July 23, 2010

IN THE INSURANCE IMBROGLIO, THE COMMON MAN IS THE SCAPEGOAT AGAIN!

Since the past two weeks, insurance companies proffering health insurance (18 major ones, including four public sector entities) have announced their decision to discontinue the cashless facility. Their argument – the bills from the bigger hospitals are inflated, which in turn is hitting their bottom lines! Reports indicate that the annual premium collected by the health insurers is around Rs. 8,000 crores whereas the outflow in terms of settlements is around Rs. 12,000 crores. Their biggest contention is that certain hospitals do not subscribe to the package rates provided by the insuring companies. And so, as a result, insurance companies have de-listed almost 150 hospitals in Delhi and NCR alone from their list and have also stopped giving cashless facilities to the insured, as of now.

In fact, there are four key stakeholders to this current imbroglio. The first is the group of insurance companies; the second are the large hospitals; the third are the state governments (as health is a state subject!); and the last – and the most significant – are the insured individuals, that is, the common man! Let’s analyse each of these stakeholders and evaluate them in the context of the current crisis.

Let us first start with the insurance companies. Considering that filing of inflated medical bills – by increasing the stay of patients, requesting unnecessary medical tests, multiple visits by consultants, differential pricing, expensive disposal items et al – has been an issue with the large and renowned hospitals since a long time, why wasn’t the same addressed by the insuring companies much before and that too within the actuarial, while drafting the health based premiums? Today, when bottom lines are put to test on account of the faulty modeling of premiums by insurance firms themselves, why should one be allowed to spoil the boat of the common man – especially when the common man initially signed up for health insurance on being promised advantages like cashless facilities?

Coming to the second stake holder – that’s the group of hospitals, who are accused of errant and inflated pricing! Now, if hospitals were/are charging that kind of price, it is just because of the existing asymmetries in the health market. Looking at health completely dispassionately, these hospitals would not even have existed had the state government (the third stakeholder) been responsible enough to create adequate health infrastructure. In the absence of the same; and in the absence of quality health facilities, all leading hospitals enjoy that position of being able to charge premium pricing. As far as quota for treating the poor free of cost is concerned, we all know how unsuccessful both the government and these hospitals are in their own respective ways.

Finally, coming over to the fourth and the most significant stakeholder – the common man. Like always, in this moment of crisis, he is the biggest loser! Health expenses are the single-most reason to drive the maximum people to poverty in this country. The out of pocket expenditure on health expenses accounts for a staggering 90%! All this because the government has miserably failed to create adequate health infrastructure; and thus, most of the health market is catered to by private players. In the given scenario, health insurance – aka cashless facility – is the only recourse for the common man. And to take that away is the most illogical thing to do! One doesn’t need to be a nuclear scientist to understand the kind of problems faced by an average Indian family during hospitalization. Don’t insurance companies realise these issues? Don’t they know that the problem here is of a lack of liquid disposable cash with families? Don’t they know that in the absence of the same, there is no other alternative that is left with such families? And if the insurance firms know all this, then they should also know that reimbursement is not a solution! A cashless facility allows a family to proceed with hospitalization without any hassle. If the patient or his family had enough cash to be paid at time of hospitalization, they would not have had to run behind companies for insurance. A scenario of reimbursement would only come into the scene if the family is able to pay the bills in the first place. Secondly, when a family member is critical, no one feels like running through the list of hospitals and getting the patient admitted in a listed one; in general, one would rush to the nearest hospital.

At the same time, it is also true that the insurance business cannot run on losses forever. But then for that, two things need to be done. A necessary re analysis of premium calculations has to be undertaken. And then, a dialogue between the state governments, Center, and the hospitals to adhere to the same. The common man cannot be a scapegoat, every time!

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6 comments:

Deena said...

We have been blessed to have had a good education-thanks to our parents..
But then again there are some children in this country who can not even write their own names. Is it not then up to us to make sure that these children also get the education that they deserve.
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Nowhere Man said...

Agreed. What annoys me the most is the fact that the private hospitals are not properly regulated at all. I wonder what their observed profit margin is.

Health insurance is fraught with huge asymmetries in information. The customer "can" have a much better idea of his health status. He can always see if the premium charged is favorable to him or not. In India, insurers do not get much information on the health status of prospective customers. Pricing it right is further complicated by these practices by private hospitals, restrictions (most of them good for the policyholders) imposed by the regulator etc.

US also realized that Universal Health Insurance is a better option. It is very sad that, perhaps, we are the only country which does even have it (due to large population, less number of qualified doctors and nurses, rampant corruption etc) as an option.

paul said...

" NO CAUSE IS MORE IMPORTANT THAN THE CAUSE OF HUMANITY ITSELF" said fidel castro in one of his speeches. He thought hospitals were more important than stock markets. so much was his concern about his people as a leader. He put first things first. The most important. Our leaders do not have that insight and the capacity to see the future. They fail to prioritize, to give preference to the most important things. The focus should be about nation's growth - Industrial growth, agricultural development etc. and simultaneously good government should focus on the humanitarian aspects like food security, health, shelter etc....but our leaders are more interested in Indo-U.S ties, providing top class facilities to Industrialists, feel happy when Ambani brothers reconcile and great initiatives taken from some good people at the top like NREGA, Sarva Shiksha abyan are spoiled by corrupt local leaders and officials. Same is the case now with health insurance, when there is a crisis involving people and corporate companies. I don't understand this, Government always take side with corporate companies and ignore people's problems, either in this case, mining problem in the naxal affected areas or Land grabbing in singur (TATA). The pro-rich Government believes that corporate companies should be given the freedom, because they are the growth drivers of this country which is partially incorrect and because there are so many other factors which contribute to country's growth. Take the example of china, they too encourage private sector growth, in fact they attract more FDIs than us, but not at the cost of their people. when it comes whether people or corporate sector, they take side with people. They have a regulated and controlled private and public sector led growth. Rightly said, in this case again, common man will be the loser.

Tony said...

There are plenty of health Insurances offered by several Finance and Insurance companies, hence choosing the best suitable one from the dozens of plans, for you and your family members is a tedious task.

Kevin Stelfox said...

I have to agree with Tony. I have used an intermediary and they research all the companies for you and come up with the best premium.
Annuity News

Anonymous Ankush said...

Cash-less facility was never for the enjoyment of Hospital-Bills, it was just to help the Common man. But here the seen is different, the Premium Hospitals even charging the highest fee as possible and even there is a huge difference in the bills of Cash-Payee and Cash-less card holder. why so, Isn't there a need To make Minimum tariff to all health deceases and it can only be possible by the intervention of Health Ministry and Home Ministry of central Government.

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