Top health insurance trends

Varun Gera, CEO, HealthAssure, talks about the various measures being taken by the private sector and the government to increase healthcare insurance penetration in the country

The healthcare sector in India is one of the fastest growing industries in the country, and there is immense potential for enhancing healthcare services penetration in India. It is, in fact, expected to advance at a CAGR of 22.87 per cent during 2015–20 to reach $280 billion.

The size and diversity of India is also reflected in the status of the healthcare industry in our country. While India is known for its quality of doctors and medical institutions, we as a country represent less than half of doctors per 1000 population as compared to other countries such as the Russian Federation with a ratio of 4.3, Argentina with 3.8/1000 and the US with 2.4/1000. Similarly, though India has the largest chain of hospitals in Asia, our bed density stands at 0.9 per 1000 people which is less than one – third of the WHO norms of three beds per 1000 people. India spends less than $1 per capita on healthcare research and only three per cent of that figure was spent on public health research, according to a recent media report.

However, India is also the largest exporter of formulations with 14 per cent market share. It ranks 12th in the world in terms of export value. In fact in the recent past, we have witnessed tremendous activity in the healthcare sector on all fronts viz. growth and investments in hospitals in tier I and tier II cities and in primary care deliveries. There have also been entries of many standalone health insurance companies and significant growth in their customer acquisition, e-commerce start-ups in healthcare, insurance broking, fitness, etc. Upto 20 per cent of the Indian population is being covered for hospitalisation with government as the payer, and regulatory policies and government emphasis on health initiatives such as Mother and Child Tracking System (MCTS) and Facilitation Centre (MCTFC) are further improving the current scenario.

However, while medical care in our country is scaling new heights, medical costs too, are escalating faster than wages. Considering the rising healthcare cost inflation and changing disease patterns with a shift towards lifestyle diseases in the urban areas, the health insurance market would have significant headroom for growth as it would replace out-of-pocket expenditure. Health insurance, remains an important viable alternative to cover the medical care costs of our country’s vast population.

The payers viz. health insurers and the government tend to have the maximum influence in the healthcare ecosystem and there has been a lot of activity and trends in both these segments. Some trends that are reflected in both domains include:

Payer — Health insurers

India has seen a significant rise in the number of health insurers and more specifically standalone health insurers in the recent years. The gross healthcare insurance premium was $2.9 billion in 2013 expanding at a CAGR of 26 per cent over FY08-13. [*Source: http://www.ibef.org/download/Healthcare-August-2015.pdf, Page 14] We are seeing the evolution of the market with launch of new products by health insurers, such as:

• Single disease covers: Single-disease insurance cover is catching on in the health insurance domain and is designed for specific ailments such as diabetes, high blood pressure and cancer. Single-disease covers offer comprehensive coverage for that particular disease and serve as an add-on cover to regular health insurance policies. Policies targeting critical illnesses look to provide cover against lifestyle diseases, given that treatment of such ailments can be expensive.
• Fitness, wellness and disease/ care management products: Many insurers are now focusing on wellness and other allied services which focusses on programme, support and access for better health of its customers.
• OPD coverage: More and more insurers are now focussed on including OPD coverage for its customers and thereby moving from being a finance company to a healthcare company.
• Health insurance portability: With the new regulations, customers have a choice of porting from one insurance company to another more easily than ever before.
• Modern distribution models: Online sales of insurance products has become a significant distribution channel for insurance companies and has allowed customers to compare the various policies available to and make informed choices. Further, insurance companies have created their own large online channel of sales through digital marketing and social media.
• Banca regulation facilitation health insurance growth: The regulator allowing Bancassurance to tie up with one life, one general and one health insurer allows for further penetration and evolution of health insurance. Additionally, the regulator has allowed for banks to act as brokers thereby allowing them to tie up with multiple insurers and allowing for broader distribution of insurance, leading to higher penetration.
• Focus on customer education, ethics and quality delivery: The regulator has  a lot of focus on the above and ensures that the market evolves with customers understanding their rights, education on the need for insurance and regulating insurers for delivery as per the product registered with a good customer experience.

Payer — Government

As India’s economy and political structure evolves, it needs to focus on healthcare. There have been many important steps taken by the government which will go further in evolving the healthcare market:

• Healthcare financing: India has made significant progress to financially cover greater population for healthcare and one of the biggest achievements has been the increased focus on healthcare financing by governments (by both central and the state). This increase has been contributed largely by government-sponsored financing and health insurance schemes, which together covered 247 million people in 2010, wherein 112 million were covered by government-sponsored health schemes like CGHS (3 million), Arogyasri (70 million), Kalaignar (35 million), others (4.4 million), and 135 million through government-sponsored health insurance, like Rashtriya Swasthya Bima Yojana (RSBY) (80 million) and Employer Employee Contribution Scheme (55 million) in the overall health insurance cover.
• Public Health Foundation India (PHFI): India faces a severe shortfall of public health professionals, and capacity building efforts are urgently required to address emerging public health challenges. To address this gap, PHFI has been launched as a public private initiative and currently there are four such institutes operational in India with many more on the anvil.
• State level initiatives: Government initiatives such as  creation of National Health Mission for providing effective healthcare to urban and rural population, enhancing scope of  RSBY to include rickshaw pullers, taxi drivers, sanitation workers, rag pickers and mine workers and additional funds provided to the National Programme for the Health Care of Elderly for senior citizens have all contributed to the growth of a robust healthcare infrastructure in the country.
• Employee State Insurance Corporation (ESIC): ESIC scheme covers large population of almost six crore of the Indian population for primary and secondary care. Apart from a major push by government to upgrade their infra facilities they have also embarked on a path towards biometric cards for their members and an ERP system for efficient healthcare delivery. The labour ministry also plans to give more flexibility to workers on their health insurance scheme and even opt for private health insurance schemes. This change is aimed  to protect formal sector workers against events of sickness, maternity, disablement and death.
• Universal Health Coverage plan: Establishing a system of Universal Health Coverage (UHC) in the country would mean that each individual would have assured access to a defined essential range of medicines and treatment at an affordable price, which should be entirely free for a large percentage of the population. The 12th Five Year Plan plan focuses on providing universal healthcare, strengthening healthcare infrastructure, promoting R&D and enacting strong regulations for the healthcare sector.

Factors such as rising income levels, ageing population, growing health awareness and changing attitude towards preventive healthcare are expected to boost the demand for better healthcare services in future. For India to reach its rightful goal of becoming a developed nation, it needs to financially empower its entire population. A key element of this empowerment is a basic risk cover that covers elements of life, disability and health. Besides insurance, other areas in healthcare such as hospital infrastructure, medical technology and manpower, need to be developed simultaneously. This empowerment can only be achieved through the collaborative public private efforts of the government, regulators and private enterprises.