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India Insurance Report - Series II 211

In 2021-22, the health segment recorded a net incurred claims ratio of 105.68% per( public-126.80%;
94.66% and standalone-79.06%)( IRDAI –Annual Report 21-22) – It clearly shows that health insurance
companies are finding it difficult to manage this portfolio. The likely fallout can be increased premiums
or/and curtailments of benefits and refusal of renewals of elderly or persons with known diseases. But a
two-tier healthcare system will be a certainty, with private healthcare providers as the mainstay. 42.5% (
41.4% rural and 44.3% urban) got treatment through a private doctor/ in a private clinic. Similarly, 23.3%
of people took treatment in private hospitals (20.8% rural and 27.3% urban). There are a few revealing facts
about the utilization of care under PM-JAY, such as the size of the average claim in Public hospitals is
Rs.9,045 while in private hospitals, it is Rs.13,730 or 56% of empanelled hospitals are public as against 46%
private, and 54% of patient hospitalization is in private hospitals as against 46% in public hospitals. These
facts point to the inevitability of the two–tier system in India’s march to universal healthcare coverage.

As regards financial protection against health shocks, especially catastrophic health expenditure, both
the Government and the insurance industry need to do a lot more. It would be more efficient if here also the
two tier system i.e. the private health insurance works in tendum with Government funded insurance coverage.
A large section of the population, estimated to be around 30-40 crore Indians, popularly known as Missing
Middle, is still without any insurance coverage. And this isn’t low hanging fruit, going by the fact that
insuarance industry is unable to reach out to this segment even after two decades of opening of the sector.
The health insurance companies need to innovate, making greater use of latest technologies and also the
public health insurance infrastructure that has been created under PM-JAY and more recently under Ayushman
Bharat Digital Health Mission. These steps would help bring down the cost of insurance operations and thus
make insurance products reachable as well as affordable. The health insurance companies can use the enormous
data generated by AB-PMJAY to come out with innovative segmentwise/disease-specific products.
The health insurance companies must leverage the AB PMJAY robust ecosystem and infrastructure to
create a low-cost product that would serve the missing middle and growing geriatric population. For this
purpose, health insurance companies can leverage PMJAY’s provider empanelment to manage claims cost-
efficiently. Insurance companies can effectively use the health benefits package devised by PMJAY to standardize
hospital tariffs and associated charges. Insurance companies can reach new segments of clients not served by
PMJAY and living in the same community. Similarly, health insurers can take significant advantage of the
647 Standard Treatment Guidelines covering 1508 procedures for standardising care delivery and quality.
Health insurance companies can also leverage the initiatives of AB-PMJAY that strengthen the patient
classification and provider payment system through ICD 11( International Classification of Disease) per ICD
(WHO,2014) and ICHI ( International Classification of Health Interventions) (ICHI,2018) with Diagnosis
Related Groups (DRG). Health insurance companies can also leverage the Health Financing and Technology
Assessment Unit ( HeFTA) to assess new health technologies and their adoption for insurance policyholders.

8. Conclusion

India should follow two-tier healthcare delivery, taking a cue from some successful countries. Health
insurers must bridge the gap of universal healthcare initiatives and serve the neglected / untouched segments
through better risk management, improving access, reducing inequalities, and enhancing financial protection.
It may still be a long road to ‘health for all.’ It certainly is a long way to Tipperary, but it is surely within reach.