Our Money: Overcoming the challenges in the health insurance sector

By Krishnan Ramachandran

With the world grappling with the coronavirus pandemic, there is renewed focus on health and health insurance. However, even today, very few Indians have health insurance. India has one of the world’s highest rates of out-of-pocket spending in healthcare. Even among the growing number of the middle class, for whom health insurance would be a worthwhile investment, very few comprehend the value of an insurance plan. But that could be changing— a recently conducted Max Bupa Covid-19 survey revealed that before the pandemic, only 10% of those surveyed were keen to buy health insurance but post the pandemic, this number is 71%—people who now consider health insurance as a necessity. However, intent aside, there are other facets that the industry needs to address to revitalise its growth. Here are some of them.

Expanding coverage
Digital health is here to stay as we are likely to see a rise in telemedicine and online video consult services along with remote chronic care management. These services are expected to become a part of health insurance offerings in future. Further, business done virtually will be the new normal, whether through digital channels or some of the more traditional channels becoming digitally enabled. In the future, we should see a disproportionate growth in both assisted and unassisted buying on company owned websites and through aggregators.
Digital technologies including automation, AI, and data analysis are emerging as potent tools to help create better offerings and improve processes. Technology is also affecting other aspects of the industry including diagnostics, hospital care, care delivery mechanisms, analytics, risk-assessment etc. As more companies enter the domain and drive more innovation and competition, healthcare prices will come down and drive greater momentum towards achieving the goal of universal health coverage for all.

Creating industry standards
New Insurance Regulatory and Development Authority of India (Irdai) norms mandate that health cover will now come with wellness and preventive measures and policyholders can get rewards for adhering a healthy wellness regime are boosters for the sector. This is expected to drive growth in health insurance products while benefiting customers. Insurers can now reward customers in various ways – from discounted outpatient consultations or treatments, medicines, health check-ups and diagnostics, redeemable vouchers for health supplements to membership in fitness centres, sports clubs, etc.

New diseases contracted after buying the policy (other than those prescribed by Irdai) cannot be excluded. Treatment for mental illness, stress or psychological and neurodegenerative disorders have been brought under the purview of health insurance.

The next step
Developing new standards also means that current underwriting and risk assessment methods need to change. Products need to be restructured to ensure more comprehensive coverage and minimal deductions. By the industry’s own assessment, consumers end up paying 25-30% of the total cost of treatment from their own pockets despite being insured. Providers therefore need to do a better job with balancing the interest of price v/s margin, to enable the sector to overcome existing challenges and expand outreach.

The writer is MD and CEO, Max Bupa Health Insurance