Pushed to poverty by mounting healthcare expenses, lakhs of people hoped medical insurance would save them. But, the insurance sector is hardly mature as hospitals continue to overcharge insured patients and insurers insist on cumbersome checks.
His post-retirement reserves evaporated, Sandeepen Sen knew he was in deep trouble. His survival was perched precariously on a surgery so expensive that he had no clue where to head for money. Health insurance policies he had none. Neither was he a BPL card-holder to claim subsidised treatment under a government scheme. The alarm bells were loud, and too close for comfort!
Lakhs of Bangaloreans find themselves in the same vulnerable state or worse. Caught in a whirlpool of mounting medical expenses, unaware of health insurance policies that work out better when taken at an early age, they feel cornered. Artificially jacking up bills for insured patients, making insurance claims tougher, hospitals aren’t helping either. Is there a way out?
It is a vicious circle out there, a tussle between private health institutions, insurance firms and the patients. Exposed to this complex yet murky game for years, an insurance agent squarely blames the hospitals for their greed. “Once the hospitals know that a customer is insured, they get greedy and hike the rates. They are least bothered about leaving a part of the sum assured for the remaining period of the year. They know the patient will not come back in the same year,” the agent explains.
The strategy to deal with insured patients is clear in many corporate hospitals: Push them to take rooms that cost higher, and levy proportionately higher charges for doctors, nurses, ICU, and even canteen food. Struggling to control this practice, insurance firms eventually made a rule that room rent cannot exceed two per cent of the insured sum. So, if the insurance cover is Rs 2 lakh, the daily room rent cannot go beyond Rs 400.
To verify claims, some insurance firms send their own doctors to the hospitals concerned. If there are no fraudulent claims, the dues are cleared fast. If not, the amount is kept pending and internal investigations are ordered. This could take weeks, or months, spelling doom for the hapless patients.
Partial reimbursements The insurance firm might eventually settle the bills, but only partially. The patients would have to pay the balance from their own pockets. In effect, they would be forking out more than they would have if they weren’t insured. Dilip Sharma (name changed), a medical practitioner himself, was at the receiving end when he took his mother for an angiography at a corporate hospital in the City. “When I told them she was insured, the hospital people said the procedure would cost Rs 25,000. I asked what if she doesn’t have insurance cover. They openly admited it would be only Rs 15,000,” recalls Sharma.
Hearing such stories of insurance abuse, many are reluctant to sign up for a policy. But this hesitation could prove costly. “Ideally, people should take up a policy by the critical age of 45 years, after which health risks begin to rise. Due to low awareness of the benefits involved and other issues, people start planning for a health cover very late in their lives. The health risks would have increased by then,” explains insurance agent, B Ravikanth.
Also on the rise with age is the premium amount. Once out of a group insurance umbrella provided by the employer, a retired employee will find taking a fresh individual policy at age 58 or 60, costly and cumbersome. Pre-existing illnesses would have gone up, and the premium could prove too steep for a late entrant with low or no income.
Unfriendly insurance products
People tend to bank on their life savings to tide over the medical emergencies. It worked well as long as the expenses were reasonable. But, as Dr N Devadasan, director of the city-based Institute of Public Health, points out, high inflation in medical expenses has thrown their plans in total disarray. “It is only now people are slowly becoming aware of insurance needs,” he says.
But many of the insurance products available in the private sector are unfriendly. Dr Devadasan explains, “There is a lot of fineprint. There are many (disease) exclusions and other conditions which deter people, raising fears that their bills wouldn’t get reimbursed. Besides, there are also some hospitals that don’t entertain insured patients at all, citing delays in payments. Thus, the health insurance sector in India is still very immature.”
Hospitals levying a higher charge for insured patients is technically and legally “not correct,” he contends. Hospital heads justify this by citing payment delays from the insurance firms. But this indicates an inefficiency in the system, which cannot be unfairly transferred onto the patient. “When the medical bills go up, the insured amount for subsequent treatments for the rest of the year reduces. Besides, it would trigger loading on the next year’s premium amount.”
No arbitrary loading
Fortunately for the insured, the Insurance Regulatory and Development Authority (IRDA) has now disallowed loading premiums arbitrarily. Loading is the amount charged by the health insurance company on the renewal premium when claims are made on the policy. From October 1, 2013, insurers are required to base the loading on the preceding three years' claims experience as also expected claims experience. The hike will have to be adequately justified.
Unlike in the West, most insurance firms here aren’t proactive in simplifying the claims process for the patients by inking agreements with the empanelled hospitals. As non-government medical activists contend, such deals could have fixed standardised rates for various treatments and procedures, simplifying the claims process. The insurers could have performed periodic medical audits to ensure that the patients get quality treatment.
Expanding Vajpayee scheme
Until the insurance system reaches some level of maturity, one workable option could be extending government health schemes to the middle classes. The State has one such proposal: to expand the Vajpayee Arogyashree Scheme (VAS) to the rest of the population. This might just slow down a trend, where healthcare expenses are ruining lakhs of families, pushing them to poverty. But many private hospitals are reportedly up against this move.