Medical Insurance Scenario in Contemporary India

Health is defined as the complete state of physical, mental and social well-being, and not merely the absence of disease or infirmity. The popular saying goes “health is wealth”. In this age of increased medical costs, complex diseases, insufficient funding of government health care mechanisms and increased demand for quality health care services, the adage has a greater significance. Medical insurance, no longer a foreign term in our everyday life, is evolving into an important tool for us to seek health services, without any financial burden.

The concept of Health insurance has been in existence since the year 1694. What was traditionally called accident or disability assurance evolved into modern health insurance in the past century. Today, a wide spectrum of health insurance programmes covers the cost of routine, preventive and emergency medical procedures. Medical insurance is defined as a contract where an individual or group purchases in advance health coverage by paying a fee called “premium”. This contract refers to a wide variety of policies that cover the cost of doctors, medicines and hospitals, in case there is a medical requirement.

Over the past few decades, there have been major developments in the health insurance sector in India. Before independence, the health conditions in India were dismal with prevalence of high mortality rates (life expectancy of 37 years in 1951), contagious diseases and scarcity of quality medical care. But since Independence, there have been major efforts in improving the health status in the country. With the improvement in healthcare delivery and increase in disposable income, life expectancy in India had increased to 65 years by 2011. Though medical insurance was launched in 1986, it was after the new economic policy implemented by the Government of India in 1991 and subsequent liberalisation and privatisation, that Insurance sector has transformed tremendously. The Insurance Regulatory and Development Authority (IRDA) bill, passed in Indian parliament, is an important milestone in the improvement of the sector.

IRDA has the crucial role to ensure that insurance sector develops rapidly and the consumers’ interests are safeguarded in order to improve the health status of the country. The advent of privatisation and the constitution of IRDA have improved the insurance sector by promoting competition. Now Insurers offer consumers value for money, help them avoid queues, low quality medical care and thereby increase consumer satisfaction.

India is a growing market for Medical insurance. According to the statistics of the National Health Profile 2015, collected by the Central Bureau of Health Intelligence (CBHI), less than 20% of 1.1 billion Indians have medical insurance. In a survey conducted by NCAER for IRDA in 2012, only 54% were aware of medical insurance. At any point of time, a population of 4 to 5 crores are availing medical services and 80% of health financing is through private funds, which is out of pocket payments and not by any pre-payment schemes. This scenario suggests that medical insurance has a greater scope in India.

The existing medical insurance schemes in India can be categorised as follows: Voluntary health insurance or Private insurance, Mandatory Health Insurance schemes or government run schemes, Insurance offered by NGOs/Community based health insurance and Employer based schemes. The private health insurers have introduced many innovative products like family floater plans, top-up plans, critical illness plans, hospital cash and top up policies.

The recent changes in FDI (2012) norms have opened the medical insurance market to global companies who can leverage on their best practices and experiences from other markets in the field of process and technology. In India, medical insurance membership is expected to be at least 60 crores by the end of 2015. Growing population, increasing disposable income, need for quality health services and increase in life expectancy will continue to increase the relevance and demand for medical insurance in India.

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