HEALTH INSURANCE

Introduction of Insurance
With such a large population and the untapped market area of this population insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

Since then the insurance industry has gone through many sea changes .The competition LIC started facing from these companies were threatening to the existence of LIC. Since the liberalization of the industry the insurance industry has never looked back and today stand as the one of the most competitive and exploring industry in India. The entry of the private players and the increased use of the new distribution are in the limelight today.

The use of new distribution techniques and the IT tools has increased the scope of the industry in the longer run.

Introduction of Health Insurance

Health insurance is a safeguard against rising medical costs. A health insurance policy is a contract between an individual and a group, in which the insurer agrees to

provide specified health insurance at an agreed upon price (the premium). Depending upon the policy, premium may be payable either in a lumpsum or in installments. Health insurance usually provides either direct payment or reimbursement for expenses associated with illnesses & in uries. !he cost & range of protection provided by Health insurance depends on the insurance provider & the policy purchased. !here are many health concerns including the following which accentuate the demand for health insurance" #nvironment pollution is causing serious health problems to humans. !he fast spreading A$D%, poisonous gases, various wastes including nuclear waste generated by the people are seriously endangering the life on earth. A person may face serious monetary problems for the medical treatment & hospitali&ations during life. 'owadays, most companies give the benefit of health insurance to its employees. Health insurance is a part of a larger business set(up and tends to remain a loss leader in the initial stages and can become viable only in urban context with large(scale ris) pooling and effective demand. !hese experiments do not convey in full measure the potential of insurance to ris) pooling, community rating and controlled administrative costs, limited exclusions and co(payments. Health insurance properly developed and regulated can act as a bridge between patients and providers balancing *uality care at reasonable costs with an effective and accountable health care. +e need big players as insurers with staying power and competence to deal with large ris) pooling and innovative product. $n this article, therefore, the author analyses various issues concerning health insurance in $ndia

History of health insurance:National ,-,. $nsurance Act passed ,-./" +or)man0s 1ompensation Act ,-/2 $nsurance Act, ,-/2

 ,-32" #%$ Act passed ,-4." 5irst #%$ Hospital established ,-46 7ife $nsurance industry nationali&ed 8udaliar committee (,-4-(,-6,) recommendations. 7ong range health insurance policy for all. %mall fee for availing health services. ,-9. :eneral $nsurance industry nationali&ed ,--- $;DA bill passed in <arliament to allow foreign players entry .==," $nsurance amendment Act #mphasis on !<As. 5rom the above table we see that the first real attempt at insurance was carried out well before $ndependence, with the passing of the $nsurance Act in ,-,., which set down rules and regulations specific to the insurance industry. !hen there was a more fundamental sha)eup in ,-/2 with the $nsurance Act, ,-/2 and this led to an insurance wing being set up, attached to the 8inistry of 5inance. At the time of nationali&ation of 7ife $nsurance industry there were ,96 (life and non(life) companies in the industry. !he general insurance industry was nationali&ed in ,-9.. !he next significant event was the passage of the $nsurance ;egulatory & Development Authority Act, which opened up the insurance sector to the private players. !his was followed by the $ndian $nsurance (Amendment) >ill .==, which dealt with the means by which insurers might access the new mar)ets that had opened up and the role of bro)ers in the insurance mar)et.

International ,22/" >ismarc)( %ic)ness benefit to wor)ers ,-,," 7loyd :eorge( 'ational Health insurance scheme to cover sic)ness expense, medical relief, drugs & compensation of wages lost, to improve *uality of life & improve industrial production.

 ?.5.@imball" <repayment system of health care

How Does A Health Policy Differ Vis--Vis A Life Insurance Policy? !he health insurance plan is more comprehensive in its coverage. All expenses involved in hospitali&ation fall under its purview. 7ife insurers usually cover critical illness and hospital cash extensions (only room rent charges) on life policies, which do not include doctor0s fees, expenses incurred on buying medicine and surgery costs etc.

HEALTH A!E " ENA!I#"

Health care has always been a problem area for $ndia, a nation with a large population and a larger percentage of this population living in urban slums and in rural area, below the poverty line. >efore independence the health structure was in dismal condition i.e. high morbidity and high mortalities, and prevalence of infectious diseases. %ince independence emphasis has been put on <rimary Health 1are and we have made considerable progress in improving the Health %tatus of the country. 1:" 1entral :overnment <H" <rimary Health 81H" 8aternal and 1hild Health

Why Health Insurance

Health is a human right, which has also been accepted in the constitution. $ts accessibility and affordability has to be insured. +hile the well(to(do segment of the population both in rural & urban areas have acceptability and affordability to wards medical care, at the same time cannot be said about the people who belong to poor segment of the society. $t is well )nown that more then 94A of the population utili&es private sectors for medical care unfortunately medical care becoming costlier day by day and it has become almost out of reach of the poor people. !oday there is need for in ection of substantial resources in the health sectors to ensure affordability of medical care to all. Health insurance is an important option, which needs to be considered by the policy ma)ers and planners.

B!eco$nition as an industry" $n the mid 2=Cs, the healthcare sector was recogni&ed as an industry. Hence it became possible to get long term funding from the 5inancial $nstitutions. !he :overnment also reduced the import duty on medical e*uipments and technology. "ocio Econo%ic chan$es: !he rise of literacy rate, higher levels of income and increasing awareness through deep penetration of media channels, contributed to greater attention being paid to health. +ith the rise in the system of nuclear families, it became necessary for regular health chec)(ups and increase in health expenses. &rand De'elo(%ent: 8any family(run business houses, have set(up charity hospitals. >y lending their name to the hospital, they develop a good image in the mar)et, which further improves the brand image of products from their other businesses. HEALTH "E T#! IN INDIA !ill now, in $ndia, the health sector i.e. the primary health care system has been managed mainly by the shallow structure of government health(care facilities and other public health care systems in a traditional model of health funding and provision. >ut, it is unable to ustify the demand for health security by over .== million of the health

insurable population in $ndia, mainly due to service costs being out of reach of many people, absence of good and effective number of physicians, low rate of education programs, less number of hospitals, poor medical e*uipment and over all, the poor budget of government towards the health program. #ven %ocial insurance schemes available in $ndia, such as the #mployee %tate insurance %cheme (#%$%) and 1entral :overnment Health %cheme (1:H%) have restricted coverage to a very small segment of the population, around / per cent. !he game is old but the rules are new, and in the process of changing further. 5rom being ensconced in a monopoly run from the nationalisation days beginning ,-46, the insurance industry has indeed wo)en up D to a de(regulated environment, with the industry space now being populated by several private players in partnerships with multinational insurance giants. !he opening of the insurance sector in $ndia has been a landmar) event in $ndia0 economic history. :one are the days of the domination by the 7$1 and :$1 when ordinary citi&ens had to wor) according to their whims and fancies. Ever the past one year, the traditional notion of insurance has been turned on its head. !oday insurance offers complete solutions to create wealth, protect health and insure life. Added to this, the profile of the $ndian customer is changing. !oday, while boundaries between various financial products are getting blurred, people are increasingly loo)ing not ust at products but also at integrated financial solutions that can offer them stability of returns along with total protection. $nsurance products will need to be customised to satisfy these myriad needs of the customers and this where the private players come in bringing with them hopes of wider options and efficient service. !he mar)et is already seeing a rise in number of players and in ma)ing insurance products, new companies will have to adopt systems which factor in all potential ris)s. $n such a scenario, it0ll be difficult to say what will be the differentiator across the different <layers D products, pricing or serviceF

!here is also the case of the neglected health insurance sector. +ill there be more players venturing into this sectorF !he poor health scenario in $ndia does offer a gamut of options for new players. !his paper loo)s at the opening of the insurance sector and its implications with specific reference to the health insurance sector, the current scenario, future positions, >ottle nec)s that could be faced, future growth potentials and comparisons with similar %outh Asian countries which also have economies which are opening up.

Health Insurance in )orei$n ountries

!he level of care and treatment available to foreign nationals in much of #urope can vary widely from country to country, not to mention the cost. Health $nsurance can help remove this uncertainty by offering *uic) access to *uality medical treatment in time of need. 7loyd & +hyte $nternational can ta)e you through the process from start to finish offering expert and impartial advice. Gour policy will be written in #nglish no matter where you are located in #urope, and all our offices have multilingual staff to cater for your every need. +e are authorised and regulated by the 5inancial %ervices Authority so you can rest assured that you will receive the very highest levels of service. +hen abroad you will be exposed to a different climate, which in itself can cause health problems that you may not have previously been exposed, and if you are loo)ing to move to warmer climes the increased ris) of s)in cancer is ust one example that you may need to consider. Different climates and countries also bring different diseases, which as a foreigner you may be more susceptible. As highlighted above the healthcare systems can vary from country to country across #urope, therefore by ma)ing your own provisions you )now that you will receive *uality medical care and treatment no matter where you are.

Deter%inants of Via*le Health Insurance

%imilar studies on the effect of community ris) sharing in health care in ;wanda, $ndia and !hailand have been underta)en by different research institutes. !hese studies as well as the %enegal case have been selected as part of the wor) of the 1ommission on 8acroeconomics and Health of the +orld Health Erganisations. !his commission examines the interrelations among investment in health, economic growth, and poverty reduction. All the studies are based on household surveys on the effect of community financing schemes (15 schemes) and have used the same methodology for data analysis. !he following points summari&e important findings of the different studies with respect to the design of the schemes" )le+i*ility in Payin$ Procedure $n ;wanda the households who could not afford to pay the premium in one bit, were allowed to pay in installments to a tontine before oining a pre(payment scheme. $n addition, church based groups collected fees for the indigent, disabled, orphans etc. !he paying of contributions by charitable organi&ations has also be reported in the %enegal study, which has given otherwise excluded people the chance to participate in the mutuals. %ome mutual even start collective activities from which they use some of the earnings to pay membership fees. Another example for a possible source of financing is organi&ing a tombola or lottery. $n conclusion there are various possibilities to adapt paying procedures to the local level re*uirements. $n this context, the role of the state also needs to be explored e.g. the possibilities for demand targeted subsidies E+(erience in "ocial Protection and o%%unity Partici(ation 1ommunity financing schemes (15 schemes) are often set up by voluntary, non( profit oriented organi&ations. !hese organi&ations act as an insurance bro)er between the interest of a health care provider and the expectations and needs of their members. !o deal with these ambiguities is of ma or importance and re*uires trained personal. $n this context it must be stressed that the administrative procedure for handling claims should be as simple and transparent as possible. !he %#+A example but also other experiences

(e.g. :rameen >an) in >angladesh) shows that mutual insurance schemes are li)ely to perform better, when they are lin)ed to an organi&ation which already has experience in the field of financial services and social protection. 1ommunity participation matters, when it comes to the control of moral ha&ard behavior and costs. !he results of the studies in the four countries suggest, that the degree of community participation in the design and running of the 15 schemes can vary widely and is usually greater if funds are owned and managed by the members themselves than if schemes are run by health facilities. $f members can identify themselves with HtheirI schemes because they control the funds and have decision(ma)ing power, they will tend less to unnecessary use of health care services. E+istence of a Via*le Health are Pro'ider !he success or failure of health insurance schemes is largely dependent on the existence of a viable health care providers, e.g. to the hospital that offers services to the insured. Decisions ta)en by the health care provider have an impact on mobili&ing demand for 15 schemes as well as on the financial balance of the scheme. !he %enegalese case study was enlightening in that respect" 5rom the beginning of the mutual health organi&ation movement, it has been supported by the hospital %t. ?ean de Dieu. !he administration of the hospital had recogni&ed that their ultimate target group J the poor J couldn0t pay their fees, but it was also not possible for the hospital to allow for a general exception of fees for the poor. !he creation of mutual health organi&ation allowed to directly targeting their clientele in a cost effective manner. >eside the financial support which the hospital gives to the mutuals an e*ual important point is the well recogni&ed *uality of care. !he delivery of services with high *uality is a very important point for mobili&ing demand in the mid to long run. $n some settings it will even not be possible to set up a viable insurance scheme and mobili&e demand before *uality of care is not improved, because if people feel that they will get no Hvalue for moneyI at the hospitals or health posts, they would be unwilling to pay premiums.

o%%unity and Household haracteristics !he demand for health insurance is a crucial factor if the benefits expected from

community financing schemes are to be reali&ed. !he demand of households for health insurance depends not only on the *uality of care offered by the health care provider, on the premium and benefit pac)age, but also on socio(economic and cultural characteristics of households and communities. +idespread absolute poverty among potential members can be a serious obstacle to the implementation of insurance. !his argument was fre*uently put forward from non(members in %enegal. $f people are struggling for survival every day, they are less willing to pay insurance premiums in advance in order to use services at a later point in time. %ocial exclusion may persist even if barriers to access are reduced for part of the population, and exemption mechanisms for the poorest or sliding scales for premiums that might be a remedy are not easy to implement. After or before the introduction of health insurance, rising incomes, that may be brought about by development pro ects, can be necessary to attract members and reali&e the potential benefits of 15. %#+A0s activities in this direction are a good example. !he prevailing concepts of illness and ris) are relevant to the decision of households whether to purchase health insurance or not. $f people see illness as a somewhat random event that can hit anyone, they are surely more willing to purchase insurance than if they perceive it as punishment for misbehavior by magic powers. 1ultural habits in dealing with the ris) of illness can influence the demand for insurance. $n %enegal this has been fre*uently reported as one obstacle to buy health insurance as people were used to put money aside for unpredictable events li)e marriages and funerals, but they believed that saving money for eventual health care costs meant Hwishing oneself the diseaseI. $f solidarity is strong, people will not worry so much if the benefits of the premiums they paid will accrue to themselves or other community members. 5or example, members of the 5andene scheme in %cheme expressed the opinion that if they would not need health care themselves, at least they had done something good for the community by contributing to the insurance fund. !he degree of solidarity and mutual trust is probably higher in homogeneous, close()nit communities

than in scattered and diverse populations comprising people of different ethnic origin, religion and culture.

Health Insurance "che%es:

>ased on ownership the existing health schemes can be broadly divided into following categories"( :overnment or state(board systems (including 1:H% & #%$%) 8ar)et(based systems (<rivate & Koluntary). #mployer provided insurance systems.

,o'ern%ent-"tate &ased "yste%s"

!he best documented &target system of health care delivery in $ndia is the diverse networ) of hospitals, primary health centre, community health centre, dispensaries & speciality facilities financed & managed by the central & state local governments. !hese facilities are officially available to the entire population either free or for nominal charges. Along with some other networ)s of village health wor)ers maternal & child health programmes & speciality disease prevention programmes these public facilities carry out a central role in $ndia0s primary health care system studies have shown that these facilities are mostly under funded, understaffed & short of drugs & essential supplies & that they sometimes suffer from low morale & inade*uate motivation. !he health facilities made available to the public are managed & operated under the authority of central & state agencies. !he state government mostly own & manage the public sector delivery system & have to bear the costs of operation. >ut the central government plays a ma or role in the planning, financing & transfer of resources that determine new investment in health facilities & speciali&ed programmes. 8uch of the funding for health facilities originates from the Lnion 8inistry & family +elfare & is channeled to the state governments, which retain considerable authority for the spending decisions. Kirtually all decisions are made by the central & state government(including the staffing & supply decisions, with little & autonomy for providers of health care at lower levels. Ever the years, the central government has been the main source of funds for the primary health care facilities, whereas the states bear the ma or responsibility of recurrent costs, especially the costs of returning hospitals. !his system has added to overall inefficiency of public health facilities.

entral ,o'ern%ent Health "che%e:

!he 1entral :overnment Health %cheme (1:H%) was introduced in ,-43 as contributory health scheme to provide comprehensive medical care to the central government employees & their families. $t was basically designed to replace the cumbersome & expensive system of reimbursements (8inistry of Health & 5amily +elfare, Annual ;eport ,--/(-3). %eparate dispensaries are maintained for the exclusive use of the central government employees covered by the scheme. Ever the years, the coverage has grown substantially with provision for non(allopathic system of medicines as well as for allopathic. $n addition, the 1:H% reimburses patients for part of their out of poc)et costs on treatment at the government hospitals & some other facilities. !he list of beneficiaries includes all categories of current as well as former government employees, members of parliament & so on. %ince the large central but bureaucracy $ndia definitely belongs to the middle(income & high Jincome categories, they are li)ely to ma)e above(average use of health services. !he 1:H% has been in the recent past, widely critici&ed from the point of view of *uality & accessibility.

E%(loyees "tate Insurance "che%e:

#stablished in ,-32, the #mployees %tate $nsurance %cheme (#%$%), an insurance system which provides both the cash & the medical benefits. $t is managed by the #mployees %tate $nsurance %cheme (#%$%), a wholly government(owned enterprise it was conceived as a compulsory social security benefit for wor)ers in the formal sector. !he original legislation creating the scheme allows it to cover only factories which have been Husing powerI & employing ten or more wor)ers. However, since ,-2- the scheme has been expended, & it )nows includes all such factories which are Hnot using powerI & employing .=or more persons. 8ines are explicit excluded from coverage under the #%$% act.

o%(rehensi'e Health Insurance "che%e

'ational 1ommon 8inimum <rogramme, 1omprehensive Health $nsurance %cheme for one district in each state in .==3(=4 has been formulated for implementation with community participation. !he %alient 5eatures of the %cheme are" <rimary focus of Health $nsurance in the <ilot District would be the poorer section of the society i.e. both ><7 and 'on(><7. !he experience gained from the outcome in implementing the scheme in these <ilot Districts would form the basis for possible expansion and its replication in other districts in future. !o focus on the health insurance needs of the <opulation by mar)eting the entire range of existing Health $nsurance products catering to the needs of all income groups such as 8ediclaim, >havishya Arogya, ?an Arogya, Lniversal Health, %wasthya >ima <olicies etc. All the existing Health $nsurance products would be mar)eted to the population in the <ilot District in a holistic manner by mobili&ing support from different agencies vi&. %tate :overnment, 7ocal bodies, 1ommunity based organi&ations, ':Es, 1ooperatives and other organi&ations involved in %ocial %ector activities. !he four <ublic %ector $nsurance 1ompanies would mar)et the product by utili&ing the existing mar)eting channels. !he claims settlement process would be simplified depending upon the availability of the !hird <arty Administrators (!<As) or through !ie(up arrangements with %ervice <roviders, medical facilities would be provided cash( less, as far as possible. !he programme will be underta)en, in one District in each %tate ideally be the one that have a strong presence of 1ommunity >ased Ergani&ations and having a reasonable health infrastructure and delivery mechanism.

Ty(es of Health are Insurance A'aila*le:

8edical $nsurance 1ritical $llness $nsurance

7eading insurance companies are coming out with new plans to meet the re*uirements of their customersM health care insurance plans especially target customers in the higher age group. $t is necessary for younger people to start planning for their future after they retire, at an early age, so as to lead a financially stable life in later years

.edical Insurance
8edical insurance in $ndia is gaining such a high trend that policies are out even for infants. $t is the buffer against medical emergencies. !hese covers is a hospitalisation cover and reimburse the medical expenses incurred in respect of covered disease Nsurgery while the insured was admitted in the hospital as an in patient Different ty(es of .edical Insurance are a'aila*le here: $ndividual 8edical $nsurance :roup 8edical $nsurance Everseas 8edical $nsurance alculation of .edical Insurance A%ount-Pre%iu%: !he amount of premium depends on the sum insured (amount of coverage) age of the member and also if one is ta)ing an individual or a group $nsurance. <remium can be paid on a monthlyN*uarterlyNhalf yearlyN yearly basis. Amount also depends on the company policies of the insured.

.edical Insurance lai% Procedure:

An individual has a fill and submit the claim form to the insurer A claim representative, so appointed, analyses the expenses incurred After submission of the medical expenses report, the claim is cleared within 9(,4 days. !he number of days may vary from company to company

Docu%ents !e/uired for .edical Insurance lai%:

,. HospitalNdoctor report .. 8emo of expenses incurred /. %alary %lip

ritical Illness Insurance

1ritical $llness $nsurance provides for payment of amount e*ual to sum assured, if illness stri)es, irrespective of expenses incurred on treatment. 8ost insurance companies are providing this insurance as an addition to the life insuranceM additional premium payable for critical illness. $t is introduced as a value addition to meet the demands and also as mar)eting strategy. !he insurance covers surgery cost, critical illness cover and post(hospitalisation. !he insurance is different in paying only for prolonged hospitalisation. Ene of the uni*ue features of this insurance is that a lump sum allowance is paid irrespective of the actual medical expenses.

alculation of ritical Illness Insurance A%ount-Pre%iu%:

!he amount of premium depends on the insurance of the insurance company. %ometimes life insurance companies charge extra premium for the insurance, which is an add on to the 7$<. <remium is generally paid on a yearly basis.

ritical Illness Insurance lai% Procedure: $nsurance holders can ma)e multiple claims till their lifetime cover is exhausted. !he company pays a lumpsum amount as claims irrespective of the actual expenses, as against a medical insurance, which is only reimbursement insurance. !he claim should be reported to the insurers, who in turn will appoint a surveyor. %urveyor will chec) the necessary documents and analyse the extent of damage. !he claim process ta)es anywhere from 9(., days.

Docu%ents !e/uired for ritical Illness Insurance lai%:

,. 1opy of 5$; ($f any) .. 8edical 1ertificate & details of medical expenses & disability certificate /. 7eave certificate from employer 3. Duly filled 1laim 5orm 4. %alary 1ertificate from employer.

.edicare
8edicare is the 5ederal health insurance program for Americans age 64 and older and for certain disabled Americans. $f you are eligible for %ocial %ecurity or ;ailroad ;etirement benefits and are age 64, you and your spouse automatically *ualify for 8edicare. 8edicare has two parts" hospital insurance, )nown as <art A, and supplementary medical insurance, )nown as <art >, which provides payments for doctors and related services and supplies ordered by the doctor. $f you are eligible for 8edicare, <art A is free, but you must pay a premium for <art >. 8edicare will pay for many of your health care expenses, but not all of them. $n particular, 8edicare does not cover most nursing home care, long(term care services in the home, or prescription drugs. !here are also special rules on when 8edicare pays your bills that apply if you have employer group health insurance coverage through your own ob or the employment of a spouse.

%ome people who are covered by 8edicare buy private insurance, called O8edigapO policies, to pay the medical bills that 8edicare doesnCt cover. %ome 8edigap policies cover 8edicareCs deductiblesM most pay the coinsurance amount. %ome also pay for health services not covered by 8edicare. !here are ,= standard plans from which you can choose. (%ome %tates may have fewer than ,=.) $f you buy a 8edigap policy, ma)e sure you do not purchase more than one.

.edicaid
8edicaid provides health care coverage for some low(income people who cannot afford it. !his includes people who are eligible because they are aged, blind, or disabled or certain people in families with dependent children. 8edicaid is a 5ederal program that is operated by the %tates, and each %tate decides who is eligible and the scope of health services offered.

Disa*ility Insurance
Disability insurance replaces income you lose if you have a long(term illness or in ury and cannot wor). !his is an important type of coverage for wor)ing(age people to consider. Disability insurance does not cover the cost of rehabilitation if you are in ured. 1hec) your ma or medical insurance to see if it is covered there. %ome employers offer group disability insurance and this may be one of the benefits where you wor). Er you might be eligible for some government(sponsored programs that provide disability benefits. 8any different )inds of individual policies are also available. The Consumer's Guide to Disability Insurance explains disability insurance and sources of disability income to help you decide if you need this coverage.

Hos(ital Inde%nity Insurance

!his insurance offers limited coverage. $t pays a fixed amount for each day, up to a maximum number of days. Gou may use it for medical or other expenses. Lsually, the amount you receive will be less than the cost of a hospital stay.

%ome hospital indemnity policies will pay the specified daily amount even if you have other health insurance. Ethers may coordinate benefits, so that the money you receive does not e*ual more than ,== percent of the hospital bill.

Lon$-Ter% are Insurance

7ong(term care insurance is designed to cover the costs of nursing home care, which can be several thousand dollars each month. 7ong(term care is usually not covered by health insurance except in a very limited way. 8edicare covers very few long(term care expenses. !here are many plans and they vary in costs and services covered, each with its own limits.

Indi'idual Insurance
$f your employer does not offer group insurance, or if the insurance offered is very limited, you can buy an individual policy. Gou can get fee(for(service, H8E, or <<E protection. >ut you should compare your options and shop carefully because coverage and costs vary from company to company. $ndividual plans may not offer benefits as broad as those in group plans. $f you get a noncancellable policy (also called a guaranteed renewable policy), then you will receive individual insurance under that policy as long as you )eep paying the monthly premium. !he insurance company can raise the cost, but cannot cancel your coverage. 8any companies now offer a conditionally renewable policy. !his means that the insurance company can cancel all policies li)e yours, not ust yours. !his protects you from being singled out. >ut it doesnCt protect you from losing coverage. >efore you buy any health insurance policy, ma)e sure you )now what it will pay for...and what it wonCt. !o find out about individual health insurance plans, you can call insurance companies, H8Es, and <<Es in your community, or spea) to the agent who handles your car or house insurance.

Ti(s when sho((in$ for indi'idual insurance:

%hop carefully. <olicies differ widely in coverage and cost. 1ontact different insurance companies, or as) your agent to show you policies from several insurers so you can compare them. 8a)e sure the policy protects you from large medical costs. ;ead and understand the policy. 8a)e sure it provides the )ind of coverage thatCs right for you. Gou donCt want unpleasant surprises when youCre sic) or in the hospital. 1hec) to see that the policy states" the date that the policy will begin paying (some have a waiting period before coverage begins), and what is covered or excluded from coverage. 8a)e sure there is a Ofree loo)O clause. 8ost companies give you at least ,= days to loo) over your policy after you receive it. $f you decide it is not for you, you can return it and have your premium refunded. >eware of single disease insurance policies. !here are some polices that offer protection for only one disease, such as cancer. $f you already have health insurance, your regular plan probably already provides all the coverage you need. 1hec) to see what protection you have before buying any more insurance.

,rou( Insurance
8ost Americans get health insurance through their obs or are covered because a family member has insurance at wor). !his is called group insurance. :roup insurance is generally the least expensive )ind. $n many cases, the employer pays part or all of the cost. %ome employers offer only one health insurance plan. %ome offer a choice of plans" a fee(for(service plan, a health maintenance organi&ation (H8E), or a preferred provider organi&ation (<<E), for example. #xplanations of fee(for(service plans, H8Es, and <<Es are provided in the section called !ypes of $nsurance.

+hat happens if you or your family member leaves the obF Gou will lose your employer(supported group coverage. $t may be possible to )eep the same policy, but you will have to pay for it yourself. !his will certainly cost you more than group coverage for the same, or less, protection. A 5ederal law ma)es it possible for most people to continue their group health coverage for a period of time. 1alled 1E>;A (for the 1onsolidated Emnibus >udget ;econciliation Act of ,-24), the law re*uires that if you wor) for a business of .= or more employees and leave your ob or are laid off, you can continue to get health coverage for at least ,2 months. Gou will be charged a higher premium than when you were wor)ing. Gou also will be able to get insurance under 1E>;A if your spouse was covered but now you are widowed or divorced. $f you were covered under your parentsC group plan while you were in school, you also can continue in the plan for up to ,2 months under 1E>;A until you find a ob that offers you your own health insurance. 'ot all employers offer health insurance. Gou might find this to be the case with your ob, especially if you wor) for a small business or wor) part(time. $f your employer does not offer health insurance, you might be able to get group insurance through membership in a labor union, professional association, club, or other organi&ation. 8any organi&ations offer health insurance plans to members.

0hat ty(es of $rou( health insurance (lans are a'aila*le?

:roup health insurance plans are categori&ed as either indemnity plans (also )nown as Otraditional indemnity,O Ofee(for(service,O or O55%O plans) or managed care plans. $ndemnity and managed care plans differ in their basic approach. <ut broadly, the ma or differences concern choice of providers, out(of(poc)et costs for covered services, and how bills are paid. Gou will typically have a broader choice of doctors (including specialists, such as cardiologists and surgeons), hospitals, and other health care providers

with an indemnity plan while you will typically have less out(of(poc)et costs and paperwor) with a managed care plan.

$ndemnity plans once dominated the American health insurance mar)et, but are no longer as popular as they used to be. !hey are most common on the east coast. 8anaged care plans now ta)e up a much larger share of the general health insurance mar)et and are especially dominant in the western parts of the country. !here are three basic types of managed care plans" <<Es, H8Es, and <E% plans

Health care financin$ in India"

!he share of public financing in total health care is ust about ,A of :D< compared to ..2A in other developing countries. >eneficiaries are both poor as well as well(fed section of society. Ever 2=A of total health financing is private financing, much of which is out(of( poc)et payments (i.e. Lser charges) & not any prepayment schemes. Access to health care service providers and availability of physicians is one part of the issue 5inancing for health care is the other aspect of the issue <ublic spending in health care is very low at ,9A and the 'ational Health <olicy has recogni&ed this 8ore than 26A of healthcare financing is through unplanned for, non( contributory spending.

!he experience of different countries suggests that private insurance has important role to play in overall health care. <rivate health insurance has increased service capacity & supply by in ecting financial resources up front #.g." $n L%, private health insurance has financed health insurance in terms of doctor facilities through the H8E set(up <rivate health insurance increases choice (provider, benefits, cost(sharing) for the individual #.g." $n Australia, private insurance offer the option to access to spare capacity & elective care in non(public institutions.

!he proportion of insurance in health care financing in $ndia is extremely low Health care financing in $ndia .==. A !he )ey issue related to financing of health care in $ndia revolves around the lac) of ade*uate insurance 7imited 1overage Enly around ,=A of the population is covered through health financing schemes. :eographic spread in terms of health care facilities & financing awareness is limited. %election criteria by suppliers often restricts the poor (& more li)ely to be ill) from affordable pre(payment scheme. 8oral ha&ard & Adverse selection 1laims ratios for mediclaim 9 ?an Arogya policies has been in the range of ,.=(,/=A

!he final lap towards the privati&ation of the Health care sector in $ndia was made with the passing of the $;DA >ill. !ill then, control of formal insurance lay with the public sector. !his bill allows for the entry of various private players into various sectors of the insurance industry, overseen by a regulatory authority, which will control the various entities. $t is to be assessed whether such a system will prove to be effective, in )eeping with the three moot points of health insurance policy in $ndia. Aggregate cost of providing health care in $ndia. B$ne*uitable distribution of healthcare delivery systems (all metro(centered and poorly subsidi&ed). Puality of healthcare benefit. Healthcare osts &ecause #f Entry #f Pri'ate Players !heoretically there are many reasons why entry of private entities into the health insurance sector would spiral up costs. Healthcare providers, li)e doctors, are supposed to be more informed about their patients0 health, future situation, etc. than the latter himself. !his, along with prospects of being ill and the various opportunity costs of being so ma)es the demand for health care *uite dependent on the treatment course suggested by the physician. $n a regime of indemnity insurance (also called Qfee(for( service0(in which the insurer pays for the cost of covered health care services after they have been provided)), the provider may actually sell more health care than needed. Also there is the problem of asymmetric information in the transaction between the insurer and the insured. Ence insured, a person feels less the need to ta)e precautions against ill health. However these effects are li)ely to have the same effect in any scenarioRpublic health setting or privately insured. The major cost spiral due to private entry lies in a third more significant factor. Lnder the public sector, which involves the dual functions of financing and provisioning of services, there are a host of restrictions, especially referral to higher order care and budgetary limits.

7oo)ing at the special insurance programmes of the $ndian govt. for its employees( under the 1entral :overnment Health %cheme (1:H%), employees are not eligible for reimbursements without referrals from the concerned authorities. $t is the same for the #mployees %tate $nsurance %chemes (#%$%), in the organi&ed sector. !he case of referrals is not much for outside private players, (1:H% has only 6 of total expenditure on private referrals), but is widespread within the public sector wherein the utili&ation is highly biased towards the public hospitals and facilities. Ene must remember that in $ndia, the only significant health insurance policy is 8ediclaim and the ma or players are few and all public sector entities. Here the only choice that one actually has is to decide +HE8 to insure HE+ 8L1H for. !his is *uite unli)e the west where there is a staggering range of health policies to choose from, along with various options li)e H8Es (Health 8aintenance Ergani&ation) and <<Es (<referred <rovider Ergani&ations) to aid you. 'ow the *uestion arises, What are HMOs? 8anaged health care institutions that have emerged in $ndia, li)e the H8Es, which have come up in the private sector in other countries combine the role of the insured and the insurer and can therefore help cut costs. !his has been seen to a certain extent in countries li)e the L%A. An H8E is a form of insurer provider that, in return for a monthly premium, provides comprehensive health care services to its members. $t is different from any standard health care insurance provider in that the patient0s are re*uired to see doctors only within the company0s networ) of physicians. A similar organi&ation are PP#s1 A <<E (<referred <rovider Ergani&ation) is a hybrid between a normal health insurance program and an H8E. Lnder these programs <<Es contract physicians on a fee(for service basis and allow visits to specialists without a recommendation from a primary care physician. <<Es tend to be more expensive than H8Es. $n $ndia, there are also certain small companies that provide what is )nown as Q$rou( insurance2. #mployers sometimes provide this to their employees in whom the former pays part or the entire insurance premium of the latter (which is not much). $nsuring large groups together is a viable option when one considers that not only is the danger of ris)s in the applicant pool lesser in large groups (as per the law of large

numbers) but also, the administrative costs are lower(1lose to home, :$1 offers discounts over ,4A for individual insurance to almost 69A for groups of 4= thousand crores or more (<helps ,--9). Also, employee based group insurance can be promoted (as is being done already to an extent) by linking it to insurance-linked tax benefits . $n $ndia, since the premium can be paid either by the employees or the employer, tax benefits can accrue to either. $t would perhaps be more feasible to promote employerbased benefits, to aid insurance, especially if corporate income tax rates are higher than personal tax rates. !he same would hold if the employers could gain returns to scale through group insurance administration. %pecific to developing countries, li)e $ndia, is another factor that leads to extremely high health care costs( the financial health of the health insurance companies. 8any companies in developing nations face inade*uacy of even minimum capital reserves. <lus they also lac) sufficient information of the factors that affect health. Which is why they may be charging premiums whose real cost is much less than their benefits offered in a competitive environment. Adding to this are the foolhardy get-rich uick solutions that these companies adopt which are highly ris)(prone, forcing governments to create expensive bailout pac)ages that drain the former of the need to be efficient. !here is a need to set a minimum standard of regulations and restrictions with regard to management and personnel, solvency, capital re*uirement etc. along with strict control at the national level. 3uality #f Health are In India Ln*uestionably, the *uality of health care provided in $ndia will improve with the influx of private insurers. $n the free mar)et, as the consumer grows more informed and aware, he desires better *uality( institutions he may choose to labelNcertify products and services in the health sector, such that only the reputed brands stay on in the mar)et and the other non(certified ones are sidelined. As demand for health pushes up its price, the opportunities for well *ualified professionals will increase, but at the same time, so will the supply of low *uality

wor)ers (fa)e degrees, certificates in allopathy etc.), which may even lead to deterioratin$ /uality at the %ar$in. $t is here that we need to loo) at the options of managed care. !he developments would be in the direction of developing a strong information base and accreditation system for the providers. $n $ndia too we have certain similar schemes li)e %#+A44 and !ribhuvandas (run through ':Es) and these models need to be examined carefully. Howe'er we need to reali5e that the ar$u%ents for Inde%nity insurance are 'ery different fro% those for H.#s1 !here are certain constraints on the latter that may actually be a case for indemnity insurance. !he *uality of services offered by H8Es may be compromised to ma)e the pac)age sold affordable, by empanelling ill(*ualified practitioners, etc. !here is need for much harsher control for this to be prevented. E/uity I%(lications #f Pri'ate Health Insurance <otentially, the entry of new private players into the mar)et may actually worsen the e*uity balance in the economy, in terms of distribution of spending on health. Ene reason is that insurers may indulge in ris6 selection and screen off any potentially high(ris) clients. %uch a process will pose an unfairly large burden on those who are sic) and need ris) protection. #xacerbating this will be lac6 of a suita*le *uffer in terms of good *uality public health insurance. <ublic facilities may actually deteriorate with all *ualified personnel moving to the better paying private mar)et. !hough there has been an argument advanced that provision of better *uality and higher cost insurance may lead the rich to adapt to it, leaving the lower priced policies to the less well off. However, we find that such a trend is highly insignificant in terms of the percentage of the elite moving away, considering the many subsidies they receive on these very public policies.. !he only way this will happen is if the *uality differences between the private and public sectors are very large and the premium on private insurance very cheap, which is an extremely unli)ely situation. World ide concurrence is that ine!uality ill orsen ith mar"et opening up# until the regulatory authorities address these problems with measures li)e limiting the number of

policies that will be on offer, controlling price, etc. However, this negates the very point of opening up of the health insurance sector. $n the liberali&ed insurance mar)et, there will be %ulti(le distri*ution channels, which will include agents# bro"ers# corporate intermediaries# ban" branches# affinity groups and direct mar"eting through telesales and Internet. %ome channels will be cheaper than others. Hence there will be competition among the channels. !he new insurers will operate with the help of multiple distribution channels but the existing insurers may be forced to operate only with the help of agents. Hence, intense competition will grow among the old and new insurers in the mar)et to win the consumers. !his will pose a great challenge to the insurers in the liberali&ed insurance mar)et.

!he %ocial %ecurity Disability (%%D) program is one of our government0s best )ept secrets. %ocial %ecurity is an involuntary national insurance policy. A certain amount of money is ta)en out of your pay chec) every wee) (your 5$1A taxes) to cover benefit payments and 8edicare when you reach retirement age, or if you become disabled. Almost everyone )nows about the retirement function, and it0s one of the better run government programs. Almost nobody )nows about the disability function of %ocial %ecurity. And the government isn0t doing anything to tell you about its secret. 7et0s ma)e this clear right now" $f you wor) long enough at a ob which is covered by %ocial %ecurity and you become disabled you are probably eligible for %ocial %ecurity Disability (%%D) benefits. According to the %ocial %ecurity Administration, a HDisabilityI can be physical or emotional, or some combination of both. $n order to win benefits you must have a disability severe enough to )eep you from wor)ing in any regular paying ob for at least ,. consecutive months.

Ad'anta$es of social security

78 Increased .onthly Inco%e 7ong(term disability benefits or disability pensions from an employer or insurance company are generally not ad usted for inflation. However, %ocial %ecurity disability benefits increase when %ocial %ecurity cost(of(living ad ustments are made. +hen the 1onsumer <rice $ndex increases a certain percentage, %ocial %ecurity benefits follow. However, the monthly benefit amount from an employer plan generally remains the same. $f a disabled employee currently receives S,,=== monthly from an employer, ,= years from now that employee will still receive a S,,=== monthly payment regardless of inflation.

98 Increased !etire%ent and "ur'i'ors &enefits

%ocial %ecurity disability entitlement Ofree&esO a personCs %ocial %ecurity earnings record. $n other words, the time period during which a person receives %ocial %ecurity disability benefits is not counted as time the person is employed. +ith employer or insurance company plans, this isnCt the case. !his is important because future benefits( %ocial %ecurity retirement benefits, dependentsM benefits or even subse*uent disability or survivorsM benefits(are computed based on a personCs average earnings during a period of timeM for example, the past /4 years. $f there were no earnings for a number of months or years because of a disability and that period of time is included in the calculation, the average will be lower and the benefit computation will be lower. >ecause %ocial %ecurity doesnCt count that period of time at all, there is no negative impact on the average earnings. :8 Ta+-)ree Inco%e !his advantage is contingent upon how a premium is originally paid on long(term disability benefits. 5or example, if a person pays the premium during wor)ing years out of post(tax dollars, then the long(term disability benefit is not taxable when received. $f a person did not pay the premium (but was paid by another source), or if the person paid the premium out of pre(tax dollars, then the long(term disability benefit is taxable when received. $n addition, 4= percent of a %ocial %ecurity disability benefit is also taxable. ;8 .edicare o'era$e Enly .4 percent of todayCs employer0s offer extended health care benefits to their employees and most employers only offer 1E>;A protection on disabilities. 1E>;A legislation mandates that an employee can purchase ,2 months of health coverage when leaving a company. However, if a person *ualifies for %ocial %ecurity disability during the first ,2 months of 1E>;A coverage, an additional ,, months of 1E>;A can be purchased. %o, obtaining %ocial %ecurity disability can provide a person with health care

coverage for up to .- months after a disability occurs. !he disabled person, regardless of age, is then eligible for 8edicare coverage when 1E>;A expires. 8edicare coverage includes <art A hospital benefits and <art > medical benefits, which, when added to any other health insurance coverage, will increase overall health insurance protection. ('ote" %ome businesses are exempt from offering 1E>;A coverage, such as those with not(for( profit status and those with fewer employees than the federally re*uired minimum.) <8 Vocational !eha*ilitation and !eturn-To-0or6 Incenti'es +hen %ocial %ecurity approves a personCs claim for disability benefits, a determination is made as to the li)elihood that the personCs medical condition will improve. $f a personCs condition improves while participating in a vocational rehabilitation program that is li)ely to assist the person in becoming self(supporting. %ocial %ecurity benefits may continue until the program ends. $f medical improvement is not expected, a person will be eligible for a trial wor) period. !his trial allows a person to return to wor) with no restriction on earnings for up to nine months. After this period of time, a grace period of three months is allowed, during which the person can continue to wor), while his or her individual case is evaluated. $f the evaluation determines that the person is still disabled, that person can receive a %ocial %ecurity disability monthly chec), if thereCs any month during the next three years in which he or she does not earn S4== from employment. %o whatCs in it for the employerF #mployers should )eep in mind that, when an employee *ualifies for %ocial %ecurity disability, the employer(paid disability benefit is reduced by the original amount paid by %ocial %ecurity. (1ost(of( living increases are not factored in.) !his offsetting effect assures that the cost of benefits is shared by the employee and his or her employer. !hatCs the best way to assure that employers can afford to offer this benefit to future employees.

urrent Policies A'aila*le In .ar6et and the .a=or Players

+hen tal)ing of health insurance in $ndia, the first name that comes to mind is mediclaim, which is :$10s health insurance policy and has been the only policy of any real note in the country even though it may seem unattractive to any person who has been used to a comprehensive health insurance policy. As of now there are only two players in this field, 7ife $nsurance 1orporation and the :eneral $nsurance 1orporation (with its four subsidiaries.) 8ediclaim is the health insurance scheme offered by :$1 and ?eevan Asha is the health insurance scheme offered by 7$1. !he :eneral $nsurance 1orporation (:$1) was formed by a 7egislative ActM it is a merger of more than a hundred private companies. $t was then regrouped into the 3 subsidiaries of :$1" 'ational $nsurance 1ompany, 'ew $ndia Assurance 1ompany, Eriental $nsurance 1ompany, and Lnited $ndia $nsurance 1ompany. !he opening up of the sector has, however, brought in a lot of new players" +ith the mar)ets of Developed countries nearing saturation, insurers are loo)ing at the world0s emerging mar)ets. !hese developing economies comprise 23A of world population and ..A of global :D< but only -A of world insurance. En the other hand is the global insurance mar)et, concentrated mainly in 'orth America, +estern #urope, ?apan and Eceania( containing -,A of world0s annual premium collectionF %ince the gestation period of the typical insurance business is around ten years, it is high time for foreign insurers to ma)e their presence felt in $ndia. !he new players will have to prove their creditworthiness. $t will be a tedious and difficult tas) to woo customers away from 7$1 and gain their trust. !heir previous trac) record and brand value in overseas mar)et will not help them much in getting immediate brand recognition in $ndia. !hough they may piggybac) on the brand names of their local partner, in the long run, it is their persistent trac) record and creditworthiness, which will matter. %o, being among the first will be a ma or deciding factor to achieve success in this business. Already several companies have entered into the mar)et and a do&en companies have oined with foreign partners. !he real growth in the twenty(first century will come

from countries li)e $ndia and 1hina. Delay may doom future efforts to sta)e a claim in these high potential mar)ets.

The urrent "cenario:

8ost of the foreign 1ompanies entering $ndia have decided to focus on life insurance rather than health insurance per se. !hough there are companies li)e >a a Alliance, which has launched a mediclaim policy with cashless clai% facility1 !he insured under this policy can avail of cashless treatment from 3, hospitals across the country to the extent of sum insured and for ailments that are covered. !he ma or advantage is that under such plans, the policyholder is not re*uired to settle his hospital bills upfront and then ma)e a claim with the insurer. $nstead, the insurer settles the hospital bills on behalf of the policyholder, who can leave for home without paying. $tCs a precursor to the formal transition to a third(party administrator regime, which provides hassle(free health insurance and also standardi&es medical diagnostic procedures and hospitali&ation expenses. !his is something that is missing in the present day 8ediclaim policy of :$1, which re*uires you to ma)e the payments for hospital expenses and then submit the bill to the insurance company and wait to get reimbursed which itself may ta)e time due to the bureaucratic procedures involved. =A 4A ,=A ,4A .=A .4A /=A /4A L%A ?apan L@ :ermany 5rance The < &i$$est Insurance .ar6ets In 7>>>? In Percent1 Insurance .ar6et In 7>>> 7ife 6,A 'on(7ife /-A o%(osition #f The ,lo*al

o%(arison of India2s e+istin$ health scenario 'is-@-'is other nations $oin$ throu$h a si%ilar li*erali5ation (haseA !he $ndian insurance scenario pales into comparison when compared with other countries of the world where most of the developed countries have a large portion of government involvement in this sector. !he *uality and availability of government( funded healthcare in $ndia is an area of concern. +ith the advent of newer technologies, the cost of healthcare has become prohibitive for a large segment of the population. !he government and the people are using various health financing options to meet rising health care costs. Health insurance recently becoming being an affordable option, the potential and opportunity for insurance companies has immensely brightened. $n countries such as @orea, !aiwan, and %ri 7an)a, after the insurance sector was opened up, premia grew at thrice the rate of :D< growth. 1learly then, $ndia can benefit from the entry of private players. #ven overall, $ndia still has a low insurance penetration of ,.-4 per cent that ma)es it 4,st in the world. Despite the fact that $ndia boasts a saving rate of around .4 per cent, less than 4 percent is spent on insurance. !he following data indicates the status of select Asian 1ountries, with reference to their 'ational incomes and their Health expenditure both in public and private sectors.

Rural-Urban Mix
$t must be borne in mind that $ndia is a predominantly rural country and will continue to be so in the near future. 'ew players may tend to favor the OcreamyO layer of the urban population. >ut, in doing so, they may well miss a large chun) of the insurable population. A strong case in point is the current business composition of predominant mar)et leader the 7ife $nsurance 1orporation of $ndia. !he lionCs share of its new business comes from the rural and semi(rural mar)ets. $n a country of , billion people, mass mar)eting is always a profitable and cost(effective option for gaining mar)et share. !he rural sector is a perfect case for mass mar)eting. 1ompetition in rural areas tends to be )inder than that in urban areas, which are usually cutthroat and the generally smaller policy amounts in rural areas would be more than offset by the higher volume potential in these areas in contrast with urban areas. $dentifying the right agents to harness the full potential of the vibrant and dynamic rural mar)ets will certainly provide results. ;ural insurance should be loo)ed upon as an opportunity and not an obligation. !wo aspects that need to be developed so as to allow health insurers to penetrate the rural mar)et are" A smaller bundle of innovative products in sync with rural needs and perception BAn efficient delivery system. $n this light, the suggestions of the $;DA bill are extremely useful. +e need to set up cooperative societies that will encourage targeting the rural sector. Also, insurance agents need to be trained to sell health insurance to the rural layman, considering that the bucolic population in $ndia is more susceptible to falling ill, as regard to the health J conscious urban one.

Health Insurance Is NecessaryA &ut 0ho 0ill De'elo( It )or The Poor?
7i)e you, we are aware of the huge need to bolster health insurance in $ndia. A growing number of private health insurers sell insurance to wealthy individuals. And the government of $ndia is motivated to loo) for solutions to encourage health insurance for the poor, in pursuit of brea)ing the vicious cycle of poverty (T ill health (T poverty. 5or the time being, most poor $ndians are unable to pay the cost of healthcare to heal their illnesses, and they must rely on themselves alone when paying the direct and indirect cost of illness. $n some cases, individuals can get limited help from their community, as some groups have started Hmicro health insuranceI units, which offer rudimentary pre(payment solutions. 1an micro health insurance units serve as an effective instrument in insuring the poorF !he pro ect H%trengthening 8icro Health $nsurance Lnits for the <oor in $ndiaI intends to provide new evidence(based reasoning how the stability and efficiency of schemes in place can be increased, and pave the way for the establishment of new schemes.

Health Insurance for the !ural Poor?

5or most people living in developing countries Hhealth insuranceI is an un)nown word. $t is generally assumed that, with the exception of the upper classes, people cannot afford such type of social protection. !his is a pity as also poor people demand protection against the financial conse*uences of illnesses. 5or most people living in poor developing countries illness still represents a permanent threat to their income earning capacity. >eside the direct costs for treatment and drugs, indirect costs for the missing labor force of the ill and the occupying person have to be shouldered by the household. Health insurance schemes are an increasingly recogni&ed factor as a tool to finance health care provision in low income countries. :iven the high latent demand from people for health care services of a good *uality and the extreme under(utili&ation of health services in several countries, it has been argued that social health insurance may improve the access to health care of acceptable *uality. +hereas alternative forms of health care financing and cost recovery strategies li)e user fees have been heavily critici&ed, the option of insurance seems to be a promising alternative as it is a possibility

to pool ris) transferring, unforeseeable health care costs to fixed premiums. ;ecently, mainly in %ub(%aharan Africa but also in a variety of other countries, non(profit, mutual, community(based health insurance schemes have emerged. !hese schemes are characteri&ed by an ethic of mutual aid, solidarity and the collective pooling of health ris)s. $n several countries these schemes operate in con unction with health care providers, mainly hospitals in the area. Against this bac)ground the 1enter for Development ;esearch (U#5(>onn) analyses within his research program on social security systems in rural areas the prospects and limitations of innovative health insurance schemes. $n close collaboration with national research institutes empirical studies are currently being carried out in #thiopia, 1hina, :hana, $ndia, %enegal and !an&ania. !he aim of these pro ects is to estimate demand for health care and health insurance, *uantify economic and social impacts, as well as identifying factors of success and failure. !he studies focus on rural areas because here the need for insurance is especially, but private insurance mar)ets do not exist and public measures often fail to reach their target population.

I%(act on the Poor

Developments on the health insurance front will not leave the poor unaffected. #ven though private for(profit insurance companies are not expected to voluntarily provide health insurance cover to the poor, the poor may still be affected on account of the influence that development of health insurance will have on the supply of such services. 5urthermore, the poor may also directly benefit if insurance regulations are specifically designed to achieve redistribution and e*uity ob ectives. At the minimum the government must ensure that (i) the liberalisation of insurance mar)et provides value for money for the direct beneficiaries (ii) the poor are not adversely affected by the liberalisation (<eters et al. .===). However, the government can definitely aim higher by ensuring that the poor too benefit from the developments in health insurance. !he li)ely impact of developing voluntary insurance on the poor is far from clear. !here are both potential benefits and ris"s associated with it. Development of health insurance would influence supply of health services both in terms of its *uality and price. $t would also influence the extent of public funds available for subsidising the poor. !he

potential benefits and ris)s are formally listed below"

Potential &enefits:
$f the introduction of evidence(based medicine tric)les down to other providers that are used more often by the poor, the poor could benefit from the improvement in *uality in the private sector. B$f public subsidy to the non(poor who oin health insurance decreases, greater public resources may be available for providing subsidy to the poor

Potential !is6s:
!his section is based on the findings and recommendation made during the +orld >an) organi&ed national seminar on private health insurance in 'ovember ,---. !hese are reported in 5erreiro (.===), <eters, D. et al. VaW and <eters, D. et al. VbW. !he gap between the poor access at present and the re*uired access may increase with cost escalationM As the non(poor ma)e a switchover from public to private hospitals there is a ris) of political support for public financing getting reduced which would impact the poor by excluding them *uality care from private mar)et or by deteriorating *uality and wea)ening support for public services (<eters et al. .==.) !he poor might benefit from the expansion of private providers if the supply of health care expands due to increase in affordability resulting from health insurance. However, if prices grow faster than delivery capacity, cost escalation may even expand the existing gap between the poor and the re*uired access to health care. All this is unpredictable, since it depends on the supply response of health care and the model of health insurance implemented in the country. ;egarding the latter, it is clear that an $ndemnityNfee(for(service system will unavoidably result in a severe cost escalation whereas a managed care which coordinates financing and delivery of healthcare would probably be capable of maintaining costs under control. 8anaged care by containing of unnecessary treatment helps in containment of costs and thereby ma)es health insurance more affordable to larger number of peopleM provides incentives for improving healthcare deliveryM promotes preventive care such as medical chec) ups, immunisation and so on. %ince fee(for(service approach to payment of health providers tends to escalate costs the government should encourage managed care models.

Women and health sector

:iven the above dismal picture of health care in $ndia not much can be expected in favor of women as clients of the health care system. >oth the private and the public health systemCs core attention towards women is viewing the latter as mothers. +hile the private nursing home sector mostly comprises of maternity homes, the public health sectorCs ma or concern vis(X(vis women is to prevent them from becoming mothers. +hile the private maternity homes cater to the urban population and the middle classes (about 4= million women in the reproductive ages) the public sectorCs health services offer family planning services (overwhelmingly tubectomies and $L1Ds) in both rural and urban areas covering over ,== million couples. !he maternity services available under the public sector, especially in rural areas, is mostly through paramedics li)e auxiliary nurse midwives or trained dais. >eyond the above and some other occasional services li)e ante(natal care and abortion services (both within the context of family planning), very little else is available to women to address their general and other gender(specific health care needs. Ef course the informal sector practitioners do cater to some specific needs of women li)e abortions, white discharges, psychic problems (what patriarchal literature calls hysteria) etc. >ut very little of it is documented to enable a discussion or ma)e comments. %ome efforts are definitely being made to understand the contributions and Nor harms of such providers.

%ome ':Es and +omenCs groups have put in efforts to document this and have even helped in improving s)ills of such practitioners. !his gross neglect begins with defining womenCs health care needs and their low status in society. +omen in $ndia, and especially those in rural areas, given their general living conditions and the double burden on their shoulders, have never publicly voiced their concern over their reproductive, sexual and gynecological health needs. #ven something as obvious as menstruation is grossly neglected and this has serious conse*uences because many diseases in our country are related to blood loss ( tuberculosis, malaria, dysentery, )alaa&ar, hoo)worm ( and hence ma)es anemia an extremely important concern of womenCs health which presently receives very little attention.

!he health system, as indicated earlier, views womenCs health only in terms of their uterus. !hus, historically all health programmes designed specifically for women have been related to that ( 81H, family planning (contraception), child survival, safe motherhood, etc.. +hat is tragic is that even this narrow focused approach has failed to provide women with safe pregnancy, maternity, contraception, etc.. High maternal mortality and the high level of unsafe, unhygienic births, especially in the countryside, is evidence which stands out pointedly. !he table below clearly shows the poor overall coverage of both the private and public health sectors ta)en together for the various 81H services as found during the 3.nd ;ound of the 'ational %ample %urvey in $-26(29 and the '5H% in ,--.(-/. !he rural ( urban and the strong class differences are also worth noting. +hile the '5H% data is not strictly comparable with the '%% data, the improvement in coverage, especially of immunisation and A'1, over the period due to perhaps the mission approach and higher allocation of resources is also worth noting.

Health "ector )inancin$ in onte+t of 0o%en2s Health

$n the last decade or so the health of women has been receiving special attention the world over. 5rom the 'airobi L' 1onference, through the 1airo $1<D and to the recently concluded >ei ing 1onference, health and health care of women has been an important agenda item which has ta)en a growing share of attention, and especially so reproductive health. And it is here where the catch lies. +hile recognising the importance of reproductive health, especially in a country li)e $ndia which still has relatively high fertility, overwhelming proportion of deliveries being conducted at homes, often under unhygienic conditions, a supposed unconcern for gynecological morbidities and an embarrassingly high proportion of abortions being done illegally, it is even more important to emphasis the need for ma)ing available comprehensive health services to all, and especially to women as a group for their special needs. !he danger of beginning with reproductive health is narrowing down the focus to the uterus, precisely what the womenCs health movements want to avoid. And pushing for ma)ing reproductive health a special program under the %tateCs primary health care program would end up the same way in which earlier versions of health programs of women li)e the 81H program or safe(motherhood have ended ( targets for population control programs, and especially ha&ardous contraceptives li)e in ectables and implants. !hus the demand must begin with provision of easily accessible and free of cost comprehensive health care for all, with a clear recognition and provision for the special needs of women, as well as for other vulnerable groups li)e children, senior citi&ens, tribals etc. 'atural and social ustice demands that society must provide for a basic decent human life. !his becomes even more imminent in countries where poverty is rampant but it is precisely in such countries where social provisions, li)e health, education, housing, public transportation and other public utilities, are not available to a large ma ority of the population.

Health Ad%inistration Tea% BHAT8 scores a firstC

!his 1laims %ettlement case, handled by HA!, perfectly underlines how we can generate that extra goodwill ( ust by leveraging our )nowledge and experience. !he client in this claim was a lady employee of :u arat <aguthan #nergy 1orporation. !he patient in need of Health $nsurance coverage was her spouse. !he client was earlier handled by a !<A and was *uite satisfied with the services. !he proposition of our HA! services was made to the client at the time of renewal. $nitially, there was some hesitancy from the clientCs side as they were apprehensive about an insurer coordinating cashless services directly. 1overage of hospitalisation expenses & cost of surgery. !he patient was suffering from inguinal hernia and needed an operation. !he client intimated us of the hospitalisation / days in advance to ensure smooth cashless dealings with the hospitals. HA! suggested hospitalisation at a prominent hospital in 8umbai, which was a part of the >a a Allian& Health Administration !eam networ). HA! contacted the hospital and arranged for the preauthori&ation of the client to get an estimate of the expenses. !he hospital provided an estimate of ;s. 4=,=== excluding the surgeonCs charges as the latter would be provided by the surgeon after the patient was admitted. >ased on past experience with !<As, HA! deduced that this may be a ploy to inflate the bill after the patient has been admitted, as, by then, changing hospitals wouldnCt be a viable option. 8eanwhile, HA! had gathered data about the approximate costs for this surgery in other hospitals. !he client was anxious, expecting a huge bill for the surgery, and more so, as HA! was handling its first case with a big corporate hospital. After admission, a pre( authori&ation estimate of ;s. ,,.4,=== was sent to HA! for approval which was much above the average cost of this surgery in other hospitals. !he hospital billings department was immediately contacted and negotiation of the rates was conducted. HA! too) a strong stand on the flimsy logic behind the high estimate and insisted that the rates be reduced to a reasonable level. !he hospital responded by stating that other !<As had been adhering to this rate without ob ections. HA! pressed upon the hospital authorities to revise the rates on the premise that HA! would discontinue the agreement unless preferential rates were extended to our members.

After further negotiations, HA! was able to convince the hospital to reduce the cost of the treatment and surgery to ;s. 64,=== including all cost components. !he patient underwent surgery for his ailment, and the operation was conducted successfully. $n this case, HA! was able to help the patient by drawing on its past experience. HA! could gather accurate information from its networ) of affiliated hospitals, which enabled it to verify the accuracy of the cost estimate of the surgery. !his made it possible for HA! to negotiate with !he hospitals on behalf of the patient on solid grounds, and bring the estimate of the operation down by a significant amount. !hus, the patient was ensured the highest *uality of heath care at a reasonable price. !he balance sum insured can be used later. !he client was very satisfied with the services offered by HA!, and responsiveness to the situation at hand. !hey were glad to have got hassle(free hospitalisation with all the modalities being ta)en care of by HA!. !hey were particularly happy about the price differentiation that they availed of by moving away from the !<A services to HA!.

onclusion: Health insurance is a emerging important financial tool in meeting health care needs of the people in $ndia. #xponential rise in the cost of delivery of healthcare services, price competition, mar)et realignment are the ma or factors that are forcing hospitals to scrutini&e their business processes and to redesign them in a manner that would not only help to )eep the prices competitive but also help in delivering *uality care to the patients.