Mr' A'G' GAJAPATHY

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PRESENTATION BY Mr. A.G. GAJAPATHY STAR HEALTH
AND ALLIED INSURANCE CO. LTD At IIRM Hyderabad
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On PREVAILING HEALTH INSURANCE PRACTICES IN U.K
USA AND THE CURRENT SCENARIO IN INDIA
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Definition of Health - WHO

• World Health Organisation (WHO) defines health as
  complete physical,mental and social well being
  and not merely the absence of disease and
  injury.It concerns a person more to know the risk
  of 50 illnesses that may throw him on his back
  than the possible date of one death which must
  come. As per WHO, a countrys Health systems
  comprise of all the organisations, institutions
  and resources that are devoted produce health
  actions.Health actions are any efforts whether in
  personal healthcare, public health services or
  through intersectoral initiatives whose primary
  purpose is to improve health.

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United Kingdom -National Health Scheme

• Described as a Jewel in the Crown of Human
  Civilisation.
• National Health Scheme was launched in 1948 in
  U.K., when post war austerity still reigned.
• What the Government created was a comprehensive
  service based on the democratic principle that
  everyone should have access to the best available
  healthcare, delivered free at the point of need
  and funded from general taxation.

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United Kingdom -National Health Scheme

• Rapid developments in medical technology as well
  as new forms of ill-health steadily increased
  pressure on resources.
• Despite these problems NHS remains as the
  Britains most cherished institution, and the
  exclusive provider of health services for over
  90 of the population.
• A patient visiting a local doctors for surgery
  may get the anxieties that anyone waiting to
  consult a physician feels but one thing he need
  not have to worry that is money.

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United Kingdom -National Health Scheme

• Over a period, a patient is seen by doctors,
  technicians and clerical staff with sympathy and
  responsiveness.
• Diagnostic and treatment are thoughtful and
  thorough, first class health care and there are
  no bills to pay.
• There is no need to even fill up a form or a
  claim to file.
• NHS delivers healthcare through a network of
  clinics and hospitals.
• Changes in the way services are delivered and in
  the way patients are treated have been happening
  continuously in the NHS since it was set in 1948.

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United Kingdom -National Health Scheme

• NHS plan published in 2000, paved the way to a
  full-scale modernization programme designed to
  totally transform the NHS and the way it cares
  for patients.
• At its core, the Plan envisages the continuing
  commitment to the founding principles of NHS.
  These are
• Quality care that
• Meets the needs of everyone
• Its free at the point of need.
• And is based on a patients clinical need and not
  their ability to pay.

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United Kingdom -National Health Scheme

• NHS is also encouraged to have private patient
  units within their hospitals to attract private
  patients.
• Private patients are those persons who fund
  themselves or who have health insurance cover.
• As an alternative to NHS, full indemnity health
  insurance policies are offered by private
  insurance companies.
• Here, the insured first had to consult with a
  General Practioner (GP) and then enter the
  Private Hospitals.

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United Kingdom -National Health Scheme

• The idea was a measure to reduce unnecessary
  visits to specialists.
• However, most group schemes waive the
  requirements of visit to a GP since they have
  their in house medical specialists
• Generally companies provide health care benefits
  to all the employees through group medical
  insurance policy.
• Some employers follow the self-funding concept by
  forming a claims administration company backed up
  by re-insurance to protect their retained losses.

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United Kingdom -National Health Scheme

• Full indemnity policies offered by private
  insurance companies are however, costly.
• Hence, budget plans have been introduced that
  offer limited cover and sometimes only to those
  treatments that are not available within a time
  limited.
• These plans have cash limit on certain types of
  treatment and an overall cash limit for the total
  value of any treatment.

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U. S.A- Managed Care

• A concept called Managed Care is quiet common
  in U.S.A
• Almost all plans have some sort of managed care
  programme to help control costs.
• It is a term used to describe the coordination of
  financing and delivery of health care.
• Its aim is to provide high quality healthcare for
  the lowest possible cost to the covered members

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U. S.A- Managed Care

• Its involves one or more of the following
• i.arrangements with selected health care
  providers to furnish a comprehensive set of
  healthcare services
• ii Standards for selection or networking of
  healthcare providers.
• iii.Programs for ongoing quality improvement and
  utilization review
• iv.Emphasis on preventive care to keep the
  covered members healthy.
• v.Incentives for covered members to use network
  healthcare providers.

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U. S.A- Managed Care

• Pre approval from insurance Company before
  hospitalization.
• Absence of pre-approval may disentitle
  hospitalization claim.

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U. S.A- Fee for Service Plans

• Traditional kind of Health care policy
• Insurance companies pay fees for services
  provided to the insured persons.
• Offers choices of hospitals and Doctors anywhere
  in the country.
• Insurer pays only part of Doctors fees and
  hospital bills.
• Insured Person pays
• a Monthly fee called premium
• a certain amount of money in a year called
  deductibles say about 250 per annum per person.
• A portion of the Bills called co-insurance . the
  ration can be 8020

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U. S.A- Fee for Service Plans

• Most of the plans have a cap the insured is
  required to pay for medical Bills in any one
  year. It can be as low as 1000 or as high as
  5000 inclusive of deductibles and co-insurance.
• Two kinds of covers basic and Major medical
• Basic cover or basic protection pays for
• a.Room Rent while in hospital.
• b.X-rays, prescribed medicines and the like.
• c.Doctors visits
• Cost of surgery, whether provided in or out of
  the hospital.

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U. S.A- Fee for Service Plans

• Major Medical insurance takes where the basic
  coverage leaves off. It covers the cost of long,
  high cost illness or injury
• Some policies combine basic and major medical
  insurance coverage into one plan called
  comprehensive plan.
• Most insurance plans pay only what they call a
  reasonable and customary fee.

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U. S.A- Health Maintenance Organisation

• Prepaid Health plans usually monthly premiums.
• Comprehensive care for self and family
• Doctors visit, hospital stays, emergency care,
  surgery, lab-tests,x-rays and therapy.
• Usually delivery of healthcare is through its own
  group practice or through doctoes/healthcare
  professionals under contract.
• Co-payment such as 5 for a doctors visit or 25
  for hospital treatment.

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U. S.A- Health Maintenance Organisation

• HMOs typically provide preventive care, such as
  office visits, immunizations well baby check up
  mammograms etc
• Members present a card like credit card at the
  Doctors office or hospital and avail of the
  services.
• Longer wait than under a fee for service plan

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U. S.A- Federal Health Insurance

• Medicare-Federal health Insurance Programme for
  Americans aged 65 and above.
• In two parts- Hospital Insurance known as Part A,
  supplementary Medical Insurance known as Part
  B-payments for doctors and related services.
• Medicare- provides health care for low income
  groups, age, disablement,dependence being the
  criteria.
• FEDERAL Programme administered by States. States
  decide eligibility and scope of health services
  offered.

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U. S.A- Federal Health Insurance

• Hospital Indemnity Insurance
• Limited Coverage
• Pays fixed amount for each day, upto a max. no.of
  days.

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U.S- Health Insurance Trends

• U.S spends 15 of G.D.P to Health care, a higher
  proportion than any other country
• Still 14 of the America population-14 million
  are without health insurance.
• Most of the rest of the population are left with
  inadequate and often expensive coverage.
• 51 million insured Americans spent more than
  one-tenth of their income on health care.
• 10.7 million insured Americans spent more than a
  quarter of their paycheck on healthcare.
• 6.8 million insured Americans spent more than
  one-third of their income on health care.

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U.S- Health Insurance Trends

• Almost one in five Americans reported postponing
  seeking medical care.
• Of these, more than one in three said the delay
  resulted in a temporary disability that included
  significant pain and suffering.
• And more than one in ten said the delay caused a
  long-term disability.
• Every 30 seconds, an American files for
  bankruptcy after having a health problem.
• About half of all personal bankruptcy cases due
  to medical reasons.

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U.S- Health Insurance Trends

• Among those whose illness led to bankruptcy more
  than three in four had insurance at onset of the
  illness.
• The majority of the medically bankrupt had been
  to college, had responsible jobs, and had been
  homeowners.
• Private purchase of Health insurance is declining
  due to high cost.
• Employer provided health insurance coverage is
  hardening as employers are refusing to bear the
  rising health insurance costs. Insurance
  Companies are refusing to grant cover at price
  affordable to employers.

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U.S- Health Insurance Trends

• From 2000 to 2004,premiums paid by workers rose
  nearly three times faster than the average U.S
  earnings.
• Government support via social security schemes
  are not available in all the states and wherever
  available the protections is partly.
• As a result the number of uninsured persons with
  inadequate protection are on the increase.
• As a direct consequence of the above, US citizens
  are exploring low cost,high quality avenues for
  medical treatment.
• Hence the increase in Medical Tourism to India.

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Indian Scenario

• National Rural Health Mission(2005-2012)
  document of the Indian Federal Government
  describes the Public Health as under-
• Public Health expenditure in India has declined
  from 1.3 of GDp in 1990 to 0.9 of GDP in 1999.
  The union Budgetary allocation for health is 1.3
  while the States Budgetary allocation is 5.5
• Union Government contribution to pubic health
  expenditure is 15 while states contribution
  about 85

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Indian Scenario

• Vertical Health and Family Welfare programme have
  limited synergisation at operational levels.
• Lack of community ownership of public health
  programmed impacts levels of efficiency,accountabi
  lity and effectives.
• Lack of integration of sanitation,hygiene,nutritio
  n and drinking water issues.
• There are striking inequalities.
• Only 10 Indians have some form of health
  insurance, mostly inadequate.

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Indian Scenario

• Hospitalised Indians spend on an average 58 of
  their total annual expenditure.
• Over 40 of hospitalised Indians borrow heavily
  or sell assets to cover expenses.
• Over 25 of hospitalized Indians fall below
  poverty line because of hospital expenses.
• In the recent past lots of research and study
  were carried out on the state of Indian Health
  and Indian Health Insurance. Several Insurance
  Journals including IRDA Journals, Insurance Post,
  Insurance Chronicle etc have brought out well
  researched articles on the subject.

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Indian Scenario

• These articles and Government of Indias document
  on the subject reveals starling facts about the
  state public health and the health insurance
  scenario in India. Some of them are
• 71 of all deaths are due to Cancer,Health
  attack, Stroke and renal failure.
• About 7o million people in India suffer from one
  form or other heart ailment.
• Out of this 10 need bypass surgery.
• Treatment for all these ailments costs between
  Rs. 3 Lakhs and Rs.5 Lakhs, which is beyond the
  reach of middle class population.

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Indian Scenario

• Span of life increasing.
• More serious diseases occur during old age I.e
  between 60 80years
• This age group is without any Insurance cover
  back up.
• No social Security scheme of Government for
  providing healthcare treatment.
• Tremendous escalation in the Cost of treatment
• People needs to make provision to manage the
  economies of scale needed to manage the health of
  the entire family. Hence the need for health
  insurance arises.

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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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Indian Scenario

• More concentration of medical facilities in urban
  areas than rural areas.
• ESIS and CGHS, a form of Insurance cover are not
  governed by Regulatory norms.
• Health Service provision by Railways and Army are
  not governed by Ministry of Health.
• The middleclass population of India is estimated
  to be around 350 millions.
• Out of this about 30 million people employed in
  Central and State Govt, PSUs are enjoying the
  facility of healthcare whilst in service.

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Indian Scenario

• Problem area is after retirement.
• Some charitable trusts or individuals try to
  contribute in the delivery of Health care to the
  needy people.
• Traditionally, Indians have been a close knit
  society. In cases of illness the earlier joint
  family system, tendered to give best of the
  comforts to the sick persons cost of giving
  such care was not an issue.
• With the change in times all that have changed.
• Expensive hospital,expensive treatments and
  medicines have come to stay.

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Indian Scenario

• It puts tremendous stress on family savings or
  sometimes wipe it out.
• But still only less than 1 of the teaming
  population of India is covered by some form of
  Insurance protection.
• The four Nationalised general insurance Companies
  introduced Mediclaim product in 1986.
• Underwent various changes sine then.
• Basically an indemnity based product for the
  reimbursement of eligible expenses under the
  terms and conditions of Coverage.

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Indian Scenario

• TPA- a recent development.
• Some of the private players are also into medical
  covers.
• Various plans under different ministries.
• Working employees get provider facility if the
  ailment is of primary or secondary care level.
  Tertiary care is a problem area.
• Retired personnel face worst situation.
• They no longer may be residing near own facility.
• Procedure delays in authorisation
• Tertiary care which is required at a higher level
  as the person gets older makes it more difficult.

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Indian Scenario

• Defense Ministry sought help from the General
  Insurance Industry for retired army personnel and
  their families.
• Some state government shave approached Insurers
  for administration of Health Schemes for their
  employees.
• According to one study, the NGO sector might be
  covering more than 5 of the population.
• Some of the important NGOs health care services
  are
• Child in Need Institute
• SEWA
• Street nit karni
• Parivar Seva snatha etc

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Indian Scenario

• Some concerns,issues and challenges
• Low level of awareness.
• Pre existing conditions and other exclusions.
• Up front payment to hospitals
• Reimbursement policies
• TPA recent development.
• Claims procedure
• Service standards.
• High Claims ratios
• Over utilisation of services.

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Indian Scenario

• Mostly Group /Corporate orientated.
• Inadequate information regarding health,ailments,
  procedures, treatment costs.
• Low level of medical penetration the population
  to bed ratio in India is 1 bed Per 1000 as
  against the WHO norm of 1 bed Per 300