach USD 280 billion by 2020. The spending on healthcare is estimated to grow 14 percent annually.
It further added that at present the sector is estimated to be around USD

40 billion but it will rapidly grow to touch USD 78.6 billion by 2012.

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PORTABILITY OF BENEFITS
At present, one of the major problems faced by a

policyholder is the exclusion period for pre-existing illnesses. approved health insurance portability. Those who are not satisfied with their insurer can now switch to a new one and keep all the benefits of no-claim bonus and even the preexisting disease cover. health insurance policy within three working days and make data on claim details available to the counterpart within seven working days.

IRDA, which regulates insurance sector in India, has finally

All insurers will have to acknowledge a request to port the

Whats portable
Waiting period: Primarily waiting period on pre-existing diseases is portable. To illustrate, say, a specific disease has a waiting period of two years in policy X and three years in policy Y. In this case, policy Y can exclude the disease for only one year if the policyholder has already waited for two years in the previous policy. Sum insured: For the same example above, say, you had Rs. 2 lakh as sum insured in policy X and you opt for Rs. 5 lakh in policy Y. Here you will get a claim benefit of up to Rs. 2 lakh after a waiting period of a year for pre-existing diseases. Whats not You can only port credits on waiting period on pre-existing ailments and not features. While buying a new policy, the features of the new policy will apply. So, for instance, if insurer X didnt not have sub limits on the rooms rents and the new insurer Y has, you will have to accept the sub limits in the new policy.

BUDGET ALLOCATION 2011-12

The Union Budget stepped up plan allocation for the health

sector by 20 per cent with a focus on health insurance, which Finance Minister Pranab Mukherjee announced would be extended now to unorganised sector workers in hazardous mining and associated industries.

The Rashtriya Swashthya Bima Yojana has emerged as an

effective instrument for providing a basic health cover to poor and marginal workers. It is now being extended to MGNREGA beneficiaries, beedi workers and others,"

The Finance Minister rescinded the service tax levied on health

check up or treatment instead imposing a tax on all services provided by hospitals with 25 or more beds that have the facility of central air conditioning.

 The total allocation for the health sector has been

hiked to Rs 26,760 crore from Rs 23,530 crore last year.

Routine immunisation has seen a boost from Rs 417

crore to Rs 511 crore while pulse polio immunisation has been decreased from Rs 1017 crore to Rs 663 crore.
The UPA Government's flagship National Rural Health

Mission has seen a hiked budget allocation from Rs 2100 crore to Rs 2356 crore.

 Thank you!