From sickness to wellness

Yoga Day takeaway: India, espousing the cause of Yoga, must consider spearheading the move to wellness insurance from sickness/ health insurance.

Prime Minister Narendra Modi has already contributed significantly to global health and well-being by proposing at the United Nations on September 27, 2014, that the world should adopt an International Yoga day. The prime minister had observed then that Yoga, amongst other things, embodies holistic approach to health and well-being and, indeed, is an invaluable gift of India’s ancient tradition to the world.

The United Nations, soon thereafter on December 11, 2014, proclaimed June 21 to be the International Yoga Day and Secretary-General Ban ki-Moon observed that, “By proclaiming 21 June as the International Day of Yoga, the General Assembly has recognised the holistic benefits of this timeless practice and its inherent compatibility with the principles and values of the United Nations.” The implications of Yoga for health and immunity are well documented, and a healthy workforce implies higher economic growth.

And, in India, after nearly 70 years of independence, about 70 per cent Indians do not have health or medical insurance despite four public sector companies and twenty-two private sector companies offering health insurance services. The main reasons behind such low enrolment rates are poverty and lack of financial literacy in major parts of India.
According to the study conducted by the World Bank (2012), health spending was the most important cause of poverty in India. A number of studies have estimated that nearly 70 per cent of health expenses are borne by individuals on their own, placing substantial burden on household budget. This has significant implications for elderly people in the country in addition to those living below the poverty line. 

According to the Insurance Regulatory and Development Authority, the number of persons covered under health insurance in India have declined between 2010 and 2014 due to decrease in number of persons covered under government insurance schemes. Further, health insurance business in India is also highly skewed with Maharashtra, Tamil Nadu, Karnataka and Delhi contributing for 62 per cent of total health insurance premium. Also, 62 per cent of gross health insurance premium is contributed by public sector companies while private sector and stand-alone health insurers contribute 26 per cent and 12 per cent of the gross premium, respectively.

Though this reflects an opportunity for private sector players to enter the healthcare market, low enrolment rates discourage private sector players and make health insurance business financially unviable. The need of the hour is incentivising insurance companies to nurture healthcare market in India to make health insurance all inclusive, so as to increase its penetration in India.

There is a larger message that International Yoga Day should inspire, at least, in India. Globally, under health insurance, insurance companies only provide treatment cover for sickness. Rather, insurance policy can ensure that people start following a healthy lifestyle thus resulting in fewer episodes of sickness. The issue is that of perception about traditional health insurance which is curative rather than preventive in nature. In contrast,Yoga is both preventive and curative in nature, in that context.

India, espousing the cause of Yoga, could probably consider spearheading the movement to wellness insurance from sickness/health insurance. The emphasis on wellness insurance would be a change in lifestyle and an attempt to create awareness of consciousness which, in fact, is the essence of Yoga. So, instead of providing ‘sickness’ cover only, insurance schemes could focus on ensuring mechanisms to keep people healthy. Distribution of wellness coupons for yoga/ sports/ fitness centres to drive people towards a healthy lifestyle is one alternative that insurance companies could consider.

Advantages of wellness coupons

An obvious question is as to why should insurance companies take up the extra cost involved in providing these wellness coupons. First, a healthy lifestyle would lead to a reduction in sickness expenditure and thus the unspent premium on expensive treatment of diseases could be then utilised for these coupons.

Second, by ensuring everyone to sign up for the wellness insurance, the customer base for the insurance companies will increase manifold leading to economies of scale. The advantage is that this extra population would consist of a larger proportion of healthy people who would not have signed up for the insurance earlier and thus will have lower probability of falling sick, making insurance companies more profitable. Also, this will lead to proliferation of yoga/ fitness/ health centres, making people aware of a healthy style of living.

As the government is encouraging recently announced accident insurance scheme at a premium of Rs 12 per annum, the wellness insurance plan can also be supported, in the initial stages, by the government, especially for population below poverty line. A healthy workforce implies higher productivity, lower absenteeism and lower medical costs for the government.

As Obama care ensures that everybody in the US has an insurance cover, even people who cannot afford it, India should pioneer universal wellness insurance. As the prime minister had announced from the ramparts of Red Fort on August 15, 2014, that everybody in India should have a bank account, probably the next step should be to have a wellness insurance in the country.

As the success of Jan Dhan Yojana was ensured by the mass scale participation of bankers and financial institutions, wellness insurance can be promoted with the help of insurance and health providers through their products and retail outlets. That would be a step in the direction of India being a welfare state and can contribute towards the vision of a healthy India 2020.

(Singh is RBI Chair Professor of Economics, IIM-Bangalore; Thapar and Mishra are full-time PGP students working with Singh on a project on health insurance in India)