123 (New)

INTRODUCTION
India is the first largest country in terms of purchasing power parity and is considered one of
the fastest emerging economics in the world. However, its health status remains a major
concern. Infant mortality rate of India is as high as 54.6 while it is around 23 for China.
Similarly life expectancy at birth for India is around 64.7 while it is in the range of 77.80 for
many countries. Insurance generally comprises of life and non-life (general) insurance. Health
Insurance in India comes under general insurance. The development of health insurance in
India therefore, has to be seen in the backdrop of the development of insurance in general.
Healthcare, with global revenue of over Rs.2.75 trillion is the largest industry in the world.
The nation of India with a population of 1000 million experiences a vast inequity that exists
sin the healthcare industry with barely 3 percent of the population covered by some form of
health insurance, either social or private. Health insurance schemes are increasingly
recognized as preferable mechanisms to finance health care provision. The option of insurance
seems to be promising alternatives as its pools and transfers risk of unforeseeable health care
costs for a pre-determined fixed premium. We do not social security system, appropriate
Health Insurance Schemes for different sections of the society particularly underprivileged
and the poor is an urgent need of the hour. Insurance penetration being very low and health
insurances share being minimal in the existing situation, the vast majority of the populations
are outside the existing Health Insurance System. With the opening up of the insurance market
for private entry and the accompanying hype it is being hoped that in the days to come, the
teeming population of India can look for health coverage from an array of insurance providers
that too at an affordable price. The present series on health and group insurance therefore
attempts to trace the significance of health insurance and its basic tenets in preserving the
economic value of the lives of the citizens.
ORIGIN OF HEALTH INSURANCE
The concept of health insurance was proposed in 1964 by Hugh the Elder chamberlen form
the Peter Chamberlen family. In the late 19th century, early health insurance was actually
disability insurance, in the sense that it covered only the cost of emergency care for injuries
that could led to a disability. This payment model continued until the start of the 20 th century
in some jurisdictions (like California), where all laws regulating health insurance actually
referred to disability insurance. Patients were expected to pay all other healthcare costs out of
their own packets, under what is known as the fee for-service business model. During the
middle to late 20th century, traditional disability insurance evolved into modern health
insurance. It is not an easy task to regulated health insurance. Some countries including the
US had to launch war-like operation to unearth large scale frauds. Malpractices in health
Insurance range from excessive billing to exaggerating severity of hospital patient conditions.
In India, Health Insurance is not of recent origin. Concern for loss resulting from accident
and illness can be traced to ancient civilizations. In fact, one of the earliest forms of health
insurance may have been based on the ancient custom of paying the doctor while in good
health and discontinuing payment during periods of illness. This custom existed in South
East Asian countries including India. The development of health insurance in existing form
in India is based on pattern followed in Europe and America. Health Insurance or medical
insurance schemes had developed in India due to industrial relations problems between the
employer and the employees. The Corporate Houses used to offer core and non-core benefits
to the employees. The insurance policies were granted to large Corporate Houses purely on
an accommodation basis. The cover usually offered to the employees was in the nature of
hospitalization and domiciliary treatment for dental and non-surgical eye treatment. The
benefits used to be for very small amount. There was no scheme for individuals and families.
In 1981, the Apex Body of Public Sector Insurance Companies i.e. GIC designed a limited
cover for individuals and families for covering their hospitalization needs. This was replaced
by a mediclaim policy in the year 1986 under a market agreement to provide insurance
benefits to individuals and groups under a group mediclaim policy. The scheme so
2
introduced was modified in 1991 and 1996 in the light of experience and suggestions
received from the insuring public and medical fraternity. The benefit provided under the
policy was on reimbursement basis on occurrence of a major calamity in the form of
accident/sickness to an insured person.
The first Mediclaim Insurance Scheme was introduced by GIC in 1986 for people not
covered under the above scheme. Prior to 1986, cover against sickness and diseases were
provided by extension of Personal Accident Policy. It is interesting to note that even after
nearly two decades of health insurance, the population covered by health insurance is only
1% of the total population. The following table demonstrates the progress of health insurance
in India:
:
Year
1999-00
People Covered
(lacs)% increase
48.94
Premiums (Rs.
In Crs.)
380
Per Capita Premium

(Rs.)
777
2000-01
56.23
519
923
2001-02
77.84
742
953
2002-03
88.02
895
994
2003-04
109.95
1024
931
MEANING AND DEFINITION
Health insurance insures you and your family against sudden medical expenses. A medical
emergency can arise due to sudden illness or injury. With medical expenses rising, a health
insurance policy would help you sail through a bad patch. Your medical expenses will be
taken care of by the Insurance companyprovided you pay your premium regularly.
World health organization defines health as complete physical, mental and social well being
and not merely the absence of disease and injury. As per WHO, a countrys Health Systems
comprise of all the organizations, institutions and resources that are devoted to produce
health actions
New India Assurance Company Limited, stressing on the social security aspect of health
insurance, in their written note, stated; Basically the philosophy behind the concept of
Health Insurance is to provide protection against uncertainty of illness /accident by spreading
the risk based on the principle that what is highly unpredictable for an individual is
predictable for a group of individuals. Thus, insurance is a system by which Healthcare
expenditure of few unfortunate individuals, who suffer from illness/injury, is shared by many
fortunate ones who are insured and exposed to the same risk but remain healthy.
Oriental Insurance Company, emphasizing the financial security aspects of health insurance,
in their written note, stated; Health insurance is a financial mechanism that exists to provide
protection to individuals and households from hospitalization expenses incurred as a result of
unexpected illness or injury. Under the mechanism, the insurer agrees to compensate or
guarantees the insured person against loss by specified contingent event and provide financial
coverage for which the insured party pays a premium. The case for health insurance rests on
three grounds: a) Illness can not be predicted; b) Financial burden of hospitalization is high
and cannot be planned; c) The proportion of people requiring hospitalization due to illness or
injury in any large population is small thus enabling risk pooling. Pooling of risks, resources,
and benefits is the hall mark of any insurance system.
Form
Scheme
Beneficiaries
in lacs
Social
The Employees State Insurance Scheme
253.
/Mandatory
Central Government Health Scheme
43.
State Sponsored Schemes
5.
Schemes
(This figure may be enhanced with the recent coverage
extended by Assam Government to its undeserving
population)
Employer based
Railways Health Scheme
80.
Schemes
Defense employees
66.
Ex-Serviceman
75.
Mining & Plantations (Public Sector)
40.
Employers run facilities/reimbursement schemes of private

sector/public sector.
60/80.
Commercial
Pubic Sector Non-Life Companies
100.
Schemes
Private Sector non-life Companies
8.
Health Segment of Life Insurance companies
2.3
Community health schemes by NGOs and others
30.
Community
Schemes
WHY HEALTH INSURANCE IS A MUST?
Health insurance has become a necessity today because it plays a major role in health care.
This is because one never knows when illnesses may strike. And in such cases hospitalization
and medication expenses can be unaffordable. Health insurance can prove to be a source of
support by taking care of the financial burden of your family may have to go through.
Advancement in science and technology has brought about a revolutionary change in mans
life. It has reduced mortality rates and increased his life span but at the same time has given
rise to a number of other ills. Increasing pollution levels especially in metros, stress and strain
at workplace, cut throat competition taking its toll are some of the harsh realities.
Pollution levels in certain areas are unimaginably high and the areas are nothing short of gas
chambers. An individual going to his place of work has to spend long hours in queues,
inhaling the vehicular emissions of poisonous carbon monoxide gases affecting his health in
the long run. Besides accidents on roads are common features.
In such instances timely affordable medical help is the need of the hour. But this may be
easier said than done. Treatment for major illnesses or accidents can be unaffordable and may
leave you poorer by thousands of rupees.
It is especially worse when the patient needs specialized care. Expenses are exorbitant and the
situation leaves you mentally devastated also burning a deep hole in your pocket. The family
balance is affected, all those comforts of life have to be given up and your family has to make
up with bare minimum necessities only.
Health insurance takes care of you in such circumstances. It will help you tackle such
situations with ease by providing you with timely and adequate medical care. The financial
burden of footing huge medical bills is taken care of by health insurance. Besides if the
accident causes life long disability to the patient, the earning member of the family, the
insurance company will come to the rescue.
Primary health care - a basic necessity and right of every individual, is today only a distant
dream. The government has done precious little in this regard for the masses and hence the
private sector has taken up the challenge to exploit the potential of the 92,400 crore healthcare
industry.
With educational levels going up people are becoming increasingly aware of the need of
timely healthcare facilities. But at the same time the high costs of private health care is a
major deterrent. The need of the hour is affordable health care for all in order that even the
people in remote villages can have access to it.
Insurer
2003-2004
2004-2005
Fire
Marine
Motor
Health
Fire
Marine
Motor
Health
Public sect
-33.3
-13.32
13.46
28.89
-1.46
2.85
9.30
17.79
New India
-10.9
-21.90
8.06
54.92
2.54
-2.31
8.33
27.23
National
-1.63
-13.14
29.73
42.36
3.05
34.93
19.02
26.28
United India
4.67
-11.32
3.87
10.85
-6.69
-18.57
-7.79
5.24
Oriental
-1.62
-4.01
12.28
7.78
-5.61
10.0
14.80
6.58
Pvt. Sector
63.5
120.85
86.67
130.3
28.7
48.56
70.39
114.21
Total
6.57
-3.92
18.66
35.13
5.39
10.22
16.13
27.91
INDIAN SCENARIO
In India, presently the health insurance exists primarily in the form of Mediclaim policy offered
to the individual or to any group, association or corporate bodies. The government spending is
less than 25 percent against the average spending of 30-40 percent in other developing
countries. There is need for regulation for the self-funded health plans by major employers who
may not find insurance as a cost effective alternative.According to WHO figures (2002), total
health expenditures represent 6.1% of Indias GDP, but most of this amount, representing
4.8% of GDP is the share of private expenditures and only 1.3% of GDP is public
expenditure. Of the 4.8% private expenditure, 98.5% are out-of-pocket spending of users. In
other words, 77.5% of total expenditure for health care costs is paid by individuals or
households (WHO, 2005) and this huge expenditure does not pass through any pooling
mechanism. Access to health care in India is still low and with only less than 1% of GDP
allotted to public health, there is lack of adequate health infrastructure.
.Penetration of Mediclaim is currently done by state-owned insurance companies, covering only

about 2.5 millionpeople i.e. less than 0.50 percent of the countrys population. There are some
health insurance schemes issued by four public sector general insurance companies, namely,
National Insurance Company Limited (NICL), New India Assurance Company Limited
(NIACL), Oriental Insurance Company Limited (OICL) and United India Insurance
Company Limited (UIICL). Besides these four companies, Life Insurance Corporation (LIC)
of India also offers a few health covers in a limited manner. At present, 82.44% of the entire
commercial health insurance business in the country is shared between public companies, while
private firms manage the rest 17.56%.The number of beneficiaries under the various forms of
health insurance in India is given in the table below
Insurer
Health premium (in Health premium as a %

RsCrore)2005
age of total non-life
business 2004-2005
Growth of health
premium (20042005)%
ICICI Lombard
Bajaj Allianz
Royal Sundaram
IFFCO Tokio
Tata AIG
Cholamdalam
Reliance
HDFC Chubb
Private Sector
New India
National
United India
Oriental
Public Sector
Total
118.78
70.39
30.02
28.37
26.64
20.12
7.98
1.97
304.27
504.28
364.29
294.19
265.14
1427.9
1732.17
13.4
8.3
9.1
5.6
5.7
11.8
4.9
1.1
8.6
11.9
9.5
10.0
8.7
9.8
9.6
257.0
242.2
88.8
73.3
35.3
2.4
148.0
43.9
26.3
5.2
13.9
24.0
36.0
Paradoxically, the medical professionals are resisting standardization in treatment coding

known as ICD and cost cutting measures for making the medical treatment affordable to the
ailing. They tend to forget that that future growth of healthcare in a country like India would
depend upon the development of health insurance model. The need for support from the
health domain members/players and the ministry of health both at the centre and the state
cannot be overemphasized. However given the state of affairs of regulations in the healthcare
sector in India, it is doubtful whether full fledged insurance companies would like to take
healthcare risks manageable so that insurers may find it worthwhile to move into the sector in
a big way.
ISSUES AND CONCERNS

All over the world, insurance coverage is being extended through 3 basic models: i) public
financing and public delivery as practiced in the UK until its recent reforms, ii) private
financing and public delivery as the model practiced in the US, Singapore, and Taiwan and iii)
public financing and private delivery as the Bismarck model, idealized national (public or
social) health insurance scheme practiced in Canada, Germany, France, Japan and China.
Health care insurance is one such alternative that covers the risk of payment for health care.
William C Hsiao (1992) of the Harvard University undertook a comparative study of the three
models and concluded that "public financing and private delivery" of health care as practiced
in Canada is the best among the 3 models in terms of performance, health outcome, public
satisfaction and access to health. There is however, a school of thought that doubts the
suitability of this model to Indian conditions on the grounds that:
i. The size of the population is far more than any of the countries where it is being currently
practiced efficiently.
ii. The level of the per capita income is far lower than in other countries.
iii. The type of federal set up India has is different from the rest.
True, these apprehensions cannot simply be shunned off but one redeeming feature of the
Indian system is that it has the necessary infrastructure - sizeable public hospitals, not-forprofit voluntary organizations plus highly skilled professionals in different kinds of medical
services and decades of experience in managing insurance business. What is therefore needed
is a better link-up of these available resources with the ordinary consumer at an affordable
price. With the opening up of the insurance market for private entry and the accompanying
hype it is being hoped that in the days to come, the teeming population of India can look for
health coverage from an array of insurance providers that too at an affordable price. The
common negative factors which evolve after looking at various health coverage phase are
1. Quality of service when facilities are owned by the plan giver. ESIS, CGHS is grossly inferior
Reimbursement delays in case out of pocket spending and or rejections of claims
2. Limitations of services Either monetary restriction on the amount available per year or noncomprehensive care of certain pre-existing & chronic ailments.
3. Inadequate information regarding health, ailment, procedures & treatments, cost and outcome
4. Provider malpractices
5. Coatings for comprehensive total care
6. The Low Level of Medical Penetration in India
Health care spend in India is considerably lower than that in other countries..
Life expectancy (avg.
US
UK
Mexico
Brazil
China
India
Access to
77.4
78.3
72.6
71.4
72.5
64.0
health care
service
# of years)
providers and
# of Physicians per
2.7
1.9
1.7
1.2
1.7
0.4
1,000 people
Healthcare spend
availability of
physicians is
5365
3036
336
236
62
32
one part of the

issue
(USD per capital
Financing for
Healthcare spend (%
13.2
8.4
5.5
7.5
5.0
5.3
of GDP)
health care is
the other
aspect of the
issue
LICENSING HEALTH INSURANCE IN INDIA

Health insurance is one of the most regulated forms of insurance business in those countries
where it plays a dominant role in financing of health expenditures. Spiraling healthcare costs
and rapid technological advances in the medical field have triggered the need for costcontainment by the health insurers without sacrificing the interest of the policyholders or
claimants. The nature of loss in health insurance might result in differences of opinion. All
these call for intervention by regulatory authorities to protect the consumers
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However, under the Insurance Regulatory Development Authority (IRDA) in India, the
powers of licensing and regulatory insurance, including health insurance, has been mandated
under an act parliament.
Despite such a regulatory authority, very little has been done by IRDA to lay down ground
rules for hospitals which run health plans and may be required to register themselves as
insurers or hospital managed organizations (HMO). It may be pertinent to note that in similar
situation, the US federal and state health insurance regulation prescribe elaborate legal
framework to ensure quality standards for rate regulation, cost containment, etc.
HEALTH SECTOR FINANCING

One of the major goals for the future health system in India is to ensure good health for the
population through access to high quality services. To achieve this goal, there is a need to
enlarge coverage and rationalize the current mechanisms for collective health financing. There
are at least six dimensions of the choice of health financing policies:
Identification of beneficiaries
Benefits covered by insurance source(s) of financing
Methods for provider payment institutions that pay providers
Role of public and private sectors in the delivery of service
The world Health Organization has defined possible approach to financing of health
expenditure
Using central/state revenue
for health
Compulsory premium
contributors to health
Channeling loans, grants
Tax-based and outof-pocket expenses

are direct expenses
related outlays
etc. to healthcare
Payments to health are
providers for service
Premium contributions
towards health support
11
Health Ins. Involves

a fund pool for future
healthcare
Tax
funded
Public
Total health
Expenditure
Private
Social
Security
Externally
funded
Out-ofPocket
Private
Health Ins
Externally
sourced
HEALTH INSURANCE AS A HEALTH FINANCING TOOL

Attracting additional money for health additional resources may be available through
insurance because firstly, consumers are more enthusiastic about paying for health insurance
than paying general taxations, the benefits are specific and viable and secondly, consumers
are more able and prefer, to pay regular, affordable premiums rather than paying fees for
treatment when they are ill. Getting better value for money (or increasing efficiency)
Improving the quality and targeting of healthcare (increasing effectiveness)
1. A greater explicitness and viability of spending on health services occurs as a result of
insurance.
2. The third party institution can specify in contracts the kinds of healthcare that to be provided
and can therefore concentrate on providing cost effectiveness
3. Consumers, and their representatives, will demand better quality care because they can see a
definite link between their payments and services
OPPORTUNITIES AND CHALLENGES
The total percentage of population covered under any sort of medical coverage is in single
digits which is woefully inadequate. Further, most of these covered persons belong to the
organized sector mainly in sectors like Railways, Defence, Central Government, etc. Within
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this, only a negligible percentage of the persons are covered under private health insurance. If
we are seriously looking at a problem is by resorting to alternative avenues like private health
insurance. It is usually mentioned that it is difficult to bring the rural, illiterate folk under the
umbrella of insurance. When it comes to health insurance, this argument would not hold any
credence as many of the so-called educated people themselves do not understand the
importance of having such protection. Thus, there is a monumental task of convincing
different classes of the society about insurance in general and health insurance in particular.
Let us take a look at how health, as a class, has been performing in the Indian insurance
market. A commercial health insurance policy has been introduced in the market in the late
1980s; and thus it remains one of the youngest classes to be introduced in the industry. In
spite of that, it is third largest class in terms of gross premium(Rs.78,831 lakh) earned for
the quarter-ended June 2006, after Motor (2,39,117) and Fire (Rs. 1,63,286). Further, even
if one considers the growth percentage of any class, health has grown by about 44% for the
one-year period (June 05 to June 06). In absolute terms, it has registered a growth of Rs.25,
303 lakh from Rs. 53,528 lakh. This compares very favorably with the overall performance of
the industry which registered a growth of Rs.1,24,906 lakh, from Rs.5,38,084.32 to
Rs.6,62,900.78; which is around 23%. In the process, it has overtaken more conventional
classes of insurance like marine and engineering. Looking at in isolation, it has a
commendable performance.
But when one looks at the percentage of the population who actually go for commercial health
insurance, particularly in the rural areas; one could easily realize that something grossly
wrong with the way private health insurance is being accessed in the country.
On the contrary, it is commonplace to observe some member or the other in many families to
be hospitalized in a nearby town and in most of these cases; they end up paying huge amounts
of hospital hills. Going further, the funding for such casualties is provided by the ubiquitous
moneylender; and thus they become unfortunate victims of a debt trap. Looking at the
importance of providing healthcare for the masses, any amount of hard work should not be
deterrent. In accomplishing this huge task, there is a role for everyone to contribute in
whatever manner they can.
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NEED FOR PRIORITIES

Further, there is a huge emphasis on curative care- both in the case of healthcare management
of the country as also when it comes to providing commercial health insurance. Over a period
of time, we have managed to eradicate some of the killer diseases like smallpox. Further, we
have also been able to spread awareness about the maladies of afflictions like polio; and
promote the administration of vaccinations against such invalidating conditions by promoting
strong campaigns. This augurs well for the health of the country, at least on the area of
preventing such diseases. But when compared to some of the other third world countries, we
are way behind in tackling diseases like malaria, water-borne infections etc. there is a certain
need to achieve better progress in this area; and given the means, it is not impossible
altogether; it is just that the right focus and direction is to be targeted.
GOVERNMENT/STATE BASED SYSTEMS
The best documented and largest system of health care delivery in India is the diverse network
of hospitals, primary health Centres, community health centres, dispensaries and speciality
facilities financed and managed by the Central and State local Governments. These facilities
are officially available to the entire population either free or for nominal charges. Along with
some other networks of village health workers, maternal and child health programmes and
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speciality disease prevention programmes these public facilities carry out a central role in
Indias primary health care system short of durgs and essential supplies and that they
sometimes suffer from low morale and inadequate motivation.
The health facilities made available to the public are managed and operated under the
authority of central and state agencies. The state governments mostly own and mange the
public sector delivery system and have to bear the costs of operation. But the Central
Government plays a major role on the planning, financing and transfer for resources that
determine new investment in health facilities and specialized programmes. Much of the
funding for health facilities originates from the Union Ministry of Health and Family Welfare
and is channeled to the state governments, which retain considerable authority for the
spending decisions. Over the years, the Central Government have been the main source of
funds for the primary health care facilities, whereas the states bear the major responsibility of
recurrent costs, especially the costs of running hospitals. This system has added to the overall
inefficiency of public heath facilities.
CENTRAL GOVERNMENT HEALTH SCHEME

The Central Government Health Scheme (CGHS) was introduced in 1954 as a contributory
health scheme to provide comprehensive medical care to the central government employees
and their families. It was basically designed to replace the cumbersome and expensive system
of reimbursements (Ministry of Health and Family Welfare, Annual Report 1993-94).
Separate dispensaries are maintained for the exclusive use of the central government
employees covered by the scheme. Over the years, the coverage has grown substantially with
provision for the non-allopathic system of medicines as well as for allopathic. In addition, the
CGHS reimburses patients for part of their out of pocket costs on treatment at the government
hospitals and some other facilities.The list of beneficiaries includes all categories of current as
well as former government employees, members of parliament and so on. The CGHS has
been in the recent past, widely criticized from the point of view of quality and accessibility.
EMPLOYEES STATE INSURANCE SCHEME

Established in 1948, the Employees State Insurance Scheme(ESIS) is an insurance system
which provides both the cash and the medical benefits. It is managed by the Employees State
15
Insurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a

compulsory social security benefit for workers in the formal sector.It benefits 33.4 million
workers with income less than Rs.6500/- a month along with their families. Since 1989 the
schemes has been expanded, and it now includes all such factories which are not using
power and employing 20 or more persons. Mines and plantations are explicitly excluded
form coverage under the ESIS Act.
EMPLOYER-MANAGED SYSTEMS
Employer-managed health facilities and the reimbursement of health expenses by
employers are the other means of health insurance in India. Generally, the public sector
undertakings and big industrial houses have their own dispensary and hospitals and provide
medicines, etc, across the counter, usually within the company premises township. These
include defence services, educational institutions, particularly universities also provides
medical services to their employees.
In addition, there are various medical reimbursement plains offered by employees for private
medical expenses in the private sector including commercial banks and autonomous
institutions. Also, in some organization we may find a self-insurance system known as
medical benefit or medical allowance scheme. Under this scheme, employees incurring
medical expenses are required to submit their claims to their employees for reimbursement,
and reimbursements are not linked to their individual contribution. Such coverages generally
vary according to the employees salary or designation. Overall, the performance of these
systems in India has been satisfactory.
NGO SYSTEMS
Health facilities are also provided by voluntary and charitable or Non-government
organizations(NGOs). Some of the important NGOs are Child In Need Institute (CINI),
Self-employed Womens Association (SEWA), Streehitkarni and ParivarSevaSanstha. The
health care facilities offered by these organizations are a part of their main objectives.
Though, these are not exactly health insurance programmes, yet they have potential to
generate awareness and associate themselves with the major health insurance.
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MARKET BASED SYSTEMS

A. GIC Mediclaim Coverages
The GIC holds a major share in the market-based health insurance segment. It introduced the
standard Mediclaim health insurance scheme in 1986, and become operational in 1987. This
product was later on modified in 1997 to allow for premium differentials for various age
group meant for both individuals and groups. As on date, the GIC and its subsidiaries offer
the following products:
A.1Mediclaim or Hospitalization Benefit Insurance Policy

Suitability
Anyone in the age group of 5 to 80 years can take the policy. Children in the age group below
the age of 5 years can also be covered from the age of 3 months onwards provided one or both
of the parents are covered concurrently. Higher limits are permitted of the policy is in renewal
for the preceding three years. Suitable for persons of any nationality but treatment should be
availed of within the country and the claim is paid in Indian currency/foreign currency.
Salient Features
Provides cover, which takes care of medical expenses following hospitalization from sudden
illness or accident
Cover extends to pre-hospitalization and post-hospitalization for periods of 30 days and 60
days respectively.
Domiciliary hospitalization is also covered
Benefits
Reimbursement of medical expenses
Discount in insurance premium is allowed on family package, cumulative bonus and health
check. In case of family package cover, a single member can avail of the entire policy limits.
17
The premium paid by a chequeupto a maximum of Rs. 10,000 is totally exempt from income
tax.
Domiciliary Hospitalization
The term means that a patient can be treated at home when he is not in a fit condition to be
moved to the hospital or where is no accommodation in the specialist hospital provided
The treatment was for a period not less than 3 days.
The sub-limits of sum insured towards domiciliary hospitalization are furnished in the sum
insured and premium schedules.
Exclusions
The facility is not available if any illness is contracted within 30 days from the
commencement of risk except in case of an accident.
Any pre-existing diseases
Treatment for contracts, benign prostatic hypertrophy, hydrocele, congenital internal diseases,
fistula in anus, piles sinusitis and related disorders for 1st year of policy
AIDS or conditions of similar kind
Requirements
A completed proposal form. If the prosper is a Diabetic, a separate questionnaire completed
by the family physician.
A.2 BHAVISHYA AROGYA INSURANCE POLICY

Suitability
BhavishyaArogya is a life term policy where medical benefits are made available after
retirement of the insured. Therefore, by paying premiums during the earning period, one can
make a provision for medical benefits after retirement. Persons in the age group- of 25 to 55
years are eligible for this policy.
Salient Features
The policy provides hospitalization benefits for lifetime after retirements age of the insured.
18
Premiums can be paid in equated annual installments up to the age of retirement

Premiums can also be remitted in lumpsum on one time basis. Discount is offered for one
time payment
Benefits
The policy comes into force after retirement and provides for hospitalization and domiciliary
hospitalization benefits, following an accident or sickness.
Other conditions
The minimum sum to be insured is Rs. 50,000 and can be increased in multiples of Rs.10, 000
as a unit, thereafter.
For every Rs. 10,000 increase of sum insured, the premium is loaded by 20%
Maximum sum insured is Rs. 2 lakh.
After commencement of the risk (i.e. after retirement) cumulative bonus @ 5% for every
successive claim free year is added upto a maximum of 50%.
In case of death of insured before retirement, refund of premium will be at a pre-determined
scale and it is payable to nominee/assignee.
In the event of voluntary cancellation of the policy, the refunds will be75% of the set scales
applicable for death claims, provided there is no claim under the policy.
Requirements
A completed proposal form
Proof of age is necessary as the payment of premium depends on the age
A.3 JAN AROGYA BIMA POLICY

This policy was introduced in the year-1998. It is designed to provide hospitalization
insurance to poorer sections of the society.
The coverage is along the lines of the individual mediclaim policy except that cumulative
bonus and medical check up benefits are not included.
19
The sum insured per insured person is restricted to Rs. 5000/-. Premium up to Rs. 10000/qualifies for tax benefit under Section 80D of the Income Tax Act. Service tax is not
applicable to the policy. The premium payable as per the following table
Age of the person
Up to 45
46-55
56-65
66-70
years
Head of the family
70
100
120
140
Spouse
70
100
120
140
Dependent child up to 25 years
190
250
290
330
For family of 2+1 dependent children
190
250
290
330
For family of 2+2 dependent children
240
300
340
380
The policy is available to individuals and family members by duly completing the proposal
form. The age limit is 5 to 70 years.
Children between the age of 3 months and 5 years can be covered provided one or both
parents are covered concurrently. Past two years business performance of the insurance
com under the scheJan ArogyaBima Policy
Year
2004-05
Company
Target
Premium
Claim
Claim
Rs. Crore
In Rs. Crore
Incurred
Ratio
NICL
1.66
1.54
88.20
OICL
0.98
0.70
70.70
UIICL
0.54
0.86
159.00
0.75
1.03
137.33
3.93
4.13
105.08
NICL
0.23
0.33
102.03
OICL
0.57
0.17
29.40
UIICL
0.55
0.87
158.00
0.52
0.68
131.40
1.87
2.05
58.74
NIACL
1.00
TOTAL
2003-04
NIACL
0.75
TOTAL
Past two years business performance of the BhavishyaArogya Policy
20
Year
Company
Target
Premium
Claim
Claim
Rs. Crore
In Rs. Crore
Incurred
Ratio
0.12
0.01
14
0.12
0.01
14
OICL
UIICL
TOTAL
OICL
0.08
UIICL
0.021
0.018
87
0.101
0.018
87
TOTAL
B. LIC COVERAGES
The Life Insurance Cooperation of India introduced a special insurance programme in 1983
which covered medical expenses for only four dreaded diseases. It was withdrawn and
introduced subsequently in 1995. At present the modified versions are available in the form of
two products viz. JeevanAsha and Asha Deep
I.
JeevanAsha
Features
Open ended scheme
Covers many surgical procedure
Fixed benefits for surgical treatment can be availed twice (subject to conditions)
Exclusive Double/Triple accident benefit.
Option to switch over from existing JeevanAsha plan
Suitable for
The JeevanAsha II plan is apt for people who whose family history tends to show hereditary
lineage of maladies and afflictions that have required major or minor surgery from time to
time.
Special Features
Under the JeevanAsha plan, the major surgical procedures covered for are:
Nervous system (non-malignant causes)
21
Respiratory system
Cardiovascular system
Haemic and lymphatic system
Endocrine & Ocular system
II. Asha Deep

Features
Cover the risk of four major ailments namely, Cancer (malignant), Paralytic stroke resulting
in permanent disability, renal failure of either kidneys or Coronary artery diseases where bypass surgery has been done.
Suitable for:
The Asha Deep II (with profits) policy is best suited for people if they anticipant or have a
family history of serious diseases like Cancer, Paralysis, Renal failure and Coronary disease.
Special Features
During the term of the policy, if the life assured is afflicted by any of the major ailments listed
above and the same is established as per rules (in case of Coronary artery disease, the life
assured must have undergone the by-pass surgery), the policyholder will be eligible for the
following benefits, the policy is in force for the full sum assured.Immediate payment of 50%
of the sum assured
Payment of an amount equal to 10% of the sum assured, every year commencing from the
policy anniversary falling on or after the date of affliction and ending with the policy
anniversary preceding the date of maturity or the date of death of the life assured whichever is
earlier.
Payment of balance 50% of the sum assured and vested bonuses on the date of maturity or on
death of life assured, whichever is earlier. The bonuses will be calculated on the full sum
assured even though 50% of the sum assured would have been paid earlier
A lien for a period of one year will be imposed on all policies on all policies under this plan.
If the life assured does not get afflicted by any of the diseases mentioned above, the full sum
22
assured and vested bonuses will be paid on the date of maturity or on death of the life assured,
whichever is earlier.
Benefits
1. Survival Benefits
2. Sum Assured and vested Bonus on maturity.
Death Benefits
Natural: If the life assured is not afflicted by any of the specified ailments, the legal heirs get
the full Sum assured + accrued bonus
Accidental: Accidental benefits available to the life assured whether afflicted or not afflicted
by any of the specified ailments.
MEDICLAIM - AT A GLANCE
The Policy basically covers reimbursement of expenses of hospitalization and domiciliary

hospitalization for illness, diseases or injuries sustained. This Policy is available to persons
between the age of 5 and 80 years (children between the age group of 3 months to 5 years can
be covered if one or both their parents are also covered concurrently).
Basic Cover
Pre hospitalization Benefits
Post hospitalization Benefits
Sponsored Health Check Ups
Discount in Premium for family cover
23
Basic Cover
The insured person can claim reimbursement for the following expenditures, provided they
are reasonable and necessary incurred:
Room expenses
Nursing expenses
Surgeon, anesthetist, consultants, specialists fees
Artificial limbs, cost of organs, O.T charges, medicines and drugs and similar expenses
Note: Under no circumstance will the reimbursement exceed the sum insured. In case of a
Family Mediclaim Policy, the claim cannot exceed the sum insured specified against each
person in the proposal form
Any relevant medical expense incurred within 30 days prior to hospitalization will also
be covered under this policy
Post Hospitalization Benefits

Any relevant medical expense incurred within 60 days after hospitalization will be considered
for reimbursement under this policy.
Sponsored Health Check Ups
A person insured under this scheme is eligible for reimbursement of the cost of a complete
medical check up (subject to 1% of average sum insured). This benefit can be availed once at
the end of a block of every four underwritten - claim free years. To be eligible for this benefit
you must ensure that the policy is renewed within a week from its expiry.
Discount in Premium- for family cover
If you take a Mediclaim Policy to cover yourself and one or more of the following persons in
your family, you get a 10 % discount in the total premium payable.
Spouse
Dependent children
Dependent parents
24
OVERSEAS MEDICLAIM
At a glance you need VideshYatraMitra Policy if you are going abroad on business or
holiday. The benefits under policy include:
I. General Insurance Plan

Personal Accident Cover
Medical Expenses and Repatriation
Cover Loss of Checked in Baggage
Cover Delay of Checked in Baggage
Cover Loss of Passport
Personal Liability Cover
II. Special Insurance Plans for:

Corporate Frequent Travelers
Overseas Journey Business and holiday
What's more, while you pay the premium in Indian Rupees, the claims(while abroad) are paid
in foreign currency!
1. Personal Accident Cover
If the insured person suffers any bodily injury during the overseas trip and such injury, within
12 months of its occurrence, is the sole cause of death, loss of sight or limbs of the insured,
the Insurance Company will pay up to US$ 50,000 as compensation.
Note: No claim will be satisfied in excess of US$ 2000, on death of the insured person, if
he/she was less than 16 years of age at the time of affecting the insurance.
2. Medical Expenses & Repatriation
The cover provided by the Insurance Company extends to US$ 500,000 (for worldwide travel
including USA & Canada) and US$ 250,000 (for worldwide travel excluding USA &
25
Canada). It is paid to the insured in respect of any permissible and necessary medical
expenses that are borne by him outside India on account of any injury or sickness suffered
during the period of insurance.
If "Mercury" recommends that continued treatment in India is appropriate, then
(notwithstanding anything specified above), the insurance is extended to cover medical
expenses incurred in India also. These expenses will be paid only towards treatment
undergone within 90 days from the date on which the injury or illness first manifested itself.
Medical Expenses Covered
Physician's services, hospital and medical services and local ambulance services.
Up to US$ 225 per dental service taken only for immediate relief of toothache. Dental
care rendered necessary as a result of an accident that is covered, shall be reimbursed
subject to the limit ofcover under Personal Accident.
Expenses incurred for emergency medical evacuation including transportation and
medical care en route.
If the insured person dies abroad, the expenses incurred for the preparation and air
transportation of the remains to India or an equivalent amount for their local burial or
cremation.
Specific Conditions
Claims will be reimbursed only to the extent they are reasonable and customarily
incurred whether in case of medical or dental attention or transportation.
"Mercury" and their Medical Advisors must approve medical evacuation and
transportation in advance.
Medical expenses that could have been postponed till the insured returned to India will
not be reimbursed. The attending physician and the Medical Advisors shall decide which
expenses can be and which can't be delayed.
26
US$ 100 is the deductible amount and any expense below this amount will have to be
borne by the insured person. Further, it also means that from every claim this amount will
be deducted before making settlement.
Claims in respect of cosmetic surgery will not be paid unless it is rendered necessary as a
result of a covered accident.
Routine physical examinations and any other examinations that are not undertaken as
result of impairment of normal health shall not be covered.
Pregnancy and related complications are not covered under this policy.
Where the insured person is unable to present himself or herself for the medical
examination (where one is called for by the Insurance Company), the limit of indemnity
will be reduced to US$ 10,000. This limit will be utilized only towards physician's
services, hospital and medical services and local emergency transportation. Further, the
insurance cover will be restricted to cover only illness or diseases contracted abroad and
not cover accidents.
3. Covers Loss of Checked in Baggage
The insured will receive US$ 1,000 from the Insurance Company in the event of total loss of
baggage that has been checked in by an International Airline for an international flight. The
insurers however reserve the right to either replace orpay the intrinsic value of the lost article.
Specific Conditions:
The Insurance Company will not reimburse partial loss or damage of baggage
No claim will be paid for items whose value exceeds US$ 100, unless the proof of ownership
is presented to Mercury, in the event of submission of claim.
Valuable items are not covered by the policy since they should at all times be carried by the
insured person and not be packet as part of checked in baggage.
Any recovery from the airline under the terms of the Warsaw Convention shall become the
property of the insurers.
27
4. Covers Delay of Checked in Baggage

The Insurance Company will pay up to US$ 100 towards necessary purchases, to replace
items, in the event of more than 24 hours delay (from the scheduled arrival time) in delivery
of checked in baggage. The baggage should have be checked into an International Airline on
an international flight from India.
The proof of purchase must be provided for all items reimbursed under this cover
Any payment made by the Insurance Company for delay of baggage will be offset against a
claim arising for loss of the same baggage.
5. Covers Loss of Passport
In the event of loss of passport, the Insurance Company will pay up to US$ 250 towards
expenses reasonably and necessarily incurred by the insured person in obtaining a fresh or
duplicate passport.
US$ 30 is the deductible amount and any expense below this amount will have to be borne by
the insured person. Further, it also means that from every claim this amount will be deducted
before making settlement.
Loss or damage to the passport due to confiscation or detention by customs, police or other
authority will not be covered under this policy.
28
Claims for loss of passport will not be entertained if the theft of passport was not reported to
any police authority within 24 hours of discovery. An official report is also to be obtained
from them.
No claim shall be paid for loss or theft of the passport if it was left unattended by the insured
person. However, if the passport was left in a locked room or apartment and the insured
person could not have stored it in a safety deposit box, the claim will be satisfied.
6. Personal Liability Cover
The Insurance Company will pay up to US$ 200,000 in case the insured person, in his or her
personal capacity, become legally liable to pay third parties for accidental personal or
property damage, arising from an incident during the overseas journey.
US$ 200 is the deductible amount and any expense below this amount will have to be borne
by the insured person himself or herself. Further, it also means that from every claim this
amount will be deducted before making settlement. This deductible applies only to third party
property damage.
The Insurance Company shall meet no claims arising from Employers or Contractual liability.
No claims arising from liability to any family members, traveling companion, friend or
colleague of the insured, shall be met.
Claims arising directly or indirectly from the following shall not be paid.
Animals belonging to the insured person or in their care, custody or control.
Any willful, malicious, or unlawful act.
Pursuit of a trade, business or profession, employment or occupation.
Ownership, possession, or use of vehicles, aircraft, watercraft, parachuting, hand

gliding, air ballooning or use of firearms.
29
Legal costs of any proceedings that result from any criminal or illegal act.
Insanity, use of alcohol, drugs(except as medically described) or drug addiction.
Supply of goods or services.
Any form of ownership or occupation of land or buildings (other than occupation only of
any temporary residence)
7. Hijack
The Insurance Company will pay up to a sum of US$ 300 (US$ 30 per day). This sum will
become payable by the Insurance Company, if the insured is held hostage for more than 24
hours.
II. Special Insurance Pan
Insurance Plan for Corporate Frequent Traveler
This is a one-year cover issued to employees of companies who have to travel abroad
frequently
Features:
Each trip should not exceed 30 days. This period can be extended by 7 days without any extra
charge, if the delay is beyond the control of the insured perso
The Monetary Compensations offered in each case:
BENEFIT
LIMIT
US$)
(in
REMARKS
Medical Expenses
500,000
Deductible: US$ 100
Personal Accident
25,000
Loss of Checked in Baggage
1,000
Delay of Checked in Baggage
100
Delay > 12 hrs
30
Loss of Passport
250
Deductible: US$ 30
Personal Liability
200,000
Deductible: US$ 200
The insured person can be between 18 and 70 years of age. The age limit can be extended to
75 years at the option of the Insurance Company and after such person undergoes a thorough
medical check up. The Medical Reports should be authorized by an M.D. in Cardiology and
should include,ECG Reading,fasting blood sugar/Urine sugar&Treadmill test in case of
medical history
Where the insured person is unable to present himself or herself for the medical examination
(when one is called for by the Insurance Company), the limit of indemnity will be reduced to
US$ 10,000. This limit will be utilized only towards physician's services, hospital and medical
services and local emergency transportation. Further, the insurance cover will be restricted to
cover only illness or diseases contracted abroad and not cover accidents. The medical
certificate is a must for persons above 60 years.
Overseas Journey - Business or Holiday

This is the ideal Policy for persons traveling abroad on business or holiday. There are two
plans that are offered - (i) Worldwide Travel Excluding USA & CANADA and (ii)
Worldwide Travel Including USA & CANADA
Features:
Any individual between the age group of 6 months to 60 years can be covered. The age limit
can be extended to 75 years at the option of the Insurance Company and after such person
undergoes a thorough medical check up. The Medical Reports should be authorized by an
M.D. in Cardiology and should include,ECG Reading, Fasting blood sugar/Urine
sugar,treadmill test in case of medical history
The insurance cover for persons on holiday is a maximum of 30 days and on business is a
maximum of 180 days. ECG, urine test and fasting blood sugar reports have to be submitted
31
in case of persons above 40 years for overseas travel including USA & Canada and persons
above 60 years for overseas travel excluding USA & Canada.
The Monetary Compensations offered in each case:

BENEFIT
LIMIT (in US$)
REMARKS
Medical Expenses
Includes USA & Canada
Excludes USA & Canada
500,000
250,000
Deductible: US$ 100
Personal Accident
25,000
Hospital Benefit
US$15 per day

Max of US$150
Loss of Checked in Baggage
1,000
Delay of Checked in Baggage
100
Delay> 12 hrs
Loss of Passport
250 US$
Deductible: 30 US$
Personal Liability
200,000
Deductible: US$ 200
Hijack
US$30
per
day
Max of US$300
Held hostage for not less than

24hrs
Hospitalized for not less than

24hrs
Past two years performance of National Insurance Co.&New India AssuranceCo. under
Overseas Mediclaim Policy
Year
Company
Target
Premium
Claim
Claim
Rs. Crore
In Rs. Crore
Incurred
Ratio
15.68
7.32
46.68
24.30
22.37
92.05
39.98
29.59
74.25
15.93
8.97
56.25
27.25
20.21
75.20
43.18
29.48
68.27
NICL
2004-05
NIACL
30.00
TOTAL
NICL
2003-04
NIACL
0.75
TOTAL
32
MICRO HEALTH INSURANCE IN INDIA
Health risks and resulting catastrophic financial losses are probably significant threats to the
people, particularly persons belonging to lower income groups as these people will be excluded
from private health insurance. A health shock leads to direct expenditures for medicine, transport
and treatment but also to indirect costs related to loss of wages. Since studies have found a very
strong link between health and income poor are the most susceptible to a health shock. Given the
problem with public health delivery system, the access to and utilization of these facilities
remain problem. Strategy to improve the access by developing insurance system to private
providers has been one such area. For low-income people in rural and informal sector market
based insurance such as Mediclaimcan not meet the requirements because of its high cost.
Insurance companies and healthcare providers face high transaction costs and also they do not
have local information available with them. This makes their job of providing health insurance to
this segment very difficult and schemes which are of local origin have more chance of attracting
more members because of high level of trust with them.
Several community based organizations in India have focused on developing community based
insurance schemes during the last decade. Most of these community based insurance schemes
(CBHI) are also known as micro health insurance schemes. Micro insurance is a form of health,
life or property insurance, which offers limited protection at a low contribution (hence micro).
It is aimed at poor sections of the population and designed to help them cover themselves
collectively against risks (hence insurance). More specifically micro insurance and CBHI are
different in term interchangeably.
In India, community health insurance started way back in Kolkata in 1952 which was part of a
students movement. This scheme, which is called the Students Health Home (SHH), caters to
the schools and universities students of West Bengal. Currently there are more than 20
documented CBHI programmes, of which five were initiated in the past three years community
based health insurance schemes is different from normal market based schemes like Mediclaim.
Though the basic principle of covering future risks by paying premium in advance is same in all
health insurance schemes, CBHI schemes are tailored for local needs and provide health
insurance at low cost. CBHI schemes in India can be divided in three broad categories. Table 1
33
indicates that these three categories are quite distinct from each other in terms of the function of
the agency. An agency here can be a NGO, Trust, Hospital or Cooperative etc. their role can vary
from performing as intermediary where both treatment and insurance are provided by
intermediary itself or where the treatment and insurance are provided by third party.
Micro health insurance as mechanism of providing healthcare to the poor, the role of these CBHI
schemes will be very crucial. The success of many of these schemes though at a smaller level at
present, provides important lessons for the policy makers. One important point to remember here
is that CBHI schemes have their own problems which are non-availability of good providers,
lack of professional management, financial sustainability issues and non-recognition by IRDA.
These problems need to be taken into account while assessing their benefits. Though at present
CBHI schemes in India are serving a very small population, it lessons learnt from each of these
schemes can be used to design more of such schemes in different parts and at much larger level
they can be beneficial.
34
TABLE 1: TYPES OF CBHI SCHEMES IN INDIA

Types of CBHI
(Examples)
Role
Healthcare Intermediary
Health
Healthcare
Insurer
Provider
SEWA, BAIF,
TribhuvandasFoundation, DHAN, Sewagram, MGIMS
Karuna trust
Yeshaswini
VHS, RAHA
Plays role of agent
Plays role of insurer
Plays role of both
Purchase care from
Provide Insurance
insured &provider
providers
Purchase care from independent
Provide health care
Purchase insurance from
provider
Running Ins. Scheme
Low
Low
Low
Significant
Is an Issue
May be an Issue
Not an Issue
Payment
Mostly Fixed
Mostly Fixed Indemnity
Cashless system
Mechanism
Indemnity
Nature of Pool
Membership/
Membership/
Geography Based
Geography Based
Insurance company
Low-medium
Transaction
Costs
Benefit
on Negligible
provision side
Informational
Problems
mostly
35
Geography Based
MICRO HEALTH INSURANCE SCHEMES
UNIVERSAL HEALTH INSURANCE SCHEME
YESHAVINI CO-OPERATIVE FARMERS
(UHIS)
HEALTH SCHEME (KARNATAKA)
Marketed through public insurance
Marketed through the cooperative movement

Covers only surgical procedures
companies
Covers only Hospitalization expenses
uptoRs. 100,000 per year

Premium: Rs. 120 per/person/per
(uptoRs. 15,000)
Premium
year(Rs.90 for children under 18)
Individual: Rs 165/subsidy Rs. 200
Cashless services
Family upto 5 members:
Hospital network(169)
Rs. 240/subsidy Rs. 300
In-house model (No Insurance company)
Coverage (2005): 1,10,000
Coverage (2006); 1,830,000
Targets people in the age Group (3 months to
TPA (Family health Plan)

Second largest in the world
65 years)
Exclusion: Pre-existing diseases, delivery,
pregnancy-related illness
36
INDORE MUNICIPAL CORPORATION HEALTH
NAANI FOUNDATION SCHOOL HEALTH
INSURANCE SCHEME (MADHYA PRADESH)
PROGRAMME
(ANDHRA PRADESH)
Public Department (IMC)
NGO/Private Trust
Targets Senior Citizens (60 to 80 years old)
Targets young children (6 to 14 years-old)
Covers Hospitalization costs upto Rs.20,000
enlisted in public schools (Hyderabad
Premium: Rs. 475/Per Person/Per year.
City)
TPA (MD India):Partner-Agent Model
Premium: Rs. 120 per child per year
Hospital Network: 14 Private hospitals
Services provided by nodal health clinics
Coverage (2006); 49,419
+ base hospital + referrals

Coverage (2006); 60,000.
SCHEMES
NO OF
BENEFIC.
TYPE OF
SCHEME
TYPE OF
BENEFIT
TYPE OF
SUBSIDY
IN- HOUSE
TYPE OF
COVERAG
E
TER
YESHASVINI
1,83,000
CASHL.
DIRECT
DHARAMST.
400,000
P. AGENT
SEC.
CASHL.
SEWA
174,000
P. AGENT
SEC.
REIMB.
INDIRECT
KARUNA
118,000
P. AGENT
PER/SEC.
REIMB.
IND/DIRECT
PREM
108,000
In- House
SEC.
CASHL/
INDIRECT
REIMB.
NAANI
60,000
In- House
PER+SEC+T
CASHL.
IND/DIRECT
ER
AROGYA
60,000
P. AGENT
SEC.
CASHL.
INDIRECT
INDORE
49,000
P. AGENT
SEC.
CASHL.
DIRECT
ASHWINI
12,000
P. AGENT
PER/SEC.
CASHL.
IND/DIRECT
OVERALL PERFORMANCE
37
The spread of Health Insurance and the performance of individual Insurance Companies can
be best assessed through the total number of persons covered under the various health
insurance schemes. A table showing the total number of persons covered under the various
health policies of each of these companies for the past two years is given below.
NAME OF THE POLICY
NICL
OICL
UIICL
NAICL
Individual Mediclaim
602000
2317090
Group Mediclaim
589000
539585
Overseas Mediclaim
2003-04
57076
Mediclaim
3122536
2223436
Jan Arogya
260230
58398
BhavishyaArogya
73000
75966
955
Universal Health Insurance
78140
298796
561264
236490
3460905
2580630
1826219
3226207
Individual Mediclaim
626000
2705322
Group Mediclaim
593000
994460
Scheme
Total
Overseas Mediclaim
2004-05
55890
Mediclaim
7560666
2864532
Jan Arogya
171603
101556
BhavishyaArogya
70000
67391
1108
Universal Health Insurance
27709
107858
280644
15641
7759078
3073946
1570752
3838704
Scheme
Total
HEALTH INSURANCE FOR THE POOR.

Myths and Realties
Based on a survey is seven locations, we finds that most Indians are willing to pay 1.35
percent of income or more for health insurance and most people prefer a holistic benefit
38
package at basic coverage over high coverage of only rare events. The needs of the poor, and
their demand for health insurance, depend on local conditions.
In a country where only about 3 percent of the populations are affiliated to health insurance,
most Indians must pay the vast majority of their healthcare costs out-of-pocket. This burden is
particularly high for those who cumulate both poverty and illness.
Health insurance could be one of the most suitable solutions for this negative nexus.
However, for the time being there is very little supply of health insurance for the poor. The
largest comparative household survey conducted in 2005 in seven locations where micro
health insurance units are in operations; the survey included both insured and uninsured
persons. The seven locations are: Tamil Nadu (one urban and one rural location); Karnataka
(one rural and one tribal rural location); Maharashtra (one rural and one urban location); and
Bihar (mostly rural location). The survey conducted focus group discussions (FGD), keyinformant-interviews, and special sessions in which persons applied a decision-making
simulation. The total size of the sample has been 4,931 households. The household survey, as
well as the FGD and the analysis have been conducted under the EU/ECCP project
Strengthening micro health insurance units for the poor in India. The survey offers the
evidence to show the commonly held opinions are in fact myths.
Myth No 1: the poor are unwilling to for health insurance and the lower their income, the less
they
are
willing to pay
for health.
The
reality:
The
evidence
shows
most
that
people
are willing the

pay more than
39
1 percent of their income for health insurance. The study shows that the majority of the
sampled populations were willing to pay about Rs 559 per household per year. The poorest
are willing to pay a higher percentage of household income than less-poor households. This
confirms that the poor prioritize access to some healthcare, and that this basic level is quite
stable.
The policy insight: The declared WTP levels are much higher than what has been assumed as
feasible
hitherto.
Consequently, the demand

for pro-poor and pro-rural
health insurance at realistic
premiums
exceeds
the
supply available at present.
Myth No 2: High costs of

hospitalization and surgery
pose the greatest financial
risk for poor households.
The reality: Hospitalizations are rare and very expensive. Drug consumption occurs much
more frequently, and sometimes can cost as much as hospitalization, while in other cases
would be much cheaper. Indeed, there is no significant difference between the aggregate costs
of hospitalization.
Policy
insight:
Health
insurers and policy makers

that aim to grant to poor
households
effective
financial protection
against the cost of illness
would wish to ensure that
40
the benefit packages should include drugs, tests and consultations; in addition to
hospitalization.
Myth No 3: The larger the poor household, the less attention to health and therefore the more
sickness to health and therefore the more sickness among its members. So the large
households pose a higher risk to the insurer.
The reality: Larger
households reported
fewer
illness
episodes. As shown
in Figure 4, there is a
steep drop in illness
Episodes
household
when
size
increases from one to four persons, and is stable thereafter. Therefore, larger households
represent a lower risk to insurers. (Sample size was 3;531 households, representing 17,323
persons; conducted in five locations in Tamil Nadu, Maharashtra and Bihar. The prevalence of
illness in households for three months is 0.292.
Myth No 4:
Low income and low assets are indicators of higher risk of illness
The reality: Higher income is associated with more reported illness episodes. The poorest-ofthe-poor subgroup does not represent a higher risk for health insurers than the more affluent
subgroups. Females are more likely to be ill than males, and the under five age-groups as well
as +55 years; age-group is very vulnerable
41
Policy insight: Intra-household information sharing, resource-and-asset shoring and

demographic balancing within can lower prevalence of illness in households. Additionally, en
bloc affiliation of households can lower the risk of adverse selection. Ignoring household
features when calculating the premiums could result in premiums that are unjustified by the
insured risk.
Myth No 5: Poor
people, who are often
illiterate
and
innumerate,
unable to
are
make
judicious
rationing
regarding
decisions
the
composition of a health
insurance
packages.
42
benefit
The reality: A decision tool called Choosing Healthplans All Together (CHAT) has been used
with 24 groups (composed of 302 individuals) in Karnataka and Maharashtra to elicit their
choices of healthcare benefits under severe budgetary rationing. Participants could choose
from among 10 benefits types, and for each benefit type they could choose basic, medium or
high coverage level. Participants chose first the benefits that cost most; these included:
outpatient (OP); inpatient (IP); tests and imaging (T); and drugs (D); Table 1 lists the
frequency of choices made. The frequency of the choice stated by the participants reflects a
clear preference for a broad benefits package, even at basic level of coverage. Additionally,
participants selected benefits that cost less, and interestingly these choices, shown in Figure6,
provide protection to the weaker segments of the group (such as pregnant women or persons
with disabilities).
Policy implications: The results of this analysis demonstrate that the poor can participate
actively in the design
of the health insurance
packages,
and
that
they make judicious

choices. The CHAT
tool
enables
identify
us
to
clients
perceived priorities.
Myth No 6: The poor are

essentially quite similar to each other: with similar needs a low ability to pay, low levels of
education and a low demand for insurance. Therefore, uniform (one size fits all) insurance
products are suitable for the
poor.
The reality: The healthcare

needs
of
the
poor
are
strongly context-dependant.
43
This is evidenced by the difference in incidence of illness episodes in different locations and
by the different cost associated with an illness episode in different locations. The demand for
health insurance, evidenced by willingness to pay for it, is also strongly location-dependent.
The evidence in figures 7, 8, and 9 show the difference in prevalence of illness in households;
the different levels of insurable cost of illness episodes.
Policy insight: Communication differs from each other significantly in their needs and priorities.
For an insurance product to be attractive to such diverse market, it must respond to contextspecific needs, costs, and willingness to pay levels. The Optimal adjustment between medical
needs, their costs and willingness to pay must also take into account the perceived priorities of
the prospective clients and such perceptions
may also be location-specific. Therefore, a
one-size-fits-all
insurance
product
is
unsuited to the poor clientele and to the

reality of India.
HEALTH CARE PRODUCTS

The following are brief descriptions of
some of the major health care products
available in world markets today.
Capital Disability Policies
Disability benefits cover the financial risk to the insured of his/her becoming disabled and are
expressed either as occupational disability or the inability to pursue any activity for a living.
Benefits are payable in the form of a lump sum or as an income.
Permanent Health Insurance Policies
Disability income benefits pay a regular income should the insured experience a loss of
income upon becoming fully or partially unable to follow their own or similar occupation.
The benefit usually pays an income either until the insured has recovered sufficiently from
44
the temporary disability to return to work, or has died or until normal retirement age. A
waiting period is usually imposed prior to the commencement of the benefit payment.
Dread Disease (or Critical Illness Policies)
A Dread disease benefit offers a payment (sometimes an accelerated death payment) on a
confirmed diagnosis of a dread disease. This benefit is usually valid in the case of a limited
number of listed diseases, which often include the following diseases: Heart attack, Stroke,
Coronary artery disease requiring surgery, Cancer, Kidney failure, Surgery for a disease of
the aorta, Replacement of a heart value, Organ transplant, Coma
Other diseases can also be included and the percentage of the sum assured paid for each
disease may be related to the severity of the disease.
Long Term Care Policies
This policy provides financial security against the risk of needing either home or nursinghome care as an elderly person. Premiums will be paid regularly and will cease either when
benefit payments commence or earlier (e.g. at a given age). A group version of this product
would enable an employer to provide long term care to retiring employees and their spouses.
Hospital Cash Policies

Hospital Cash policies usually provide the insured with a daily cash amount for the duration
of an insureds stay in the hospital. Further benefits are often added in order to cover the
additional costs associated with any visit to the hospital. These would often be in the form of
a major medical expense policy
Major Medical Expense Policies
Major Medical Expenses policies often complement a hospital cash policy. The policy
would cover the costs associated with specified medical procedures. These would include the
cost of any surgery or follow-up visits to a Doctor. The actual benefit would normally be
based on a pre-determined fee scale for various different procedures.
45
What is TPA (Third Party Administrators)

TPA stands for Third Party Administrator. TPA is a middlemen between Insurer and the
Customer . Customer can directly deal with TPA at the time of claim and TPA will help
with with all the process of claim settlement . A TPA is a specialized health service
provider rendering variety of services like networking with hospitals, arranging for
hospitalization and claim processing and settlement. The concept of TPA has been
introduced by the IRDA (Insurance Regulatory and Development Authority of India) for
the benefit of both the insured and the insurer. While the insured is benefited by quicker &
better health service, insurers are benefited by reduction in their administrative costs,
fraudulent claims and ultimately bringing down the claim ratios. An insurance company
can have more than one TPA and a TPA can serve more than one insurance company.
Some of the services TPA provides are
Maintain database of policyholders
Issue of identity card to all policyholders
Provide ambulance service
Provide information to policyholders about hospitals.
Check various investigations
Provide Cashless service
Process claims
Health Insurance Claims settlement process
A bit on how health insurance claims processing works. In most cases, the Insurance
companies appoint a third part administrator (TPA) for claims processing. That means
once the health insurance policy is sold, the insurer passes on the baton to the TPA. In case
of a claim, the insured has to get in touch with the TPA for all versification and
formalities.
There are 2 ways by which health insurance claims are settled:
Cashless : For availing cashless treatment (only at authorized network hospitals), the TPA
has to be notified in advance (for planned hospitalization) or within the stipulated time limits
(for emergencies). The insurance desk at hospitals usually helps with all paper work. The
46
claim amount need to be approved by the TPA, and the hospital settles the amount with the
TPA/ Insurer. Typically there will be exclusions and such amount will have to be settled
directly at the hospital.
Reimbursement : Reimbursement facility can be availed at both the network and nonnetwork hospitals. Here the insured avails the treatment and settles the hospital bills directly
at the hospital. The insured can claim reimbursement for hospitalization by submitting
relevant bills/ documents for the claimed amount to the TPA.
The TPA mode of claims settling has its own problems. The TPA is incentivized to limit
insurance claims and they are not the ones who sells the policy. There are many cases
where the insured had a tough time to claim for his hospital expenses. So before taking
health insurance it would be useful to check who the TPA is and how good are they when
it comes to claims processing. Internet search and a friendly chat with the hospital staff can
give you good insight on the insurer/ TPA. There are also some health insurance providers
who do not employ TPAs and does claims settlement directly (this is called Inhouse TPA)
.
47
An Introduction To Cashless Mediclaim Insurance
India has made tremendous progress in medical sectors still a majority of population has not
direct accessibility to such quality medical facilities as they are too expensive to afford.
People really face a tough time at critical medical situation requiring a person subsequent
hospitalisation. Sometimes the medical treatment drains out substantial money from the
patient, making him almost broke. Had the patient insured with one of the medical insurance,
he/she wouldnt have to bear all the medical expenses. Rather, they would have been
compensated by the health plan itself. Considering the very importance of health insurance
policy, people, representing different social backgrounds purchase one of the medical policies
to ensure their well being from unforeseen medical emergency.
One of the most striking features of health insurance plan is facility of cashless treatment. So to
say, this sort of medical policy covers medical expenses such as hospitalisation, surgery, room
charge, and doctors fees as per the term of the policy. Since the insurance company is
responsible to pay these expenses, the insured person doesnt have to pay anything in this regard.
In addition, your cashless mediclaim remains effective provided that you are hospitalised at
network hospital of your insurance service provider.
How cashless mediclaim work?
First of all, as mentioned above, the cashless mediclaim functions if the insured person is
admitted to one of the network hospitals of insurance company. This will help you avail cashless
treatment during hospitalisation thus helping you save a lot of money. The cashless treatment
wont be effective if you get admitted at a non-network hospital of your company. In that case,
whatever preliminary medical expenses you incur will be born by you and not the company;
however, the company will reimburse those expenses later on.
TPA (third-party administrator) is a representative of your insurance company and during any
pre-hospitalisation case; you are supposed to phone or inform the TPA in this regard. It functions
as intermediary between your company and the assumed hospital where you will get medical
48
treatment. Thus the TPA facilitates claims on your behalf without requiring you do anything.
Hence better inform your TPA before any pre-hospitalisation case.
Adding further, like any insurance policy, the functionality of health plan is subject to certain
conditions too. Before signing up the insurance documents, better study all the terms and
conditions associated with your plan. This is very crucial thing to do as more often than not,
people, owing to lack of knowledge end up availing substandard health plan. In the case of
cashless insurance policy, the insured person doesnt need to pay anything to the concerned
hospital regarding any medical expenses.
FAMILY FLOATER MEDICLAIM POLICY
Who can take this Policy?

This insurance is available to persons between the age of 18 years to 60 years. The persons
beyond 60 years can continue their insurance provided they are insured under Mediclaim policy
with our Company without any break.
1. FLOATER BENEFIT means the Sum Insured as specified for the proposer under the
policy, is available for any or all the members of his /her family for one or more claims
during the tenure of the policy.
2. The Family Floater Mediclaim Policy can be issued to the persons up to 60 years of age
covering the following family members:
o Self
o Spouse
o Dependent children ? Maximum two
3. Parents/Parents-in law/ brothers and sisters are not covered under Family Floater
Mediclaim Policy even if they are residing with the proposer.
4. Sum Insured: Minimum Sum Insured is Rs. 2 lacs and Maximum Sum Insured is Rs 5
lacs.
5. Premium: Premium is as per Individual Mediclaim Policy (2007). The basic premium will
be as per highest age of the family member. Apply 50% loading for covering spouse, and
25% loading for covering each and every additional dependent child.
6.
49
What does this Policy Cover?

The policy covers hospitalization expenses for the treatment of illness/injury provided
hospitalization is more than 24 hours. Pre-hospitalization expenses for 30 days and post
hospitalization expenses for 60 days are also payable.
Day-care treatment - The Medical expense towards specific technologically advanced day-care
treatments / surgeries where 24 hour hospitalization is not required.
Ambulance Charges for shifting the insured from residence to hospital are covered up to the
limits specified in the policy.
Ayurvedic/Homeopathic and Unani system of medicine are covered to the extent of 25% of Sum
Insured provided the treatment is taken in the Registered Hospital.
Pre-existing diseases are covered only after 4 continuous and claim free renewals with our
Company.
Pre-existing conditions like Hypertension, Diabetes, and their complications are covered after
two years of continuous insurance on payment of additional premium.
Exclusions
Diseases contracted within 30 days of insurance.
Dental treatment except arising out of accident.
Debility and General Run Down Conditions.
Sexually transmitted diseases and HIV (AIDS).
Circumcision, Cosmetic surgery, Plastic surgery unless required to treat injury or illness.
Vaccination and Inoculation.
Pregnancy and child birth.
War, Act of foreign enemy, ionizing radiation and nuclear weapon.
Treatment outside India.
Naturopathy.
Domiciliary Treatment.
Experimental or unproven treatment.
All external equipments such as contact lenses, cochlear implants etc.
50
Premium
Premium is based on age of the proposer and geographical area of treatment. The following 3
zones have been made for rating: ZONE-I (MUMBAI), ZONE-II (DELHI & BANGALORE)
AND ZONE-III (REST OF INDIA). Premium will be charged depending on the Zone in which
the insured undertakes to seek hospitalization.
Special Features of the Policy

Loyalty Discount.
Good Health Discount.
Income Tax Benefit under Section 80D of IT Act.
How to Avail Claim?

Claims are administered through Third Party Administrators (TPA) whose contact particulars
appear on the policy document. Insured can opt for cashless or reimbursement facility for their
claims.
For more details please contact our nearest Office.
Life Health Insurance for hospitalization

At Bajaj Allianz Life Insurance we offer unique hospitalisation-cum-insurance plan that takes
care of your hospitalization bills and also provides crucial financial support to your dependents
in case of your unfortunate death.
Our health insurance plans offer a sound protection to safe guard your family from any medical
emergencies and will make sure that financial problems are least of your worries in trying to get
yourself treated.
We offer cash less Mediclaim facility across 2000 hospitals in over 300 towns and provide best
treatment in the finest hospitals with our health insurance products.
Tax Gain Plan - Health Insurance Policy
YES! You can save tax and gain OPD benefits also!
51
Bajaj Allianz has designed a unique product - The Tax Gain plan, a Family floater health
policy which covers out patient (OPD) expenses & hospitalization expenses under a
single policy and helps you in your tax management also.
1. Features
OPD &Hospitalisation expenses covered under a single policy on floater basis
Access to over 2400 hospitals all over India for cashless facility.
Covers ambulance charges in case of an emergency up to Rs 1000/130 day care procedures subject to terms & conditions
10% co-payment of the admissible claim amount applicable if treatment is taken in
non-network hospital, waiver of co-payment is available on payment of additional
premium.Provides benefit of Health check-up at the end of each four
(Hospitalization) claim free policy periods. Tests as specified in the schedule. This
benefit can be opted by any one insured member
2. Benefits
A single policy or cover can be continued till a person reaches 75 yrs!
52
53
Cashless is only a facility extended by Third Party Administrators and Cashless

hospitalization can be availed only at Medi Assist network of hospitals. The essence of
cashless hospitalization is that the insured individual need not make an upfront payment to
the hospital at the time of admission. (Note: The network hospitals list may undergo changes
in the form of additions and deletions.)
At the time of hospitalization at a network hospital, you will have to produce your ID card as
proof of being covered by a health insurance policy. It is advisable to carry some form of
photo ID (Ration card, Driving license, Voted Id card, etc.) while hospitalization of
dependants with you in case the hospital wants to verify identity.
The network hospitals have a preauthorization request form available with them. The form
has to be jointly filled in by you and your treating doctor. Please make sure all the details
asked in the form are completely filled. This will ensure speedy processing of your request.
o Required details from associate
TPA Name : Medi Assist
Medi Assist ID: TCS employee number
Insurance company: New India Assurance Company (NIACO)
This form is faxed by the hospital to the Medi Assist toll free fax number.
At Medi Assist, we receive the request and process it. The medical team will determine
whether the condition requiring admission and the treatment plan are covered by your health
insurance policy. They will also check with other terms and conditions of your insurance
policy.
If the information provided is complete, the liability of the Insurer is absolutely clear and the
expenses indicated are reasonable &necessary, Medi Assist will issue an approval to the
hospital for a specified amount depending on the disease, treatment, how much you are
insured for, etc. This is sent by fax and/or email (if available). The approval is called a
"Preauthorization". This preauthorization entitles you to avail cashless facility at the hospital
without paying for the medical expenses. (Note: Further enhancement approvals may be
issued on request, subject to terms and conditions of the policy.)
At the time of discharge, please make sure that you check and sign the original
bills and discharge summary. Please carry home a copy of the signed bill,
discharge summary and all your investigation reports. This is for your reference
and will also be useful during your future healthcare needs.
54
In case any advance payment is made to the hospital and hospital has not refunded the
advance money to you, ensure that the Hospital Bill clearly shows the advance money
paid by the patient and the net amount payable by the TPA. We will deduct the advance
paid by the patient while settling the cashless payment to the Hospital Please submit the
original advance receipt along with the claim form and the pre
/ Post. Hosp. bills, if any, to Medi Assist. Medi Assist, after deducting the non-payable
items, will refund
FURTHER ISSUES RELATING TO HEALTH INSURANCE POLICIES

The Legislative Environment
A fine balance between government imposed regulation and self regulation by the industry
needs to be found. It a particular industry is over regulated it stifles innovation and
development. On the other hand under regulation can result in unwanted practices and fly
by night operations.
Socio-Economic Environment
The socio-economic environment has a significant impact on the type of health insurance
policy that consumes will look to buy. If will also have an impact on the claims patterns of
consumers. For instance, in a relatively poor society, product demand will be for products
that cover day-to-day basic medical care. This will tend to be products which have high
frequency of claims where the average claim sizes are relatively low.
Post Retirement Benefits
Another challenge for the insurance industry is how to deal with post retirement medical
benefits. One possible way of dealing with these is to use some form of endowment product (
where premiums are paid during the working life of the insured) to provide a lump sum at
retirement date which can be used to pr-fund medical expenses (or a future Medical Expense
Policy).
IT Systems
The measurement and manipulation of data is of essential importance in operating an
effective health care management system. There is a vast quantity of data that must be stored
55
and manipulated for the various aspects of health care management. In addition this data
should be readily available and easily updateable. In short the system should be robust!
Investment Strategy
Due to the frequency and level of the contribution received for most health insurance
products, providers have large amounts of funds that need to be invested in appropriate
vehicles. Certain countries (e.g. South Africa) have also introduced reserving requirements,
which will result in significant reserves building-up over time for health Insurance products.
This has introduced the additional complication of matching assets and liabilities. This is an
area where actuarial judgement is essential.
Cross Subsidies
The issue of cross-subsidies is another item which needs to be carefully considered by any
insurer. There often tends to be cross-subsidies in health insurance policies and in particular
in medical expenses policy. Even when legislation does not force cross-subsidies, it is quite
common for there to be cross-subsidies in health Insurance products. The insurance company
needs to examine the level of the cross-subsidies and ensure that the style of their products is
such that anti-selection will not result in abuse of these cross-subsidies.
Risk Management
The success of any health insurance policy is crucially dependent on appropriate
management of the underlying risks which can be best attained by
Setting of appropriate premiums
Effective underwriting effective
Measurement and control of expenses
claim control
Appropriate use of reinsurance avoidance of anti-
Appropriate reserving
Internal operational control
selection
Investment strategy and subsequent measurement
56
AIDS
The challenges that faces health insurers is how to deal with AIDS claims, and what product
can be designed that meet the needs of AIDS suffers. This is a challenge that has not, in any
market, to my knowledge, been fully addressed. In some Southern African countries,
insurance companies are offering certain anti-retroviral treatments in order to extend the
expected life span of their policy holders. This is one area where health Care Management
can be used to delay the payment of insured benefits (normally Life Insurance) and also add
the expected life of the insured, thus benefiting all parities concerned.
Medical Savings Account:
One example of a new product introduced to relieve the risk of rising costs is the introduction
of medical Savings Account (MSA) as a component of a Medical Expense Policy. The
account holder, at each ill health incident, has to take a conscious decision whether or not to
draw on savings and deplete his wealth. MSAs can be encouraged fiscally by providing
savers with tax breaks not available to savers for other purposes. The funds in an MSA could
be used to pay health premiums, deductibles or other medical bills not covered by insurance.
An MSA minimizes moral hazard. There are two main kinds. One is a short term scheme
which can be used at the discretion of the account holder for day-to-day expenses; the other
is long term, where the savings are intended to build up to a substantial sum for either major
expenditures or for old age.
Capitated Arrangements:
A further innovation in some progressive markets, including the South African market is the
use of a capitation arrangement for Medical expense Policies. A capitation arrangement
involves identifying certain service providers usually doctors who will provide given services
to their patients. The services provided are usually doctors consultations. The doctor is paid
a fixed fee per policyholder under its care. The doctor is then responsible for providing
whatever care is necessary to that patient. By linking up a provider network through a
capitation arrangement the risk of over servicing and hence higher costs is placed in the
hands of the doctors. It will then be up to the doctor to ensure that members receive
appropriate service which will costs the doctor and not the insurer more.
57
Frequently Asked Question (FAQ)

1. What is a health insurance policy?
A health insurance policy is a contract between an insurer and an individual or a group, in
which the insurer agrees to provide specified health insurance at an agreed-upon price the
premium. Depending on the policy, the premium may be payable either in a lump sum or in
installments. Health insurance usually provides either direct payment or reimbursement for
expenses associated with illnesses and injuries. The cost and range of protection provided by
the health insurance will depend on the insurance provider and the particular policy
purchased. These days, most companies give the benefit of health insurance to the employees.
However, in case your employer does not offer a health insurance plan, it is advisable to opt
for a health insurance scheme.
2. Why do you need health insurance?

Health insurance has become a necessity in todays world considering the rise in the cost of
medical care and treatment and the huge population of the country. The escalating cost of
medical treatment today is beyond the reach of the common man. Even if an individual is
healthy and has never had any major problem, it is not possible to predict what may happen in
the future. There is a growing public awareness for better health care and desire to have better
health care from private medical providers. In case of a medical emergency, cost of hospital
room, doctors fees medicines and related health services all add up to a huge sum. In such
times, health insurance provides the much needed financial relief.
3. What are the criteria for deciding on the best health cover?
Choosing a health cover for yourself must be done after careful analysis of your needs. In case
you need a wide cover as also Income tax benefits the mediclaim policy with a family
package cover could be a suitable option for you. You may also decide on the major ailments
policy with annual, five and ten year cover options offering you a reasonable amount of
premium savings.
Those going for a wide coverage as also long term cover about five or ten years can opt for
the term hospitalization policy. This gives benefits that are not available under the normal
mediclaim policy. Another convenience this policy offers is the non-requirement of every
year renewal of the policy. If you plan to go for a less costly health cover with tax benefit and
58
limited coverage for you could choose the Jan Arogya cover. For those closer to the
retirement age the long-term retirement benefit plan would be the ideal cover.
4. Who can avail this facility?

Health insurance can be availed by people aged between five and seventy five. The health
insurance scheme could either be a personal scheme or a group scheme sponsored by your
employer.
5. What does it cover?

In anticipation of unexpected events that create the need for medical goods and services, the
health insurance does not cover certain ailments. It does not cover ailments in the first year
after the policy is taken. It covers hospitalization charges for:
Heart attacks
Strokes
Prolonged illnesses
Loss of limb, eye, or other parts of the body due to accident
Injuries
Maternity expenses
Medicines
6. What are the main health policies or schemes offered by Indian insurance companies?
Some of the existing health insurance schemes currently available are individual, family,
group insurance schemes, and senior citizens insurance schemes, long-term health care and
insurance cover for specific diseases. Choose the one that suits you best and insure your
health.
The insurance policies offered by GIC are
Mediclaim Policy
Personal Accident-Individual
Personal Accident-Family/Group Accident Insurance J
an ArogyaBima Policy
BhavishyaArogya Policy( Insurance for senior citizens)
Traffic Accident Policy
Overseas Mediclaim Policy
59
The Life Insurance Corporation (LIC) offers:

The Asha Deep Plan: It provides covers for cancer, paralytic stroke, renal failure and
coronary artery disease.
JeevanAsha: The JeevanAsha policy is the other healthcare product offered by LIC
7. What you need to know?

You should understand the policy, and become familiar with common health insurance
provisions, including limitations, exclusions, and riders. It is very important to know what
your policy covers and what you have to pay yourself. Health Insurance policies generally
cover boarding, nursing and diagnostic expenses, which include room rent charged at the
hospital or nursing home, fees of the surgeon, anesthetist, doctor, etc. Some policies even
offer fixed cash amount for each day you stay at any hospital for treatment. If you have a
persistent health problem and then decide to take insurance, it might not be covered. Expense
on hospitalization, incurred in the first 30 days after taking a policy is also not entitled, except
in case of an injury from accident. Treatment of certain diseases is not covered during the first
year of your policy. The list of diseases may vary form one health policy to another.
8. Why does Indian insurance need Foreign Players?

Competition improves quality of service. In India, LIC and GIC are well-established names.
Only companies of equal strength and track record can effectively compete with them.
Foreign players will provide expertise.
Some foreign companies entering the Indian insurance sector and their Indian partners are as
below:
Indian Partner
Aditya Birla Group
KotakMahindra
Finance
HDFC
Reliance
Foreign Partner
Sun life, Canada
Old Mutual, South
Africa
Standard Life, U.K.
No foreign Alliance
ICICI
Max India
Prudential, U.K.
New York Life,
U.S.A
AIG, U.S.A
Tata Group
60
Specialization
Life
Life
Present Status
Received License
Received License
Life
Non-Life,
Health
Life, Health
Life
Received License
Received Licensefor
Non-Life
Received License
Received License
Life and Non

Life
Received License
9. What changes are likely to occur with privatization?

Currently, insurance for health care is tied up with only emergency situations. With
privatization it is hoped that health care will come within the reach of a large proportion of the
population. An insurance model must be created with the Total Health perspective to not
only give access to quality healthcare but also incorporate preventive health care into the main
system. Hospitals, different service centres and diagnostic centres needs to be accredited.
In India, approximately 80% of the total health expenditure comes from self-paid category as
against governments contribution of 20-30%. A majority of private hospitals are expensive
for a normal middle class family. The opening up of the insurance sector to private players is
expected to give a shot in the arm of the healthcare industry.
General Insurance Company has never aggressively marketed health insurance. Moreover,
GIC takes upto 6months to process a claim and reimburses customers after they have paid for
treatment out of their own pockets.
10. What are the pros and cons of privatization of health insurance?
PROS
CONS
Flexibility in health insurance products and

prices
Supplier induced demand which would lead to

increase in cost of care
Comprehensive and cost effective packages
Risk Selection practices where the disabled,

poor, elderly would be ignored
Medical plans will be tailored as per the

requirement of an individual based on prenegotiated rates
Exclusion of pre-existing conditions and diseases
Fewer age, disease and benefits restrictions
Monopoly of profit oriented insurance cartel

with poor quality products.
FAQ on Mediclaim
1. What is Mediclaim Insurance?
Mediclaim insurance consist of the reimbursement of hospitalization and/or domiciliary
hospitalization expenses for any illness/diseases or injury sustained by the insured individual.
61
2. What is meant by Hospitalization?

Any instance when and where the insured individual is hospitalized for a minimum period of
24 hours can be termed as Hospitalization.
3. What is Domiciliary Hospitalization?
Domiciliary Hospitalization is any instance when and where the insured individual requires
medical treatment for more than three days for an illness/ disease/ injury that in the normal
course would require hospitalization and is conducted at his or her home within India due to
The condition of the patient being such that he cannot be moved to the hospital
Lack of hospital accommodation
4. What is meant by Pre- hospitalization and Post-hospitalization expenses?

The relevant medical expenses incurred during 30 days prior to hospitalization are known as
Pre-hospitalization expenses
Medical expenses incurred for 60 days after hospitalization are known as Posthospitalization expenses
5. Under Mediclaim, is the limit of insurance per sickness or annual?

Mediclaim covers room, boarding charges, nursing expenses, surgeon, anesthetist /doctors
fees, blood, oxygen, operation theatre charges, X-ray, other tests pertaining to sickness, etc.
6. What is family discount under Mediclaim?

Under Mediclaim, when the husband or the wife and children or dependant parents are
covered under same policy, a discount of 10 percent is given on the total premium by way of
family discount.
7. What are the factors which determine the premium payable under Mediclaim?
Under Mediclaim, the age and the amount of cover are the factors that decide the premium.
8. What are the factors which determine the premium payable under Mediclaim?
Under Mediclaim, the age and the amount of cover are the factors that decide the premium.
9. What are the minimum and maximum amounts for which a Mediclaim policy can be taken?
62
Under Mediclaim, the minimum amount that can be insured for is Rs.15, 000 and the
maximum amount is Rs. 5, 00,000. In any case, the amount for which the insurance company
may grant increase is at their own discretion
10. Are all diseases and injury covers by Mediclaim?

There are certain diseases and injury that are not covered by this policy. They fall under
basically three categories. The injury or diseases that are not covered in the first year of
operation of the policy are:
Cataract, Benign porstatic hypertrophy, Hysterectomy for menorrhagia or fibromyoma,
Hernia, hydrocele, Congenital internal diseases, Fistula in anus, Piles, Sinusitis and related
disorder
Note: The disease listed above are only excluded from cover only for the first year of the
policy and not afterwards. The injuries and diseases or medical conditions not covered at all
under Mediclaim are:
Cost of spectacles, contact lenses, hearing aids
Dental treatment, surgery unless it requires hospitalization
Convalescence or rest cure congenital external diseases Sterility Venereal diseases
Condition directly or indirectly related to AIDS Pregnancy Circumcision, unless it is
necessary under certain circumstances alone.
11. Can the Mediclaim the insurance contract be cancelled midway?

The policy can be cancelled at any time during the course of its operation. In such cases, the
insurance company will refund the premium paid (on the basis of the table provided below)
only if no claim bas been up to the date of cancellation.
Date of cancellation
Amount to be refunded
within 1 month
of the annual rate
Within 3 months
of the annual rate
After 6 months
No refund
12. What is the difference between Mediclaim& Critical Illness policies?

63
A Mediclaim policy is a reimbursement of the medical expenses where as Critical Illness

insurance is a benefit policy.
13. What is a benefit policy?

Under a benefit policy on happening of an event, the insurance company pays the
policyholder a lump sum amount. Whether the client spends the amount received on the
medical treatment or not rests on his or her own discretion.
14. Are all the illness is under the Critical Illness policy?
The Critical Illness policy covers only five major illnesses
Cancer
Kidney failure
Organ transplant
Multiple Sclerosis andCoronary artery surgery (20 percent of Sum Insured)
15. Is there a minimum annual income requirement under Critical Illness

Insurance?
If the client is an income tax payer and his annual income is worth a minimum of Rs.2 lakhs,
he can opt for Critical Illness insurance.
16. What is the amount of Insurance offered by a Critical Illness policy?

Under a Critical Illness policy, the amount of insurance has to be selected by the client. It is at
4 levels- Rs. 5 lakhs, Rs. 10 lakhs, Rs.20 lakhs and Rs. 25 lakhs.
17. Explain the procedure to apply for cover under overseas mediclaim?
Certain documentation has to be provided in detail to avail of cover under the Overseas
Mediclaim policy. The necessary papers are
Visa details along with visa validity.
Country of visit &Passport details.
Name and address of sponsor plus a certificate giving details of employment, studies and
the duration.
Period of desired cover.
Medical examination certificate.
64
18. What is the rate of premium calculated under the Critical Illness Policy?
Under Critical Illness insurance, the premium depends upon the age and the sex of the
person.. For instance, a 35-year old male will be charged a premium of Rs.1.53 per thousand
whereas for a female of the same age, it is Rs.2.28 per thousand. For a 65-year male it is
Rs21.86 per thousand while a female of the same age will be charged Rs.15.25 per thousand.
19. How file to be claim under Mediclaim insurance policy?

Preliminary notice of hospitalization must be given to the insuring company within 7 days of
the starting date of the hospitalization procedure. Final claim form must be submitted with the
entire relevant document
Hospital receipts/ bills/ cash memos with medical and pathological reports
Prescriptions for medicines purchased from chemists within 30 days of discharge from
the hospital
What Do The Policies Offer
MEDICAL POLICY
CRITICAL ILLNESS RIDER
Medical expenses incurred prior to the
A fixed sum insured is paid on diagnosis of illness
hospitalization
covered under the policy
Cashless hospitalization for all the
Money can be used to avail better treatment options,
expenses incurred in the hospital
in any country
Post-hospitalization expenses
Family cover
Expenses incurred on ambulance

services
Optional benefits
Expenses incurred for general health
examination
Daily hospital allowance
Whole family covered under one policy

Each member eligible for overall cover
Pre-existing diseases covered
No health check-up till the age of 45
20. Explain the procedure to apply for cover under personal accident insurance
65
Immediately give notice of the accident to the insurance company.

File a First Information Report (FIR) with the local police station
Submit the claim form with all the relevant supporting documents/medical bills/reports.
In event of a fatality, in addition to the FIR and the relevant supporting documents,
additional documents are also needed.
Death certificate
Post-mortem report wherever applicable
Coroners report or Inquest/police report
Letter of probate/will/ letter of administration/ succession certificate
Affidavit from claimant that he/she is/ are the legal heirs of the deceased
No-objection affidavit from other relatives of the deceased towards payment to be

made to the claimant
INFORMATION ON HEALTH INSURANCE
The domestic health insurance market is set for a transformation with foreign players setting
their sights on it. Deutsche Krankenversicherung AG (DKV), a Munich Re group's health
insurance firm, is entering the under-explored health insurance market through a joint venture
with Apollo Hospitals Enterprise.
US-based United Health Group, too, is keen on India debut but prefers to wait till the foreign
holding limit in the country is raised to 49 per cent from the current 26 per cent. Apollo
Hospitals informed the Bombay Stock Exchange that its board of directors authorized
Chairman Prathap C Reddy to sign a JV agreement with DKV on Wednesday. DKV is the
leader in the European health insurance market.
United Health Group International, a division of United Health Group and the largest and
most diverse healthcare services company in the US, intends to set up a standalone health
insurance firm in India. We are informally looking for partners. The minimum capital
requirement of Rs 100 crore (Rs 1 billion) is too high, and if regulatory changes lower it to Rs
50 crore (Rs 500 million), it will be more sustainable.
66
Leonardi said, "The regulatory challenges in health are the costs involved in setting up a
health insurance company. Health insurance is not regulated as a separate line of business.
There needs to be clarity in minimum benefits. B D Banerjee, insurance ombudsman for
Maharashtra and Goa, said, "Health insurance products offered by insurers lack versatility
with certain exclusions and limits, pre-existing diseases are excluded from coverage. There is
no major plan for preventive treatment and cost of insurance is prohibitive for the average
middle class."
Reliance General launches health plan
BS Reporter/Mumbai December 28,2006
Reliance General Insurance has launched Reliance Health wise- a health insurance policy
covering hospitalization expenses, day care treatment and critical illness along with a cover
against hospitalization expenses incurred by a donor in case of major organ transplant.
Available in three plans- Standard, Silver and Gold the premium for a couple for a cover of
Rs 1 lakh would be Rs 820 (Standard Plan), Rs 900 (Silver) and Rs 1,000 (Gold). Depending
on the plan opted by the policy holder, Reliance Health wise Policy will offer variable
features.
Pre-existing diseases are covered from third year onwards in Gold and Silver plans. In case
the insured person contracts any of the nine critical illnesses mentioned in the policy, the sum
insured under the policy is doubled to meet hospitalization expenses. If a person wishes to
cover his entire family, he can choose the Family Floater Option. In case of an emergency, the
sum insured is made available to each member. This is unlike policies where the total cover
may be, say Rs 4 lakh, but is spread as Rs 1 lakh on four members and no individual member
can avail benefit beyond Rs 1 lakh.
Other benefits present in the policy are daily hospitalization allowance for a maximum period
of seven days, nursing allowance for a maximum period of five days, reimbursement of
charges towards local road ambulance services, recovery benefit of Rs 10,000 in case of
hospitalization for more than ten consecutive days, allowance towards expenses of an
accompanying person at the hospital/nursing home for a maximum of five days and
reimbursement of cost of health check-up at the end of a block of four years, provided there
were no claims reported.
67
IMPLEMENTATION OFHEALTH INSURANCE SCHEME (HIS)

FOR HANDLOOM WEAVERS
The Government of India was implementing a Health Package Scheme since the year 199293 as a welfare measure for the benefit of handloom weavers. Now in its place, the
Government of India has introduced a Health Insurance Scheme for Handloom Weavers from
the Current Financial Year i.e. 2005-06 in collaboration with ICICI Lombard General
Insurance Company Ltd.
The Health Insurance Scheme aims at financially enabling the weaver community to access
the best of healthcare facilities in the country. The scheme is to cover not only the weaver but
his wife and two children, cover all pre-existing diseases as well as and keeping substantial
provision for OPD.
Contribution by the : Govt. of India
Rs.800/- per annum
Contribution by the : Handloom weaver
Rs.200/- per annum
Total premium
Rs.1000/- per annum
FUNDING PATTERN
Release of funds:
1. The Central Govt. share of premium will be released to the ICICI Lombard directly for
coverage of weavers under the scheme in installments.
2. Service Tax of 10.2% over the annual insurance premium of Rs.1000/- will be borne by
the Government of India
3. In the event the claims ratio including all related costs is below 70%, with the view to
incentives the scheme, the surplus shall be rolled over to the next policy period.
68
ESIC to enhance benefits for employees

New Delhi , Dec. 23
The Employees' State Insurance Corporation (ESIC), which earned the highest revenue ever
this year, has decided to enhance its scale of benefits to employees, but at no additional cost
to employers. The ESIC will ask the Government to increase expenditure on medical benefits
from Rs 900 per insured person family per annum to Rs 1,000.
The corporation has also decided to increase the exemption limit from paying employees
contribution from Rs 50 to Rs 70, thus exempting 5.7-lakh employees from paying their
contribution.
Benefits Enhancement
The organization also wants to increase sickness benefits, disablement benefits and the
existing limit for reimbursement of funeral expenses, estimating a total liability of Rs 61
crore from these enhancements of benefits. The announcement was made at the ESIC's
annual meeting, chaired by the Minister of State for Labour and Employment, Mr Oscar
Fernandes, to approve its annual report.
Announcing a revenue income of Rs 2,410.61 crore for the year 2005-2006 in a press release,
the ESIC stated that the scheme had been implemented in 10 new centres and 90 new
geographical areas, covering additional 1.48-lakh employees this year. The corporation has
been able to distribute 31.44 lakh cash benefit payments to the tune of Rs 273.73 crore over
the year.
Health insurance premium may vary from one location to another

RadhikaMenon
Geography, a key differentiator for pricing products: IRDA
Mumbai , March 30
69
Can the health insurance premium paid by a Mumbai resident be more than that paid by a
Chennai resident, on the strength of the geographical location, other things being equal? A
report on `Innovations in health insurance policies' by the Insurance Regulatory and
Development Authority (IRDA), recently submitted to the Finance Ministry as well as
insurance companies, says it can.
According to the report, geography would be one of the key differentiator for prices of
products since healthcare costs vary in different parts of the country. "The healthcare costs in
Chennai, for example, are lesser than the costs incurred in Mumbai. This should be used as a
differentiator for prices for products being offered in various parts of the country," said the
report. Thus, there could be restrictions in terms of where the treatment can be availed.
`Pool' concept
The IRDA constituted committee has also strongly recommended the concept of a `pool',
which will be maintained by the regulator for covering pre-existing illnesses like congenital
ailments and conditions like AIDS. The funding of the pool would be from the contributions
of insurance companies, voluntary contributions from corporates, grants from Central and
State governments and aid from international bodies such as World Bank and WHO
Star Health policy targets Gulf NRIs
`With strict control over expenses, it would be possible for Star to make profits on the
product'.
Chennai , Jan. 12
The country's only standalone health insurance company, Star Health Insurance, has
launched a new product that has several unique features. First, it will cover pre-existing
diseases. Second, it will provide cover for `parents' regardless of their age. Third, there is no
waiting period for commencement of coverage. Fourth, it will pay for doctors' consultation
fees too, including out-patient consultation.
But where is the catch? Mr V. Jagannathan, Chairman and Managing Director of the
company, told Business Lineon Friday that to avail himself of the cover, the patient will
have to be admitted into one of the "designated hospitals". If the patient goes to other
70
hospitals, Star's liability will be capped at 50 per cent of the final admissible claim, subject to
a maximum of 50 per cent of the sum insured.
MrJagannathan believes there would be a good demand for this product, which is for now
open to NRIs in West Asia. Star intends to extend the policy to resident Indians also, but over
time. There are 4 million Indians in West Asia, many of whom are concerned over the health
(expenses) of their parents, for whom no insurance company would offer coverage. For a
sum assured of Rs 1 lakh, the gross premium is Rs 1,751 (including tax). Star charges Rs 438
additionally for including one child and Rs 875 for one more adult. How will it work for
Star? MrJagannathan says that with strict control over expenses, it would be possible for Star
to make profits on the product.
ICICI Lombard plans biometric health cards

RadhikaMenon
Launch in Manipal for group insurance policy holders
The Features
Authorizes transactions based on the customers fingerprints treatment at hospitals
without having to make advance cash payment Covers head of family, 3 dependents
It's now the turn of insurance companies, after banks, to introduce biometric cards in rural
and semi-rural areas. ICICI Lombard General Insurance Company plans to offer family
biometric cards to group health insurance policyholders. The card will enable policyholders
to get hospital treatment without making any advance cash payment. Biometric cards
authorise transactions based on the customers' fingerprints.
To begin with, ICICI Lombard will launch these cards for health insurance policyholders in
Manipal, Karnataka. This family card will cover the head of the family and three other
dependants, said MrPranavPrashad, Head, Rural and Agriculture business, ICICI Lombard.
The insurer plans to introduce these cards to 7,000-10,000 policyholders by month-end.
71
ICICI Lombard has tied up with Financial Information Network & Operations Pvt Ltd
(FINO) to create this card. ICICI Bank, the parent company, has a 20 per cent stake in the
newly launched FINO- a company that provides financial institutions with technological
solutions to reach the underserved in the country.
ICICI Lombard's family card will contain a smart chip, which carries biometric information,
personal details as well as the photograph of the policyholder and three dependants. Mr Rishi
Gupta, CFO, FINO, said the `smart card' would also load the sum insured that the
policyholder is entitled to. So, when the customer presents the card at the hospital, the
balance in the card can be immediately ascertained.
Tie-up with hospitals
ICICI Lombard will tie up with neighborhood hospitals so that hand-held machines that read
these cards can be installed. MrPrashad said the card would reduce administrative hassles for
the customer and would eventually drive down distribution costs. If the experiment works in
Manipal, it may extend this service to other rural health and motor insurance policyholders.
ICICI Lombard would have to tie up with garages in the case of motor insurance.
In rural areas
Collecting biometric information in rural areas is, however, ridden with its own set of
problems. "The fingerprints of people in the rural areas are not very clear as they perform
intense manual labour. So, we take the impression of all the fingers and choose the best two
prints of each hand," he said. The card has the capacity to load as many as 15 applications
and FINO is in talks with several other finance providers and government agencies. So,
besides cash withdrawal, deposits and insurance premium payments, the urban and rural poor
may also use this card at the neighborhoodkirana store and the post office. Among banks,
ICICI Bank has introduced biometric cards and Citibank has set up biometric ATMs. Several
PSU banks are also on the verge of introducing similar technology for micro-finance
customers.
72
CONCLUSION
The Government of India, in one of its economic survey reports, has proclaimed
that human development is the ultimate goal of India's developmental plans. It is
also being realized that sound long-term development of social sectors, such as
education, and health is crucial to sustain economic growth in an increasingly
integrated world economy. The government can intervene in the health insurance
market in two ways: by directly providing subsidizing insurance or by
regulation. These two forms of intervention do not lead to identical results.
Provision of partial public insurance, even supplemented by the possibility of
opting out, can lead to second beat equilibrium. Regulation of the private
insurance market by imposition of a standard contract or by restricting premium
rates, on the other hand, can exacerbate the problem of adverse selection and
lead to chronic market instability.
There is yet another criticism about the Indian health delivery system: urban bias
in the allocation of resources. As of 90-91, 66.96 percent of the resources spent
on health care had gone to the urban sector which accounts for 25.7 percent of
the total population, while only 33.04 percent of the resources had gone to the
rural sector, which accounts for 74.30 percent of the total population. The per
capita expenditure on health care of the urban sector was said to be around
Rs.152 as against Rs.26 of the rural sector.
The Government being the central player in the health care delivery, the system
is suffering from financial constraints and inefficiency in allocating whatever
resources available. It is slowly being realized that sole reliance on the public
health care system is no longer desirable.
73
RECOMMENDATION
STAND-ALONE HEALTH INSURANCE COMPANY
Stand-alone health insurance companies in the Public Sector with model
performance can encourage the Private Sector to perform accordingly keeping
in view the issue of affordability of large sections of the needy population and
thus help create a conducive environment for spread of health insurance
business.
Universal Health insurance scheme
The subsidy was subsequently enhanced in 2004 and the scheme was confined
to the BPL segment of the population only, and in spite of it, the scheme failed
to make much head way. An exercise to identify BPL families should be
initiated immediately and the entire exercise be completed within a specific
time-frame and the scheme should also be made applicable to lower middle
class and the people who are just above the Poverty Line.
LACK OF COORDINATION
The Employees State Insurance Schemes, the Central Government Health
Scheme and other Commercial Health Insurance schemes are being operated by
three different Ministries viz. the Ministry of Labour, Ministry of Health &
Family Welfare and Ministry of Finance respectively and there is no
coordination amongst the three Ministries. A pilot health insurance scheme
involving the Ministry of Health and Family Welfare, Ministry of Finance,
IRDA and Public Sector Insurance Companies should be evolved and launched
within a specific time-frame.
74
LACK OF AWARENESS
The level of public awareness about the need, availability and benefits of health
insurance in the country is still very low despite the fact that public sector
general insurance companies have been operating in the field of health
insurance for nearly two decades, beginning from 1986. There is need to create
awareness about availability and benefits of health insurance schemes
especially in rural areas through a multi-pronged strategy involving the public
insurance companies, the central Government, the state Governments and the
Panchayati Raj Institutions as well as Non-governmental organizations so that
more and more people come forward to adopt Health Insurance schemes.
LACK OF PRODUCT VARIETY
There is a serious lack of variety of health insurance products in terms of
flexibility to cater to the specific needs of different segments of the population.
There is an imperative need to introduce long term health insurance products,
covering out-patient care, maternity care, pre-existing diseases, suitable
products for the aged, abandoned women, widows, physically and mentally
challenged, children and the rural poor.
LACK OF ADEQUATE HEALTH INFRASTRUCTURE
The two factors that discourage a majority of potential customers from buying
health insurance cover are
(i) Lack of adequate health care infrastructure, especially in rural areas where
75% of the countrys population lives, and
(ii) The consequent inaccessibility to health care for a majority of the
population
75
It feels that strengthening of the existing infrastructure for providing health

care to the rural masses is of paramount importance. The Governments of all
States and Union Territories may be requested to allot land for development of
health infrastructure in rural areas at concessional rates to private bodies/Selfhelp Groups/cooperatives etc. Soft loans from Life Insurance Corporation of
India, Banks and other financial institutions should be made available to these
bodies for creation of rural health infrastructure.
CLAIMS MANAGEMENT & THIRD PARTY ADMINISTRATOR
SYSTEM
Third Party Administrators in the Country have been following unethical
practices in collusion with health service providers and insurance companies in
settlement of claims. They also lack the competence and necessary
infrastructure to fulfill the role and functions expected of them. They also note
that complaints relating to claim settlements have increased considerably after
the introduction of the TPA System and the increase in cost of premium as also
claim costs. a sub-committee of IRDAs Internal Working Group on Health
Insurance has, inter-alia, recommended that the insurance companies should
take certain concrete steps to provide clear guidelines to enable TPAs to
effectively manage and settle claims.
LACK OF PROFITABILITY
The most health insurance schemes offered by public sector insurance
companies are loss-making primarily due to their inability to insure the younger
people who are relatively free from major diseases. Besides this, the absence of
proper re-insurance facility for health insurance is also adversely affecting the
confidence of insurance companies to underwrite health covers on a large scale.
the Government and the regulator, after due consultation, prescribe viable
76
targets of health coverage to the insurance companies, both in the public and
private sector, and introduce incentives linked to their performance in fulfilling
those targets.
POVERTY AND NEED FOR SUBSIDY

The premium of health insurance schemes is beyond the economic capacity of
people living below the poverty line as well as for a large section of the
population living just above the poverty line. The only way to ensure health
insurance cover for the poor is through subsidy to be provided by the
Government to make the premium affordable for the poor. The only subsidized
scheme at present is the Universal Health Insurance Scheme launched in 2003
and it has been confined exclusively to the BPL segments in 2004 with
enhanced subsidy. A system of differential subsidy for the poor and the BPL
segments may be introduced across the board for health insurance schemes and
service tax for providing health insurance may be abolished to increase its
affordability.
LACK OF DATA
The lack of adequate data on morbidity, demographic groups and diseases etc.,
is a major hindrance in formulating and designing new products in health
insurance and thus affect the development and progress of health insurance in
the country. A road map should be drawn for establishing a data repository and
should be evaluated and examined for expeditious implementation.
77
POLICY RELATED REFORM INITIATIVES:
1. Decide on regulator for the health care and its financing

2. Private the infrastructure. The government has pumped in billions of rupees
into the infrastructure, which is resultantly very ineffective and nonperforming
3. Allow the financing agencies and insurance companies to dictate the
performance of health facilities and the constituents.
MARKET AND PRACTICE REFORM INITIATIVES:
1. Permit entry of new players and managed healthcare organizations into the
health insurance market and introduce risk based capital norms for these
entities
2. Introduce rating and credentialing of the providers to encourage
standardization of services from various providers.
3. Creation of standards for diseases and treatment procedures to develop a
common understanding and database as well as to introduce cost
containment measures
4. Creation of an information bank on insurance, diseases, and treatment
involving creation of a centralized data warehouse besides the enforcement
of standardized billing, claims forms and proposal forms.
5. Portability across players and schemes especially with respect to the preexisting diseases condition
6. Encourage community initiatives in healthcare financing to complement
formal social security schemes that cover regularly employed or self
employed, especially in the rural communities.
Appropriate Regulation
1. Permit entry of new players and managed healthcare organizations into the
health insurance market by reducing minimum capital norms, adopting
78
solvency margins and reinsurance requirements appropriate to this class of

business.
2. Consolidation and improvement in cost effectiveness including withdrawal
of public subsidies and reform of the ESIS and CGHS schemes.
3. Regulation of private healthcare including creation and enforcement of
licensing procedures, and standardization of fees structure
79
the amount. This will ensure that you will get the eligible amount from MA
without waiting for the
Hospital to refund the advance amount to you.
The hospital will ask you to pay for all the Non-Medical Expenses in your bill.
You have to make this payment before discharge.
In case, for whatever reason, the preauthorization request cannot be approved, a
letter denying preauthorization will be sent to the hospital. In this case, you will
have to settle the hospital bill in full by yourself.
Please note that denial of a preauthorization request is in no way to be
construed as denial of treatment or denial of coverage. It may also be noted that
Cashless cannot be claimed as a matter of right. You can go ahead with the
treatment, settle the hospital bills and submit the claim for a possible
reimbursement.
Cashless Hospitalization can be of two types:
Planned Hospitalization:
This happens when you have ample time to plan your admission to the hospital.
For example, if the doctor advises surgery for hernia and says that you can
undergo the surgery anytime in this month, it gives you time to plan you
surgery.
In such cases, it is prudent to send the preauthorization request to Medi Assist at
least 72 hours before your planned admission. This will ensure a hassle-free
admission procedure for you at the hospital.
Emergency Hospitalization:
This happens typically in case of emergencies such as a road traffic accident. There
is no planning involved in the hospitalization. In such situations, the ID card can be
shown at the network hospital to avail cashless admission facility. The
preauthorization request can be sent to Medi Assist within four hours after
admission.
80

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INTRODUCTION

ORIGIN OF HEALTH INSURANCE

Per Capita Premium

MEANING AND DEFINITION

The Employees State Insurance Scheme

Central Government Health Scheme

State Sponsored Schemes

Railways Health Scheme

Mining & Plantations (Public Sector)

Employers run facilities/reimbursement schemes of private

Pubic Sector Non-Life Companies

Private Sector non-life Companies

Health Segment of Life Insurance companies

Community health schemes by NGOs and others

WHY HEALTH INSURANCE IS A MUST?

.Penetration of Mediclaim is currently done by state-owned insurance companies, covering only

Health premium (in Health premium as a %

Paradoxically, the medical professionals are resisting standardization in treatment coding

ISSUES AND CONCERNS

Life expectancy (avg.

one part of the

(USD per capital

LICENSING HEALTH INSURANCE IN INDIA

HEALTH SECTOR FINANCING

Tax-based and outof-pocket expenses

Health Ins. Involves

HEALTH INSURANCE AS A HEALTH FINANCING TOOL

NEED FOR PRIORITIES

GOVERNMENT/STATE BASED SYSTEMS

CENTRAL GOVERNMENT HEALTH SCHEME

EMPLOYEES STATE INSURANCE SCHEME

Insurance Corporation (ESIC), a wholly government-owned enterprise. It was conceived as a

MARKET BASED SYSTEMS

A.1Mediclaim or Hospitalization Benefit Insurance Policy

A.2 BHAVISHYA AROGYA INSURANCE POLICY

Premiums can be paid in equated annual installments up to the age of retirement

A.3 JAN AROGYA BIMA POLICY

Dependent child up to 25 years

For family of 2+1 dependent children

For family of 2+2 dependent children

Past two years business performance of the BhavishyaArogya Policy

II. Asha Deep

The Policy basically covers reimbursement of expenses of hospitalization and domiciliary

Post Hospitalization Benefits

I. General Insurance Plan

II. Special Insurance Plans for:

4. Covers Delay of Checked in Baggage

Animals belonging to the insured person or in their care, custody or control.

Any willful, malicious, or unlawful act.

Pursuit of a trade, business or profession, employment or occupation.

Ownership, possession, or use of vehicles, aircraft, watercraft, parachuting, hand

Insanity, use of alcohol, drugs(except as medically described) or drug addiction.

Supply of goods or services.

Deductible: US$ 100

Loss of Checked in Baggage

Delay of Checked in Baggage

Delay > 12 hrs

Deductible: US$ 200

Overseas Journey - Business or Holiday

The Monetary Compensations offered in each case:

LIMIT (in US$)

Deductible: US$ 100

US$15 per day