Health Insurance: Insurers perspective November 20 , 2006 New Delhi

1
Health Insurance Insurers perspectiveNovember
20 , 2006 / New Delhi
2
With malice towards One and All

• A US Health Insurance major to Shri. R.N.
  Malhotra Committee
• Indian Health Insurance to be Rs 20,000 Crore by
  2006
• Its 2006
• No major Indian/Foreign Health Underwriter
• Health Insurance Market appx Rs. 1,900 crore

3
National Health Policy-2002

• The Policy also encourages the setting up of
  private
• Insurance Instruments for increasing the scope of
  
• the coverage of secondary and tertiary sector
  under
• private health insurance packages.

4
Health Care Initiatives

• 1923 W.C. Act
• 1948 E.S.I. Act
• 1954 CGHS Scheme
• 1981 GIC offers limited Hospitalisation Cover
• 1986 Mediclaim introduced
• 1990 Bhavishya Arogya introduced for
  post- retirement

5
Health Care Initiatives

• 1996 Mediclaim modified . Differential rating.
• 1998 Jan Arogya introduced for poor
• 2003- UHIS introduced for BPL
• 2005 Swasthya Bima Yojana for SHGs / CLGs
• 2005 NRHM introduced

6
Some facts

• Only 9 of 1 billion population covered under a
  health scheme
• Only 0.9 of GDP for health (WHO recommends 5)
• 5 of annual family income on curative health
• Hospitalized Indians spend 58 of total annual
  expenditure on health care
• Over 40 of hospitalized Indian borrow / sell
  assets
• Over 80 of health care spend is out-of-pocket in
  India

7
Health Expenditure in India

• Proportion of Health Expenditure by Financing
  Source
• Source National Health Accounts 2001-2002,
  MoHFW, GOI

8
Beneficiaries under various Schemes (lacs)
9
Insurers Portfolio Composition
10
Rural-Urban Disparities

• RURAL (per 1000 population)
• Hospital Beds 0.2
• Doctors 0.6
• Public Expenditures Rs.80,000
• Out of pocket
• Rs.750,000
• ____________________
• IMR 74/1000 LB
• U5MR 133/1000 LB
• Births Attended 33.5
• Full Immunz.37

• URBAN (per 1000 population)
• Hospital Beds 3.0
• Doctors 3.4
• Public Expenditures Rs.560,000
• Out of Pocket Rs.1,150,000
• ___________________
• IMR 44/1000 LB
• U5MR 87/1000 LB
• Births Attended 73.3
• Full Immunz. 61

11
Issues confronting Underwriters
Demand-side Issues
Supply-side Issues
12
Demand-side Issues

• Problems in Health Profiling
• Product design
• Related servicing / networking
• Data Bank
• Pricing / Product attributes
• Adverse Selection
• Absence of pooled profiles
• Risk perception changes

13
Demand-side Issues

• Enrolment driven mass schemes
• Mapping geographies
• Prohibitive costs
• Riding piggy-back on available systems
• Pricing decision
• Risk-based vs. Mandated in mass policies
• Cross-subsidization
• Supply-side inputs
• Financing of premium
• Newer tools
• Government intervention as enabler

14
Supply-side Issues

• Inadequate geographical mapping by private
  healthcare providers
• Concentration in select economically well-off
  locations
• C D locations
• Aligning public hospitals with Cashless network
• Better reach
• Financially enabling them to upgrade
• Accreditation / Credentialisation
• Quality Service and Competence as
  differentiators
• Shall help differential pricing

15
Supply-side Issues

• Standardizing procedures / ICD Coding
• Shall help build a sustainable pricing mechanism
• Will help remove supply-side moral hazards
• Standardizing length of stay
• Tie-up with implants manufacturers and pharma
  companies
• Quality implants
• Economy of scales
• Regulatory mechanism in Insurance space
• Structured vs. Informal
• Quicker , local , empowered self-regulators

16
Supply-side Issues

• Inadequate investment in TPA space
• Manpower
• Use of technology
• Sub-optimal utilization of Technology e.g.
  Tele-medicine
• Alternative Therapies
• Ayurveda, Unani, Homeopathy
• Lack of standard treatment protocol
• Variances lead to moral hazard
• Resultant impact on pricing
• TPA vs. HMO
• Total healthcare solutions

17
Some Challenges

• Contingent Capital
• Inaccessibility to global reinsurance options
• Subsidy
• Mass-based policies for poorer sections
• Full subsidy with a sunset clause
• Product variants
• OPD , women children specific , old-aged ,
  major diseases , long-tail ailments
• Delivery issues in rural space
• Non-conventional distribution channels
• Claims logistics
• Pooling
• Of funds
• Of profiles

18
Existing Model

• The traditional model has focused on insurers
  working with the employed segment only as the
  front-end

Financial flows Service flows
19
Proposed Model

• Health insurance providers need to align
  themselves to overall health care including
  financing, preventive health care and health
  outreach in order to grow coverage
• Regulations and policy must be designed to
  encourage this

Employer supported health insurance
20
The Handloom Weavers Experience

• Sponsoring Ministry Ministry of Textiles
• Families Insured 2.98 lacs
• Lives Insured 6.02 lacs
• States Mapped 22
• Districts Mapped 113
• Clusters Mapped 461
• Panel hospitals 895
• Hospital location 396
• State Service Co-ordinators 22

21
The Handloom Weavers Experience Cont

• District Service Co-ordinators 213
• Claim serviced till Oct-06 68,761
• Unique Features
• Cashless transactions though health cards
• Covers OPD
• Covers alternative therapies, e.g. Ayurveda,
  Unani, Homeopathy
• Covers Maternity pre-existing

22

Thank you