In the rapidly coming up health insurance in India, consumers are not only seeing a wider range of products, but also a large number of insurance providers. At the same time, insurers are looking for ways to reduce their mounting losses they face. Insurance companies believe that reimbursement type products like Mediclaim are more prone to fraud and abuse. To reduce those risks they are considering the introduction of checks in the basic Mediclaim product in the form of co-payment and by reintroducing sub-limits.
A few years ago, a standard Mediclaim policy generally sold by public sector general insurance companies, namely New India Assurance, National Insurance, United India, or Oriental Insurance had in built limits to restrict how much you could spend on specific things, such as ambulance service or hospital room rent. However, for various reasons, these controlling mechanisms were done away with. Now, faced with increased losses from this segment insurers are re-introducing them in the newly designed Mediclaim policies. The companies are also spelling out how much their liability will be towards specific treatments, such as cataract operations and so on. This they say will rein in healthcare providers who tend to overcharge patients who have health insurance.
The second type of check against insurance fraud and abuse is co-payment. At present insurance companies apply this mechanism only in case of customers above the age of 55. Basically, the co-payment mechanism means that the insurance company will pay only a fixed percentage of the claim, while the rest is borne by the insured person. The idea of insurance is to pay reasonable charges. Co-payment inhibits insurances customers and their healthcare providers from misusing benefits.
Hereâ€™s an example of how co-payment works. Letâ€™s say the insured has a policy for Rs 1 lakh cover, from one of the public sector insurers. The company would have a co-payment structure such that it will pay 90% of his claim, and require the insurer to pay the remaining 10%. If the insured is a senior citizen (aged 65 or above) the co-payment ratio would be 80:20 where 80% is paid by the insurance company, and the balance by the insured. If the insured voluntarily increase the mabdatory10% or 20%, he can get discount on the insurance premium. The discount ranges from 10% to 15% depending on the percentage of voluntary co-payment.
For health insurances policies the co-payment structure also depends on where the insured lives and where he seeks treatment. This is because insurance companies divide the country into zones based on healthcare costs. Mumbai, which is the most expensive in terms of hospital and doctor fees, comprises Zone 1. Delhi and Bangalore comprise Zone 2, while the rest of India comes under Zone 3. Predictably, premiums are highest for Zone 1, and lowest for Zone 3.
As a health insurance policy holder, you can file claims for treatment that you undergo in your own zone, or in a lower cost zone. So Zone 1 residents can file claims for treatment taken any where in the country. The insurance company will be liable for 100% of the treatment cost except, of course, in the case of older customers who are required to co-pay.
If you live in Zone 2 and undergo treatment in Zones 2 or 3, your insurer will pay 100%. However, if you seek treatment in Zone 1, the company will pay only 90% of the sum insured and the insured will have to pay the remaining 10%.
If you live in Zone 3 and seek treatment in Zone 1, your co-payment liability is 20%, while the insurance company will pay 80% of the sum insured. If you seek treatment in Zone 2, the insurance company will pay 90% of the sum insured, and you will have to pay the remaining 10%.
The loss reducing measures are also being extended to the group health coverage offered by employers. Since group policies register the highest number of claims and lead to high loss ratios, insurance companies have been asking employers to pay higher premiums. Until last year, insurance companies heavily subsidized group health covers in order to get more profitable fire and engineering business from corporate companies. With the removal of tariffs in the general insurance market, insurers are now being forced to make all lines of business profitable, including health.
So, while there was no actual underwriting and control on the kind of coverage offered to employees earlier, insurance companies are now becoming stricter on this front. In some cases where premium rates have gone up significantly employers are asking employees to share a percentage of the premium to ensure coverage for themselves, spouses, children and dependent parents.
Insurance experts say that as the market develops there will be a greater onus on the consumer to be more responsible towards healthcare costs. This along with measures like co-payment and sub-limits will also bring about greater discipline among health care providers which would be good for all concerned in the long run.