Privatisation of Health Insurance[1]

8/12/2019 Privatisation of Health Insurance[1]

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1. INTRODUCTION

Insurance, in law and economics, is a form of risk management primarily used tohedge against the risk of a contingent, uncertain loss. Insurance is defined as theequitable transfer of the risk of a loss, from one entity to another, in exchange for

payment. An insurer is a company selling the insurance; an insured or policyholder isthe person or entity buying the insurance policy. The insurance rate is a factor used todetermine the amount to be charged for a certain amount of insurance coverage, calledthe premium. isk management, the practice of appraisingand controlling risk, hasevolved as a discrete field of study and practice.

The transaction involves the insured assuming a guaranteed and known relativelysmall loss in the form of payment to the insurer in exchange for the insurer!s promiseto compensate "indemnify# the insured in the case of a large, possibly devastating

loss. The insured receives a contract called the insurance policy which details theconditions and circumstances under which the insured will be compensated.

HISTORY:-In India, insurance has a deep$rooted history. It finds mention in the writings of %anu"%anusmrithi#, &agnavalkya "'harmasastra# and (autilya "Arthasastra#.The writingstalk in terms of pooling of resources that could be re$distributed in times of calamitiessuch as fire, floods, epidemics and famine. This was probably a pre$cursor to modernday insurance. Ancient Indian history has preserved the earliest traces of insurance inthe form of marine trade loans and carriers) contracts. Insurance in India has evolved

over time heavily drawing from other countries, *ngland in particular.

++ saw the advent of life insurance business in Indiawith the establishment ofthe -riental ife Insurance /ompany in /alcutta. This /ompany however failed in+01. In +23, the %adras *quitable had begun transacting life insurance business inthe %adras 4residency. +56 saw the enactment of the 7ritish Insurance Act and inthe last three decades of the nineteenth century, the 7ombay %utual "+5+#, -riental"+51# and *mpire of India "+35# were started in the 7ombay esidency. This era,however, was dominated by foreign insurance offices which did good business inIndia, namely Albert ife Assurance, oyal Insurance, iverpool and ondon 8lobeInsurance and the Indian offices were up for hard competition from the foreigncompanies.

In +3+1, the 8overnment of India started publishing returns of Insurance /ompaniesin India. The Indian ife Assurance /ompanies Act, +3+2 was the first statutorymeasure to regulate life business. In +32, the Indian Insurance /ompanies Act wasenacted to enable the 8overnment to collect statistical information about both life andnon$life business transacted in India by Indian and foreign insurers including

provident insurance societies. In +30, with a view to protecting the interest of theInsurance public, the earlier legislation was consolidated and amended by theInsurance Act, +30 with comprehensive provisions for effective control over the

activities of insurers.
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The Insurance Amendment Act of +396 abolished 4rincipal Agencies. :owever, therewere a large number of insurance companies and the level of competition was high.There were also allegations of unfair trade practices. The 8overnment of India,therefore, decided to nationalie insurance business.

An -rdinance was issued on +3th219Indian and foreign insurers in all. The I/ had monopoly till the late 36s when theInsurance sector was reopened to the private sector.

The istor! of "eneral insurance datesback to the Industrial evolution in the westand the consequent growth of sea$faring trade and commerce in the +5 thcentury. Itcame to India as a legacy of 7ritish occupation. 8eneral Insurance in India has itsroots in the establishment of Triton Insurance /ompany td., in the year +96 in/alcutta by the 7ritish. In +365, the Indian %ercantile Insurance td, was set up. This

was the first company to transact all classes of general insurance business.+395 sawthe formation of the 8eneral Insurance /ouncil, a wing of the Insurance Associaton ofIndia. The 8eneral Insurance /ouncil framed a code of conduct for ensuring fairconduct and sound business practices. In +3=, the Insurance Act was amended toregulate investments and set minimum solvency margins. The Tariff Advisory/ommittee was also set up then.

In +352 with the passing of the 8eneral Insurance 7usiness "?ationalisation# Act,general insurance business was nationalied with effect from + st


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The I'A opened up the market in August 2666 with the invitation for applicationfor registrations. Boreign companies were allowed ownership of up to 2=C. TheAuthority has the power to frame regulations under Dection ++1A of the InsuranceAct, +30 and has from 2666 onwards framed various regulations ranging fromregistration of companies for carrying on insurance business to protection of

policyholders) interests.

In 'ecember, 2666, the subsidiaries of the 8eneral Insurance /orporation of Indiawere restructured as independent companies and at the same time 8I/ was convertedinto a national re$insurer. 4arliament passed a bill de$linking the four subsidiariesfrom 8I/ in


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'isability insurance policies provide financial support in the event the

policyholder is unable to work because of disabling illness or inury. Itprovides monthly support to help pay such obligations as mortgagesand creditcards.

'isability overhead insuranceallows business owners to cover the overhead

expenses of their business while they are unable to work. Total permanent disability insurance provides benefits when a person is

permanently disabled and can no longer work in their profession, often takenas an adunct to life insurance.

Gorkers! compensationinsurance replaces all or part of a worker!s wageslostand accompanying medical expenses incurred because of a ob$related inury.

Casualt!:-

/asualty insurance insures against accidents, not necessarily tied to any specificproperty.

/rime insurance is a form of casualty insurance that covers the policyholder

against losses arising from the criminal actsof third parties. Bor example, acompany can obtain crime insurance to cover losses arising from theft orembelement.

4olitical risk insurance is a form of casualty insurance that can be taken out by

businesses with operations in countriesin which there is a risk that revolutionor otherpoliticalconditions will result in a loss.

%ro#ert!:-

4roperty insurance provides protection against risks to property, such as fire,theftorweatherdamage. This includes specialied forms of insurance such as fire insurance,flood insurance,earthquake insurance, home insurance, inland marine insurance or

boiler insurance.

Automobile insurance, known in the @(as motor insurance, is probably the

most common form of insurance and may cover both legal liability claimsagainst the driver and loss of or damage to the insured!s vehicle itself.Throughout the @nited Dtatesan auto insurance policy is required to legallyoperate a motor vehicle on public roads. In some urisdictions, bodily inury

compensation for automobile accident victims has been changed to a no$faultsystem, which reduces or eliminates the ability to sue for compensation but

provides automatic eligibility for benefits. /redit card companies insureagainst damage on rented cars.

o 'riving Dchool Insurance provides cover for any authoried driver

whilst undergoing tuition, cover also unlike other motor policiesprovides cover for instructor liability where both the pupil and drivinginstructor are equally liable in the event of a claim. .

*arthquake insurance is a form of property insurance that pays the

policyholder in the event of an earthquakethat causes damage to the property.%ost ordinary homeowners insurance policies do not cover earthquake

damage. %ost earthquake insurance policies feature a high deductible. ates
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depend on location and the probability of an earthquake, as well as theconstruction of the home. .

Blood insuranceprotects against property loss due to flooding. %any insurers

in the @.D. do not provide flood insurance in some portions of the country. Inresponse to this, the federal government created the?ational Blood Insurance

4rogramwhich serves as the insurer of last resort. :ome insurance or homeowners! insuranceE Dee F4roperty insuranceF.

andlord insurance is specifically designed for people who own properties

which they rent out. %ost house insurance cover in the @( will not be valid ifthe property is rented out therefore landlords must take out this specialist formof home insurance.

%arine insuranceand marine cargo insurance cover the loss or damage of

ships at sea or on inland waterways, and of cargo in transit, regardless of themethod of transit. Ghen the owner of the cargo and the carrier are separatecorporations, marine cargo insurance typically compensates the owner ofcargo for losses sustained from fire, shipwreck, etc., but excludes losses that

can be recovered from the carrier or the carrier!s insurance. %any marineinsurance underwriters will include Ftime elementF coverage in such policies,which extends the indemnity to cover loss of profit and other businessexpenses attributable to the delay caused by a covered loss.

)iabilit!:-

iability insurance is a very broad superset that covers legal claims against theinsured. %any types of insurance include an aspect of liability coverage. Bor example,a homeowner!s insurance policy will normally include liability coverage which

protects the insured in the event of a claim brought by someone who slips and falls onthe property; automobile insurance also includes an aspect of liability insurance thatindemnifies against the harm that a crashing car can cause to others! lives, health, or

property. The protection offered by a liability insurance policy is twofoldE a legaldefense in the event of a lawsuit commenced against the policyholder andindemnification "payment on behalf of the insured# with respect to a settlement orcourt verdict. iability policies typically cover only the negligence of the insured, andwill not apply to results of wilful or intentional acts by the insured.

4ublic liability insurance covers a business against claims should its

operations inure a member of the public or damage their property in some

way. 'irectors and officers liability insuranceprotects an organiation "usually a

corporation# from costs associated with litigation resulting from mistakesmade by directors and officers for which they are liable. In the industry, it isusually called F'-F for short.

*nvironmental liability insurance protects the insured from bodily inury,

property damage and cleanup costs as a result of the dispersal, release orescape of pollutants.

*rrors and omissions insuranceE Dee F4rofessional liability insuranceF under

Fiability insuranceF. 4rie indemnity insuranceprotects the insured from giving away a large prie

at a specific event. *xamples would include offering pries to contestants who
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can make a half$court shot at a basketball game, or a hole$in$one at a golftournament.

4rofessional liability insurance, also calledprofessional indemnity insurance,

protects insured professionals such as architectural corporation and medicalpractice against potential negligence claims made by their patientsJclients.

4rofessional liability insurance may take on different names depending on theprofession. Bor example, professional liability insurance in reference to themedical profession may be called malpractice insurance.?otaries public maytake out errors and omissions insurance (E&O). -ther potential *-

policyholders include, for example, real estate brokers, Insurance agents,home inspectors, appraisers, and website developers.

Credit

/redit insurance repays some or all of a loan when certain things happen to theborrower such as unemployment, disability, or death.

%ortgage insurance insures the lender against default by the borrower.

%ortgage insurance is a form of credit insurance, although the name creditinsurancemore often is used to refer to policies that cover other kinds of debt.

%any credit cards offer payment protection plans which are a form of credit

insurance.

Oter t!#es:-

Binancial loss insurance or 7usiness Interruption Insurance protects

individuals and companies against various financial risks. Bor example, abusinessmight purchase coverage to protect it from loss of salesif a fire in afactoryprevented it from carrying out its business for a time. Insurance mightalso cover the failure of a creditorto pay moneyit owes to the insured. Thistype of insurance is frequently referred to as Fbusiness interruption insurance.FBidelity bondsand surety bondsare included in this category, although these

products provide a benefit to a third party "the FobligeeF# in the event theinsured party "usually referred to as the FobligorF# fails to perform itsobligations under a contract with the obligee.

4ollution Insurance which consists of first$party coverage for contamination of

insured property either by external or on$site sources. /overage for liability to

third parties arising from contamination of air, water, or land due to thesudden and accidental release of haardous materials from the insured site.The policy usually covers the costs of cleanup and may include coverage forreleases from underground storage tanks. Intentional acts are specificallyexcluded.

4urchase insurance is aimed at providing protection on the products people

purchase. 4urchase insurance can cover individual purchase protection,warranties, guarantees, care plans and even mobile phone insurance. Duchinsurance is normally very limited in the scope of problems that are covered

by the policy. Title insurance provides a guarantee that title to real property is vested in the

purchaser andJor mortgagee, free and clear of liensor encumbrances. It is
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usually issued in conunction with a search of the public records performed atthe time of a real estatetransaction.

Travel insurance is an insurance cover taken by those who travel abroad,

which covers certain losses such as medical expenses, loss of personalbelongings, travel delay, personal liabilities, etc.

N&&D 'OR INSUR(NC&

There may be scenarios where the loss that we would incur due to some event wouldbe extensive and we would not be in a position to incur the losses. Day for e.g., theonly earning member in the family meets with an accident and is incapacitated fromgoing to work for = months, what would the family do for their survivalH These arethe cases where Insurance comes in handy. The insured person can claim an amountcorresponding to his disability osses and use the money to sustain his family until he

is fit to resume his ob.

%RINCI%)&S O' INSUR(NC&:-

%ain principles of InsuranceE

@tmost good faith

Indemnity

Dubrogation

/ontribution

Insurable Interest

4roximate /ause

Ut$ost ,ood 'ait

As a client it is your duty to disclose all material facts to the risk being covered. A materialfact is a fact which would influence the mind of a prudent underwriter in deciding whether toaccept a risk for insurance and on what terms. The duty to disclose operates at the time ofinception, at renewal and at any point mid term.

Inde$nit!

-n the happening of an event insured against, the Insured will be placed in the same monetaryposition that heJshe occupied immediately before the event taking place. In the event of aclaim the insured mustE

4rove that the event occurred

4rove that a monetary loss has occurred

Transfer any rights which heJshe may have for recovery from another source to the

Insurer, if heJshe has been fully indemnified.
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Subro"ation

The right of an insurer which has paid a claim under a policy to step into the shoes of theinsured so as to exercise in his name all rights he might have with regard to the recovery ofthe loss which was the subect of the relevant claim paid under the policy up to the amount of

that paid claim. The insurer)s subrogation rights may be qualified in the policy.

In the context of insurance subrogation is a feature of the principle of indemnity and thereforeonly applies to contracts of indemnity so that it does not apply to life assurance or personalaccident policies. It is intended to prevent an insured recovering more than the indemnity hereceives under his insurance "where that represents the full amount of his loss# and enables hisinsurer to recover or reduce its loss.

Contribution

The right of an insurer to call on other insurers similarly, but not necessarily equally, liable to

the same insured to share the loss of an indemnity payment i.e. a travel policy may haveoverlapping cover with the contents section of a household policy. The principle ofcontribution allows the insured to make a claim against one insurer who then has the right tocall on any other insurers liable for the loss to share the claim payment.

Insurable Interest

If an insured wishes to enforce a contract of insurance before the /ourts he must have aninsurable interest in the subect matter of the insurance, which is to say that he stands to

benefit from its preservation and will suffer from its loss. In non$marine insurances, theinsured must have insurable interest when the policy is taken out and also at the date of lossgiving rise to a claim under the policy.

%roi$ate Cause

An insurer will only be liable to pay a claim under an insurance contract if the loss that givesrise to the claim was proximately caused by an insured peril. This means that the loss must bedirectly attributed to an insured peril without any break in the chain of causation.

H&()TH INSUR(NC&:-

Healt insurancelike other forms of insuranceis a form of collectivismby means ofwhich people collectively pool their risk, in this case the risk of incurring medicalexpenses. The collective is usually publicly owned or else is organied on a non$profit

basis for the members of the pool, though in some countries health insurance poolsmay also be managed by for$profit companies. It is sometimes used more broadly toinclude insurance covering disabilityorlong$term nursing or custodial careneeds. Itmay be provided through a government$sponsored social insuranceprogram, or from

private insurance companies. It may be purchased on a group basis "e.g., by a firm tocover its employees# or purchased by an individual. In each case, the covered groupsor individuals pay premiums or taxes to help protect themselves from unexpectedhealthcare expenses. Dimilar benefits paying for medical expenses may also be

provided through social welfare programs funded by the government.
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7y estimating the overall risk of healthcare expenses, a routine finance structure "suchas a monthly premium or annual tax# can be developed, ensuring that money isavailable to pay for the healthcare benefits specified in the insurance agreement. The

benefit is administered by a central organiation such as a government agency, privatebusiness, or not$for$profit entity.

Definition:A policy that will pay specified sums for medical expenses or treatments.:ealth policies can offer many options and vary in their approaches to coverage.


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.TH&ORY ON %RI/(TIS(TION O' H&()TH

INSUR(NC&:-

%RI/(TIS(TION O' INSUR(NC&:-

%rivati0ation is the incidence or process of transferring ownership of a business,enterprise, agency or public service from thepublic sector"government# to theprivatesector "FbusinessF#. In a broader sense, privatiation refers to transfer of anygovernment function to the private sector $ including governmental functions likerevenue collection and law enforcement.K+L

The term FprivatiationF also has been used to describe two unrelated transactions.The first is a buyout, by the maority owner, of all shares of a public corporation or

holding company!s stock, privatiing a publicly traded stock. The second is ademutualiation of a mutual organiation or cooperative to form a oint stockcompany.

The privatiation of insurance and constitution I'A envisage improving theperformance of the state insurance sector in the country by increasing benefits fromcompetition in terms of lowered costs and increased level of consumer satisfaction.:owever, the implications of the entry of private insurance companies in health sectorare not very clear. The recent policy changes will have been far reaching and wouldhave maor implications for the growth and development of the health sector. Thereare several contentious issues pertaining to development in this sector and these needcritical examination. These also highlight the critical need for policy formulation andassessment. @nless privatiation and development of health insurance is managedwell it may have negative impact of health care especially to a large segment of

population in the country. If it is well managed then it can improve access to care andhealth status in the country very rapidly.

Dince the liberaliation of the insurance industry in 2666 India has been promotingprivate players to enter the health insurance sector. Gith the enactment of the I'A,the industry now has a regulatory framework to protect the interests of policy holders.This was followed by another landmark decision in 266+ establishing Third 4arty

Administrators "T4As# to facilitate speedier expansion by providing anadministrativeM intermediary structure to the insurance industry. There are, at present,+2 general insurance companies and 29 T4As. The total number of insurance holdersis reported to be ++2 lakh with almost 36C enrolled with the four public sectorinsurance companies. These four companies collected a premium of s ++2.=1 croreunder %ediclaim. -f the +62 lakh enrolled by these four companies "excluding 8I/,*mployment 8uarantee /orporation, AI/#, which are permitted to market healthinsurance products, %ediclaim alone accounts for 35 lakh persons, the rest beingenrolled under other insurance
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H&()TH INSUR(NC& &'OR& 1221:-

:ealth care facilities and personnel increased substantially between the early +396sand early +36s, but because of fast population growth, the number of licensedmedical practitioners per +6,666 individuals had fallen by the late +36s to three per

+6,666 from the +3+ level of four per +6,666. In +33+ there were approximately tenhospital beds per +6,666 individuals.

4rimary health centers are the cornerstone of the rural health care system. 7y +33+,India had about 22,166 primary health centers, ++,266 hospitals, and 25,166dispensaries. These facilities are part of a tiered health care system that funnels moredifficult cases into urban hospitals while attempting to provide routine medical care tothe vast maority in the countryside. 4rimary health centers and subcenters rely ontrained paramedics to meet most of their needs.

The main problems affecting the success of primary health centers are thepredominance of clinical and curative concerns over the intended emphasis onpreventive work and the reluctance of staff to work in rural areas. In addition, theintegration of health services with family planning programs often causes the local

population to perceive the primary health centers as hostile to their traditionalpreference for large families. Therefore, primary health centers often play anadversarial role in local efforts to implement national health policies.

According to data provided in +33 by the %inistry of :ealth and Bamily Gelfare,the total number of civilian hospitals for all states and union territories combined was+6,+95. In +33+ there were a total of ++,666 hospital and health care facilities beds.

The geographical distribution of hospitals varied according to local socioeconomicconditions. In India!s most populous state, @ttar 4radesh, with a +33+ population ofmore than +03 million, there were 509 hospitals as of +336. In (erala, with a +33+

population of 23 million occupying an area only one$seventh the sie of @ttar4radesh, there were 2,690 hospitals. In light of the central government!s goal of healthcare for all by 2666, the uneven distribution of hospitals needs to be reexamined.4rivate studies of India!s total number of hospitals in the early +336s were moreconservative than official Indian data, estimating that in +332 there were 5,066hospitals. -f this total, nearly 1,666 were owned and managed by central, state, orlocal governments

Another 2,666, owned and managed by charitable trusts, received partial support fromthe government, and the remaining +,066 hospitals, many of which were relativelysmall facilities, were owned and managed by the private sector. The use of state$of$the$art medical equipment, often imported from Gestern countries, was primarilylimited to urban centers in the early +336s. A network of regional cancer diagnosticand treatment facilities was being established in the early +336s in maor hospitalsthat were part of government medical colleges. 7y +332 twenty$two such centerswere in operation. %ost of the +,066 private hospitals lacked sophisticated medicalfacilities, although in +332 approximately +2 percent possessed state$of$the$artequipment for diagnosis and treatment of all maor diseases, including cancer. Thefast pace of development of the private medical sector and the burgeoning middle

class in the +336s have led to the emergence of the new concept in India ofestablishing hospitals and health care facilities on a for$profit basis.


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7y the late +36s, there were approximately +2 medical colleges$$roughly threetimes more than in +396. These medical colleges in +35 accepted a combined annualclass of +1,+== students. 'ata for +35 show that there were 026,666 registeredmedical practitioners and 2+3,066 registered nurses. Narious studies have shown thatin both urban and rural areas people preferred to pay and seek the more sophisticated

services provided by private physicians rather than use free treatment at public

H&()TH INSUR(NC& SINC& 1221:-

I? *D4-?D* to a fiscal and balance of payments crisis in +33+, India launched aprogramme of economic policy reforms. The programme, consisting of stabiliations$cum$structural adustment measures, was put in place with a view to attainmacroeconomic stability and higher rates of economic growth.

Dome rethinking on economic policy had begun in the early +36s, by when thelimitations of the earlier strategy based upon import substitution, public sectordominance and extensive government control over private sector activity had becomeevident, but the policy response was limited only to liberaliing particular aspects ofthe control system.

7y contrast, the reforms in the +336s in the industrial, trade, and financial sectors,among others, were much wider and deeper. As a consequence, they have contributedmore meaningfully in attaining higher rates of growth. India has gone through the firstdecade of her reform process. :ence, an assessment of what has been achieved so far

and what remains on the reform agenda is in order.

Bour different governments were in office during the +336s > the /ongressgovernment which initiated the reforms in +33+, the @nited Bront coalition "+33=$3#which continued the process, the 7


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-utlook E$

%-* than a decade of opening of the economy has produced new dynamism, mostdramatically in the information technology sector, but in others as well.

The new technologies "especially information technology and biotechnology# givenew opportunities for economic and social development.

The reforms implemented so far have helped India attain =$plus per cent growth,however should India be able to implement these remaining reforms and re$orientgovernmental spending away from inessential expenditures and towards high priorityareas of health, education and infrastructure development, then it is very likely that itwould attain and sustain even higher rates of economic growth.

If India does grow consistently at around 5$ per cent per year, this is likely to pushup its domestic savings in the next few years.

7esides, stronger growth should attract more foreign savings, especially foreign directinvestment, and thus raise the overall investment rate.

N&&D 'OR H&()TH INSUR(NC& IN INDI( :-

:ealth insurance means the financial protection against health risks. The need ofhealth insurance arises when there are long bills to be paid in case of an unexpectedevent. It helps when there is shortage of funds for the medical treatment. -ne can getthe medical and financial protection in such a situation.

Apollo %unich, a oint venture between the Apollo 8roup of :ospitals and %unichhealth, is a pure health insurance company that works using the expertise of its

partners, who are leaders in their respective fields. Its products are intelligentlydesigned looking into the healthcare needs of one and all in India. The healthinsurance provides coverage against spiraling medical costs and guarantees yousecured future.

In addition, Apollo %unich plans not only provide coverage to Qcurative) needs butalso to Qpreventive) needs so that clients can get the complete health cover. Bor this

purpose, Apollo %unich offers three value$added services along with each product.

These are cashless hospitaliation, healthline and health risk assessment tool.

Apollo %unich plans incorporate several unique features such as life$long renewal,portability etc. so that the health needs of all individuals can be considered.

R&CO33&DI(TION Y CO33ITT&& ON INSUR(NC&

S&CTOR:-

Although Indian markets were privatied and opened up to foreign companies in a?umber of sectors in +33+, insurance remained out of bounds on both counts. The

8overnment wanted to proceed with caution. Gith pressure from the opposition, the


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To make recommendations on regulation and supervision of the insurance

sector in India.

To make recommendations on the role and functioning of surveyors,

intermediaries like agents etc. in the insurance sector.

To make recommendations on any other matter which are relevant for

development of the insurance industry in IndiaH

Te co$$ittee $ade a nu$ber of i$#ortant and far-reacin" reco$$endations.

The I/ should be selective in the recruitment of I/ agents. Train these

people after the identification of training needs.

The committee suggested that the Bederation of Insurance Institute, %umbai

should start new courses and diploma courses for intermediaries of theinsurance sector

It suggested that settlement of claims were to be done within a specific time

framewithout delay.

The committee has several recommendations on product pricing,vigilance,systems and procedures, improving customer service and use of technology.

It also made a number of recommendations to alter the existing structure of the

I/and the 8I/.

The committee insisted that the insurance companies should pay special

attention to the rural insurance business..

The committee suggested somenorms relating to promoters) equity and equity

capital by foreign companies, etc.

%rotection of te interest of #olic! olders:

I'A has the responsibility of protecting the interest of insurance

policyholders. Towards achieving this obective, the Authority has taken thefollowing stepsE

I'A has notified 4rotection of 4olicyholders Interest egulations 266+ to

provide forE policy proposal documents in easily understandable language;claims procedure in both life and non$life; setting up of grievance redressalmachinery; speedy settlement of claims; and policyholders! servicing. Theegulation also provides for payment of interest by insurers for the delay insettlement of claim.

The insurers are required to maintain solvency margins so that they are in a

position to meet their obligations towards policyholders with regard topayment of claims.

It is obligatory on the part of the insurance companies to disclose clearly the

benefits, terms and conditions under the policy. The advertisements issued bythe insurers should not mislead the public.

All insurers are required to set up proper grievance redress machinery in their

head office and at their other offices.

The Authority takes up with the insurers any complaint received from the

policyholders in connection with services provided by them under the

insurance contract.
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%RO)&3S '(C&D Y H&()TH INSUR(NC&:-

The main problems affecting the success of primary health centers are thepredominance of clinical and curative concerns over the intended emphasis onpreventive work and the reluctance of staff to work in rural areas. In addition, the

integration of health services with family planning programs often causes the localpopulation to perceive the primary health centers as hostile to their traditionalpreference for large families. Therefore, primary health centers often play anadversarial role in local efforts to implement national health policies.

According to data provided in +33 by the %inistry of :ealth and Bamily Gelfare,the total number of civilian hospitals for all states and union territories combined was+6,+95. In +33+ there was a total of ++,666 hospital and health care facilities beds.The geographical distribution of hospitals varied according to local socioeconomicconditions. In India!s most populous state, @ttar 4radesh, with a +33+ population ofmore than +03 million, there were 509 hospitals as of +336. In (erala, with a +33+

population of 23 million occupying an area only one$seventh the sie of @ttar4radesh, there were 2,690 hospitals. In light of the central government!s goal of healthcare for all by 2666, the uneven distribution of hospitals needs to be reexamined.4rivate studies of India!s total number of hospitals in the early +336s were moreconservative than official Indian data, estimating that in +332 there were 5,066hospitals. -f this total, nearly 1,666 were owned and managed by central, state, orlocal governments.

Another 2,666, owned and managed by charitable trusts, received partial support fromthe government, and the remaining +,066 hospitals, many of which were relatively

small facilities, were owned and managed by the private sector. The use of state$of$the$art medical equipment, often imported from Gestern countries, was primarilylimited to urban centers in the early +336s. A network of regional cancer diagnosticand treatment facilities was being established in the early +336s in maor hospitalsthat were part of government medical colleges. 7y +332 twenty$two such centerswere in operation. %ost of the +,066 private hospitals lacked sophisticated medicalfacilities, although in +332 approximately +2 percent possessed state$of$the$artequipment for diagnosis and treatment of all maor diseases, including cancer. Thefast pace of development of the private medical sector and the burgeoning middleclass in the +336s have led to the emergence of the new concept in India ofestablishing hospitals and health care facilities on a for$profit basis.

7y the late +36s, there were approximately +2 medical colleges$$roughly threetimes more than in +396. These medical colleges in +35 accepted a combined annualclass of +1,+== students. 'ata for +35 show that there were 026,666 registeredmedical practitioners and 2+3,066 registered nurses. Narious studies have shown thatin both urban and rural areas people preferred to pay and seek the more sophisticatedservices provided by private physicians rather than use free treatment at public healthcenters.

%ROC&SS O' H&()TH INSUR(NC&:-

A health insurance policy is a contract between an insurance company and anindividual or his sponsor "e.g. an employer#. The contract can be renewable annually
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or monthly. The type and amount of health care costs that will be covered by thehealth insurance company are specified in advance, in the member contract orF*vidence of /overageF booklet. The individual insured person!s obligations may takeseveral formsE

%re$iu$:The amount the policy$holder or his sponsor "e.g. an employer#pays to the health plan each month to purchase health coverage.

Deductible:The amount that the insured must pay out$of$pocketbefore thehealth insurer pays its share. Bor example, a policy$holder might have to pay aO966 deductible per year, before any of their health care is covered by thehealth insurer. It may take several doctor!s visits or prescription refills beforethe insured person reaches the deductible and the insurance company starts to

pay for care. Co-#a!$ent:The amount that the insured person must pay out of pocket

before the health insurer pays for a particular visit or service. Bor example, aninsured person might pay a O19 co$payment for a doctor!s visit, or to obtain a

prescription. A co$payment must be paid each time a particular service isobtained.

Coinsurance:Instead of, or in addition to, paying a fixed amount up front "aco$payment#, the co$insurance is a percentage of the total cost that insured

person may also pay. Bor example, the member might have to pay 26C of thecost of a surgery over and above a co$payment, while the insurance company

pays the other 6C. If there is an upper limit on coinsurance, the policy$holdercould end up owing very little, or a great deal, depending on the actual costs ofthe services they obtain.

&clusions: ?ot all services are covered. The insured person is generally

expected to pay the full cost of non$covered services out of their own pocket. Covera"e li$its:Dome health insurance policies only pay for health care up

to a certain dollar amount. The insured person may be expected to pay anycharges in excess of the health plan!s maximum payment for a specific service.In addition, some insurance company schemes have annual or lifetimecoverage maximums. In these cases, the health plan will stop payment whenthey reach the benefit maximum, and the policy$holder must pay all remainingcosts.

Out-of-#oc+et $ai$u$s: Dimilar to coverage limits, except that in this

case, the insured person!s payment obligation ends when they reach the out$of$pocket maximum, and the health company pays all further covered costs. -ut$

of$pocket maximums can be limited to a specific benefit category "such asprescription drugs# or can apply to all coverage provided during a specificbenefit year.

Ca#itation:An amount paid by an insurer to a health care provider, for which

the provider agrees to treat all members of the insurer. In-Net4or+ %rovider: "@.D. term# A health care provider on a list of

providers preselected by the insurer. The insurer will offer discountedcoinsurance or co$payments, or additional benefits, to a plan member to see anin$network provider. 8enerally, providers in network are providers who have acontract with the insurer to accept rates further discounted from the Fusual andcustomaryF charges the insurer pays to out$of$network providers.

%rior (utori0ation:A certification or authoriation that an insurer providesprior to medical service occurring. -btaining an authoriation means that the
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insurer is obligated to pay for the service, assuming it matches what wasauthoried. %any smaller, routine services do not require authoriation.K3L

lanation of enefits: A document sent by an insurer to a patient

explaining what was covered for a medical service, and how they arrived atthe payment amount and patient responsibility amount.K+6L

4rescription drug plans are a form of insurance offered through some employerbenefit plans in the @.D., where the patient pays a copayment and the prescriptiondrug insurance part or all of the balance for drugs covered in the formulary of the

plan.

Dome, if not most, health care providers in the @nited Dtates will agree to bill theinsurance company if patients are willing to sign an agreement that they will beresponsible for the amount that the insurance company doesn!t pay. The insurancecompany pays out of network providers according to Freasonable and customaryFcharges, which may be less than the provider!s usual fee. The provider may also have

a separate contract with the insurer to accept what amounts to a discounted rate orcapitation to the provider!s standard charges. It generally costs the patient less to usean in$network provider.

DOCU3&NTS 'OR T(5IN, H&()TH INSUR(NC& (R& (S

'O))O6S:-

'or Healt Insurance

All documentation must be included for the application to be considered complete.Applicant ?ame Application 'ate

%ROO' O' ID&NTITY7D(T& O' IRTH (ND R&SID&NC&:

&ou must show -?* of the documents listed in both categories to see if youare eligible for health insurance. 'iscuss this with the person helping you with yourapplication. 4hotocopies are acceptable.

ID&NTITY7D(T& O' IRTH R&SID&NCY7HO3& (DDR&SS

'rivers licenseJ-fficial 4hoto identification I' card with address

4assport

4ostmarked envelope, postcard, or magaine label with name and date

7irth certificate 'rivers license issued within past = months

7aptismalJother religious certificate

@tility bill "gas, electric, cable#, bank statement, or correspondence

from a government agency which contains name and home address

-fficial Dchool records "not a 4.-. 7ox#Adoption records

etterJleaseJrent receipt with home address from landlord

-fficial :ospitalJdoctor birth records

4roperty tax records or mortgage statement

?aturaliation certificate

%arriage records
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%ROO' O' CURR&NT INCO3&:

&ou must provide a letter, written statement, or copy of check or stubs, from theemployer, person or agency providing the income. Dubmit all that apply. 4rovide themost recent proof of income before taxes. The proof must be dated, include theemployees name and show gross income for the pay period.

DOCU3&NT(TION CH&C5)IST

'or Healt Insurance

D&%&ND&NT C(R& COSTS:

Gritten statement from day care center or other childJadult care provider /anceledchecks or receipts

%ROO' O' H&()TH INSUR(NC&:

Insurance policy /ertificate of Insurance Insurance cardTermination etter -ther

RO)& O' DI''&R&NT R&,U)(TOR:-

The government has established Insurance egulatory and 'evelopment Authority"I'A# which is the statutory body for regulation of the whole insurance industry.They would be granting licenses to private companies and will regulate the insurance

business. As the health insurance is in its very early phase, the role of I'A will bevery crucial. They have to ensure that the sector develops rapidly and the benefit ofthe insurance goes to the consumers. 7ut it has to guard against the ill effects of

private insurance. The main danger in the health insurance business we see is that the

private companies will cover the risk of middle class who can afford to pay highpremiums. @nregulated reimbursement of medical costs by the insurance companieswill push up the prices of private care. Do large section of India!s population who arenot insured will be at a relative disadvantage as they will, in future, have to pay muchmore for the private care. Thus checking increase in the costs of medical care will bevery important role of the I'A.

Decondly, I'A will need to evolve mechanisms by which it puts some kind of statuein place that private insurance companies do not skim the market by focusing on richand upper$ class clients and in the process neglect a maor section of India!s

population. They must ensure that companies develop products for such poorer

segments of the community and possibly build an element of cross$subsidy for them.8overnment companies can take the lead in this matter and catalye new products forthe poor and lower middle class as they have done in the past.

Thirdly the regulators should also encourage ?8-s, /o$operatives and other

collectives to inter into the health insurance business and develop products for the

poor as well as for the middle class employed in the services sector such as education,

transportation, retailing etc and the self employed. This could be run as no$profit$no

loss basis similar to the scheme pioneered by Indian %edical Association for its

members. Dpecial licenses will have to be given to ?8- for this purpose without

insisting on the minimum capital norms, which are for commercial insurance

companies.


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IRD( ,UID&)IN&SS 'OR H&)TH INSUR(NC&:-

I'A guidelines issued also make it clear that the renewal of a health insurance

policycannot be reected on arbitrary grounds. As per I'A, the only exception for

reection of a health policy renewal could be fraud or misrepresentation of facts.

?*G 8@I'*I?*D issued by the Insurance egulatory and 'evelopment Authority

"I'A#, on Thursday "April 2#, made it mandatory for an insurance company to

renew a health insurance policy, irrespective of the payments already made out in

claims. These new rules will come in handy for the old and those with medical

conditions as they faced a lot of problem while renewing their health policies.

I'A has made it clear that delays of up to +9 days from the renewal date will also

need to be condoned by the insurers and they have to cover benefits given for pre$

existing diseases.

Te ne4 "uidelines sall be a##licable fro$ 8une 1* 992.

I'A guidelinesissued today also make it clear that the renewal of a health insurance

policycannot be reected on arbitrary grounds. As per I'A, the only exception for

reection of a health policy renewal could be fraud or misrepresentation of facts.

I'A also stated that a customer should not be compelled or forced to shift from one

health insurance policy to another insurance product, except where the policy was

being upgraded or discontinued with permission from the authority.

It has also asked the insurance companies to provide complete details about terms of

renewing a health policy. I'A said that the purpose of these guidelines was to

enable the consumer to take an informed decision.

The regulatory body also told the insurance companies to state in clear terms if there

are any changes in the payment of premium by the consumer.

'&(TUR&S O' H&()TH INSUR(NC&:-

Brom the above discussion, five features that characterie the health insurance systemin India emergeE

+. 7y and large, the system offers traditional indemnity, under which the insured firstpay the amount and then seek reimbursement. @nder indemnity, all known diseases orhealth conditions are excluded and therefore such policies typically have a largenumber of exclusions. This also means that those most in need of insurance, i.e. thesick, get excluded for any financial risk protection against the diseases they aresuffering from.

2. It is a fee$for$service$based payment system. Duch a system of payment isadvantageous for the provider since he bears no risk for the prices he can charge for
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Te advanta"es of individual ealt care insurance :-

S Custo$i0ed ealt care::er you have direct control over your policy and its

benefits, unlike in group coverage. &ou can negotiate to have certain provisionsincluded or excluded in your policy, and you can choose your deductible amount andco$payments.

S Coosin" !our doctor:-Delecting a health care provider including doctors isanother advantage of an individual health care policy. The biggest disadvantage is the

price. Individual policies can be very expensive, especially if you have high riskpotential or pre$existing health problems. 7efore issuing an individual health careinsurance policy, the insurance company usually runs a background check on your

personal health history. It is unwise to try to hide any pre$existing conditions from

your insurer.

The main advantages of health insurance areE

'ecreasing of medical costs

*asy access to routine medical checkups and health care

eduction of trips) costs to specialist doctors

The possibility of hospitaliation and treatment

R&(SONS 'OR %OOR %&NTR(TION O' H&()THINSUR(NC&:-

4enetration of health insurance has been slow and halting, despite the Qhuge market)estimated to range between s5.9M26 crores. Dome reasons that explain for the slowexpansion of health insurance in the country are as followsE

1. )ac+ of re"ulations and control on #rovider beaviour

The unregulated environment and a near total absence of any form of control overproviders regarding quality, cost or22 Binancing and 'elivery of :ealth /areDervices in India data$sharing, makes it difficult for proper underwriting and actuarial

premium setting. This puts the entire risk on the insurer as there could be theproblems of moral haard and induced demand. %ost insurance companies aretherefore wary about selling health insurance as they do not have the data, theexpertise and the power to regulate the providers. Geak monitoring systems forchecking fraud or manipulation by clients and providers, add to the problem.

. Unaffordable #re$iu$s and i" clai$ ratios

Increased use of services and high claim ratios only result in higher premiums. Theinsurance agencies in the face of poor information also tend to overestimate the riskand fix high premiums. 7esides, the administrative costs are also high over 06C, i.e.

+9C commission to agent; 9.9C administrative fee to T4A; own administrative cost


26/62

26C, etc. 4atients also experience problems in getting their reimbursements includinglong delays to partial reimbursements.

. Reluctance of te ealt insurance co$#anies to #ro$ote teir #roducts and

lac+ of innovation

Apart from high claim ratios, the non$exclusivity of health insurance as a product isanother reason. In India, an insurance company cannot sell non$life as well as lifeinsurance products. Dince insurance against fire or natural disaster or theft is far more

profitable, insurance companies tend to compete by adding low incentive such aspremium health insurance products to important clients, cross$subsidiing theresultant losses. Gith a view to get the non$life accounts, insurance companies tend to

provide health insurance coverat unviable premiums. Thus, there is total lack of anyeffort to promote health insurance through campaigns regarding the benefits of healthinsurance and lack of innovation to make the policies suitable to the needs of the

people.

;. Too $an! eclusions and ad$inistrative #roceduresApart from delays in settlement of claims, non$transparent procedures make itdifficult for the insured to know about their entitlements, because of which the insureris able to, on one stratagem or the other, reduce the claim amount, thusdemotivatingthe insured and deepening mistrust. The benefit package also needs to bemodified to suit the needs of the insured. *xclusions go against the logic of coveringhealth risks, though, there can be a system where the existing conditions can beexcluded for a time period>one or two years but not forever. 7esides, the systemsentail equity implications.

. Co-variants ris+s

:igh prevalence levels of risks that could affect a maority of the people at the same

time could make the enterprise unviable as there would be no gains in forming largepools. The result could be higher premiums. In India this is an important factor due tothe large load of communicable diseases. A study of claims "7hat 2662# found that22C of total claims were for communicable diseases.

SCH&3&S UND&R H&()TH INSUR(NC&:-

Te eistin" sce$es can be cate"ori0ed as:

"+# Noluntary health insurance schemes or private$for$profit schemes;"2# *mployer$based schemes;

"0# Insurance offered by ?8-s J community based health insurance, and"1# %andatory health insurance schemes or government run schemes


27/62

"?amely *DID, /8:D#.

/oluntar! ealt insurance sce$es or #rivate-for-#rofit sce$es:-

In private insurance, buyers are willing to pay premium to an insurance company that

pools people with similar risks and insures them for health expenses. The keydistinction is that the premiums are set at a level, which provides a profit to third partyand provider institutions. 4remiums are based on an assessment of the risk status ofthe consumer "or of the group of employees# and the level of benefits provided, ratherthan as a proportion of the consumer)s income. In the public sector, the 8eneralInsurance /orporation "8I/# and its four subsidiary companies "?ational Insurance/orporation, ?ew India Assurance /ompany, -riental Insurance /ompany and@nited Insurance /ompany# and the ife Insurance /orporation "I/# of India

provide voluntary insurance schemes. There are exclusions and pre$existing diseaseclauses. 4remiums are calculated based on age and the sum insured, which in turnvaries from s +9 666 to s 9 66 666. In +339J3= about half a million %ediclaim

policies were issued with about +. million beneficiaries"(rause 4atrick 2666#.Another scheme, namely the Jan Arogya Bima policy specifically targets the poor

population groups. It also covers reimbursement of hospitaliation costs up to s 9666 annually for an individual premium of s +66 a year. The same exclusionmechanisms apply for this scheme as those under the %edi$claim policy. A familydiscount of 06C is granted, but there is no group 'iscount or agent commission.:owever, like the %ediclaim, this policy too has had only limited success. The Jan

Arogya Bima Dcheme had only covered 166 666 individuals by +335.

Self-&$#lo!ed 6o$en?s (ssociation @S&6(A* ,uBaratE

This scheme established in +332, provides health, life and assets insurance to womenworking in the informal sector and their families. The enrolment in the year 2662 was30 666. This scheme operates in collaboration with the ?ational Insurance /ompany"?I/#. @nder D*GA)s most popular policy, a premium of s 9 per individual is paid

by the woman for life, health and assets insurance. At an additional payment of s 99,her husband too can be covered. s 26 per member is then paid to the ?ationalInsurance /ompany "?I/# which provides coverage to a maximum of s 2 666 per

person per year for hospitaliation. After being hospitalied at a hospital of one)schoice "public or private#, the insurance claim is submitted to D*GA. The

responsibility for enrolment of members, for processing and approving of claims restswith D*GA. ?I/ in turn receives premiums from D*GA annually and pays them alumpsum on a monthly basis for all claims reimbursed.

Social Insurance or $andator! ealt insurance sce$es or "overn$ent

run sce$es @na$el! te &SIS* C,HSA

Docial insurance is an earmarked fund set up by government with explicit benefits inreturn for payment. It is usually compulsory for certain groups in the population andthe premiums are determined by income "and hence ability to pay# rather than relatedto health risk. The benefit packages are standardied and contributions are earmarked

for spending on health services The government$run schemes include the /entral


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8overnment :ealth Dcheme "/8:D# and the *mployees Dtate Insurance Dcheme"*DID#.

Insurance offered b! N,Os 7 co$$unit!-based ealt insurance

/ommunity$based funds refer to schemes where members prepay a set amount eachyear for specified services. The premia are usually flat rate "not income$related# andtherefore not progressive. %aking profit is not the purpose of these funds, but ratherimproving access to services. -ften there is a problem with adverse selection becauseof a large number of high$risk members, since premiums are not based on assessmentof individual risk status. *xemptions may be adopted as a means of assisting the poor,

but this will also have adverse effect on the ability of the insurance fund to meet thecost of benefits./ommunity$based schemes are typically targeted at poorer populations living incommunities, in which they are involved in defining contribution level and collectingmechanisms, defining the content of the benefit package, and J or allocating the

schemes, financial resources Duch schemes are generally run by trust hospitals ornongovernmental organiations "?8-s#. The benefits offered are mainly in terms of

preventive care, though ambulatory and in$patient care is also covered. Duch schemestend to be financed through patient collection, government grants and donations.Increasingly in India, /7:I schemes are negotiating with the for$profit insurers forthe purchase of custom designed group insurance policies. :owever, the coverage ofsuch schemes is low, covering about 06$96 million indicates that many community$

based insurance schemes suffer from poor design and management, fail to include thepoorest$of$the poor, have low membership and require extensive financial support.-ther issues relate to sustainability and replication of such schemes.

Central ,overn$ent Healt Sce$e @C,HSA

Dince +391, all employees of the /entral 8overnment "present and retired#; someautonomous and semi$government organiations, %4s, udges, freedom fighters and

ournalists are covered under the /entral 8overnment :ealth Dcheme "/8:D#. Thisscheme was designed to replace the cumbersome and expensive system ofreimbursements (GOI, !!"). It aims at providing comprehensive medical care to the/entral 8overnment employees and the benefits offered include all outpatientfacilities, and preventive and promotive care in dispensaries. Inpatient facilities in

government hospitals and approved private hospitals are also covered. This scheme ismainly funded through /entral 8overnment funds, with premiums ranging from s+9 to s +96 per month based on salary scales. The coverage of this scheme hasgrown substantially with provision for the non$allopathic systems of medicine as wellas for allopathy. 7eneficiaries at this moment are around 102 666, spread across 22cities. The /8:D has been criticied from the point of view of quality andaccessibility. Dubscribers have complained of high out$of$pocket expenses due toslow reimbursement and incomplete coverage for private health care "as only 6C ofcost is reimbursed if referral is made to private facility when such facilities are notavailable with the /8:D#.

&$#lo!ee and State Insurance Sce$e @&SISA


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The enactment of the *mployees Dtate Insurance Act in +31 led to formulation of the*mployees Dtate Insurance Dcheme. This scheme provides protection to employeesagainst loss of wages due to inability to work due to sickness, maternity, disabilityand death due to employment inury. It offers medical and cash benefits, preventiveand promotive care and health education. %edical care is also provided to employees

and their family members without fee for service. -riginally, the *DID schemecovered all power$using non$seasonal factories employing +6 or more people. ater, itwas extended to cover employees working in all non$power using factories with 26 ormore persons. Ghile persons working in mines and plantations, or an organiationoffering health benefits as good as or better than *DID, are specifically excluded.Dervice establishments like shops, hotels, restaurants, cinema houses, road transportand news papers printing are now covered. The monthly wage limit for enrolment inthe *DID is s. = 966, with a prepayment contribution in the form of a payroll tax of+.59C by employees, 1.59C of employees! wages to be paid by the employers, and+2.9C of the total expenses are borne by the state governments. The number of

beneficiaries is over 00 million spread over =26 *DI centres across states. @nder the

*DID, there were +29 hospitals, 12 annexes and + 196 dispensaries with over 20 666beds facilities. The scheme is managed and financed by the *mployees DtateInsurance /orporation "a public undertaking# through the state governments, withtotal expenditure of s 0 066 million or s 166J$ per capita insured person. The *DID

programme has attracted considerable criticism. A report based on patient surveysconducted in 8uarat found that over half of those covered did not seek care from*DID facilities. @nsatisfactory nature of *DID services, low quality drugs, longwaiting periods, impudent behaviour of personnel, lack of interest or low interest on

part of employees and low awareness of *DI procedures, were some of the reasonscited.

Healt insurance initiatives b! State ,overn$ents

In the recent past, various state governments have begun health insurance initiatives.Bor instance, the Andhra 4radesh government is implementing the Aarogya akshaDcheme since 2666, with a view to increase the utiliation of permanent methods offamily planning by covering the health risks of the acceptors. All people living belowthe poverty line and those who accept permanent methods of family planning areeligible to be covered under this scheme. The 8overnment of Andhra 4radesh pays a

premium of s 59 per acceptor. The benefits to be availed of, include hospitaliationcosts up to s.1666 per year for the acceptor and for his J her two children for a totalperiod of five years from date of the family planning operation. The coverage is forcommon illnesses and accident insurance benefits are also offered. The hospital bill isdirectly reimbursed by the Insurance /ompany, namely the ?ew India Assurance/ompany. The 8overnment of 8oa along with the ?ew India Assurance /ompanyin +3 developed a medical reimbursement mechanism. This scheme can be availed

by all permanent residents of 8oa with an income below s 96 666 per annum forhospitaliation care, which is not available within the government system. The non$availability of services requires certification from the hospital 'ean or 'irector:ealth Dervices. The overall limit is s 06 666 for the insured person for a period of

one year.The aim of the proect was to develop and test a model of community healthfinancing suited for rural community, thereby increasing the access to medical care of


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the poor. The beneficiaries include the entire population of these blocks. The premiumis s 06 per person per year, with the 8overnment of (arnataka subsidiing the

premium of those below poverty line and those belonging to Dcheduled /astesJDcheduled Tribes. This premium entitles them to hospitaliation coverage in thegovernment hospitals up to a maximum of s 2 966 per year, including

hospitaliation for common illnesses, ambulance charges, loss of wages at s. 96 perday as well as drug expenses at s 96 per day. eimbursements are made to aninsurance fund which has been set up by the ?8- J 4I with the support of @?'4.The 8overnment of (erala is planning to launch a pilot proect of health insurance forthe 06C families living below the poverty line. The scheme would be associated witha government insurance company. /urrently, negotiations are under way with the IAto seek service tax exemption. The proposed premium is s 296 plus 9C tax. Themaximum benefit per family would be s 26 666. The amount for the premium would

be recovered from the drug budget "s +66#, the 4I "s +66# and from thebeneficiary "s =2.96# while the benefits available would include cover forhospitaliation, deliveries involving surgical procedures "either to the mother or the

newborn#. Instead of payment by the beneficiary, Dmart /ard facility would beoffered. This scheme would be applicable in 2+= government hospitals.

TY%&S O' H&()TH INSUR(NC&:-

A quality healthcare is a challenging process. It!s a critical issue whose importance isrecognied in all the aspects of a society. 7efore opting for health insurance plan, theneed is to make a good research because both private players and governmentorganiations are competing with each other in order to attract the maximum

customers, thus creating an overall confusion with a wide range of plans. :ealthinsurance estimates the overall risk involved in healthcare expenses and develops aroutine finance structure of monthly premium and annual tax, ensuring that the moneywill be made available as per the insurance agreement. 8enerally, people of higherage prefer these plans. 7ut it is also important for younger generation to start planningfor their future in order to lead a financially secure life in the later years.

There are different types of health insurance plans

,rou# Insurance %lan

8roup insurance offers medical insurance to the groups like employees of a company,members of an association or a co$operative society and so on.

Individual Insurance %lan

Individual insurance caters to the special needs of the individuals. 4remium iscomparatively high for this kind of insurance.

'loater Insurance %lan

Bloater plan can be availed individually or by all the members of the family. It

provides single premium for the entire family


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:ealth insurance plans can be furthe categoried asE

%ed claim 4olicy

4ersonal Accident $ Individual

4ersonal Accident $ Bamily

Insurance for 8roup Accident


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dollars via payroll deduction. Ghile this doesn)t really save you money on your healthinsurance premiums directly, it does reduce your tax burden increasing your takehome pay. If your employer does not offer pre$tax deductionsU tell them to call us

because these pre$tax plansU save them money tooW

Ste# ;

If you have maintenance prescriptions, consider buying them through your insurancecompany)s mail order pharmacy. %ost mail order pharmacies will permit you to

purchase a 36$day supply of your prescription medications for the same co$pay youwould pay for a 06$day supply at a traditional pharmacy. %ost doctors are familiarwith this process and are more than happy to accommodate you by writing a modified

prescription. In addition, always remember to ask your doctor about genericalternatives "most plans have lower co$pays for generic drugs vs. brand names#.

Ste#

Privatisation of Health Insurance[1]

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