Page 176 - India Insurance Report 2023- BIMTECH

164 India Insurance Report - Series II

12. Conclusion: Health Insurance is Constantly Evolving

Health Insurance in India is heavily tilted towards tertiary care and secondary care requiring
hospitalization. Thus, out-of-pocket (OOP) expenditure is huge for even the individuals covered by
insurance. The fact that a large chunk of the populace is not even covered by insurance makes this even
more acute. It is estimated that nearly 60% of the total health expenditure is towards out-of-pocket
expenses. Insurers have slowly begun to expand the coverage to insure OPD treatment, which is a major
factor in OOP expenditure.

The coverage of mental illness, the offer of health insurance to Divyangjan without discrimination,
and insurance for surrogacy have been mandated by the Government through various Acts. The
Government has also recognized alternate forms of medicine: Ayurveda, Yoga and Naturopathy, Unani,
Siddha, and Homeopathy, collectively called AYUSH. The present health insurance system is geared to
cover Hospitalization and therefore, it is a challenge for them to embrace the mandates. AYUSH hospitals
are hard to come as all the types of medicine don’t prescribe hospitalization. Similarly, most mental
illness treatments are outpatient in nature, which is an exclusion in the current policies.

While this article discusses health insurance for the common man, the continuous regulatory
interventions, and related issues, it is to be noted that there are numerous hurdles which are outside the
purview of the regulators and Insurers but do affect the public. The number of hospitals with the
required infrastructure, the doctor-patient ratio, bed-patient ratio and availability of paramedical staff is
woefully inadequate. A strong primary care system is more likely to promote good health and treat
diseases at an early stage with less cost. The Tier 3 and 4 cities have insufficient health infrastructure and
need to travel to metros or bigger cities, which adds to their financial burden. The government hospitals
do not inspire faith among the patients, resulting in overburdening the private sector. This skewed
supply and demand situation has led the private sector hospitals in a position where negotiating lower
rates for treatment is a challenge. And this is only the tip of the iceberg!

It is heartening to note that there is a lot of awareness about health insurance and robust growth. All
the players in the health care system will have to work in synergy; the Government will have to take a
major role to ensure this happens in the right way; and the Regulator needs to keep an acute eye on the
industry and ensure that customers are treated in a fair manner. These initiatives will probably spur
health insurance growth even further, assisting the Regulator in discharging its developmental duty.

References :

- Annual Reports of IRDAI
- Handbook of Indian Insurance Statistics of IRDAI
- Health Insurance for India’s Missing Middle – NITI Aayog
- General Insurance Council Data.