PRESENTATION BY Mr. A.G. GAJAPATHY STAR HEALTH AND ALLIED INSURANCE CO. LTD At IIRM Hyderabad

1. PRESENTATION BY Mr. A.G. GAJAPATHY STAR HEALTH AND ALLIED INSURANCE CO. LTD At IIRM Hyderabad

2. On PREVAILING HEALTH INSURANCE PRACTICES IN U.K USA AND THE CURRENT SCENARIO IN INDIA

3. Definition of Health - WHO • World Health Organisation (WHO) defines health as complete physical,mental and social well being and not merely the absence of disease and injury.It concerns a person more to know the risk of 50 illnesses that may throw him on his back than the possible date of one death which must come. As per WHO, a country’s Health systems comprise of all the organisations, institutions and resources that are devoted produce health actions.Health actions are any efforts whether in personal healthcare, public health services or through intersectoral initiatives whose primary purpose is to improve health.

4. United Kingdom -National Health Scheme • Described as a Jewel in the Crown of Human Civilisation. • National Health Scheme was launched in 1948 in U.K., when post war austerity still reigned. • What the Government created was a comprehensive service based on the democratic principle that everyone should have access to the best available healthcare, delivered free at the point of need and funded from general taxation.

5. United Kingdom -National Health Scheme • Rapid developments in medical technology as well as new forms of ill-health steadily increased pressure on resources. • Despite these problems NHS remains as the Britain’s most cherished institution, and the exclusive provider of health services for over 90% of the population. • A patient visiting a local doctor’s for surgery may get the anxieties that anyone waiting to consult a physician feels but one thing he need not have to worry: that is money.

6. United Kingdom -National Health Scheme • Over a period, a patient is seen by doctors, technicians and clerical staff with sympathy and responsiveness. • Diagnostic and treatment are thoughtful and thorough, first class health care and there are no bills to pay. • There is no need to even fill up a form or a claim to file. • NHS delivers healthcare through a network of clinics and hospitals. • Changes in the way services are delivered and in the way patients are treated have been happening continuously in the NHS since it was set in 1948.

7. United Kingdom -National Health Scheme • NHS plan published in 2000, paved the way to a full-scale modernization programme designed to totally transform the NHS and the way it cares for patients. • At its core, the Plan envisages the continuing commitment to the founding principles of NHS. These are: • Quality care that • Meets the needs of everyone • Its free at the point of need. • And is based on a patients clinical need and not their ability to pay.

8. United Kingdom -National Health Scheme • NHS is also encouraged to have private patient units within their hospitals to attract private patients. • Private patients are those persons who fund themselves or who have health insurance cover. • As an alternative to NHS, full indemnity health insurance policies are offered by private insurance companies. • Here, the insured first had to consult with a General Practioner (GP) and then enter the Private Hospitals.

9. United Kingdom -National Health Scheme • The idea was a measure to reduce unnecessary visits to specialists. • However, most group schemes waive the requirements of visit to a GP since they have their in house medical specialists • Generally companies provide health care benefits to all the employees through group medical insurance policy. • Some employers follow the self-funding concept by forming a claims administration company backed up by re-insurance to protect their retained losses.

10. United Kingdom -National Health Scheme • Full indemnity policies offered by private insurance companies are however, costly. • Hence, budget plans have been introduced that offer limited cover and sometimes only to those treatments that are not available within a time limited. • These plans have cash limit on certain types of treatment and an overall cash limit for the total value of any treatment.

11. U. S.A- Managed Care • A concept called “Managed Care” is quiet common in U.S.A • Almost all plans have some sort of managed care programme to help control costs. • It is a term used to describe the coordination of financing and delivery of health care. • Its aim is to provide high quality healthcare for the lowest possible cost to the covered members

12. U. S.A- Managed Care • Its involves one or more of the following: i.arrangements with selected health care providers to furnish a comprehensive set of healthcare services ii Standards for selection or networking of healthcare providers. iii.Programs for ongoing quality improvement and utilization review iv.Emphasis on preventive care to keep the covered members healthy. v.Incentives for covered members to use network healthcare providers.

13. U. S.A- Managed Care • Pre approval from insurance Company before hospitalization. • Absence of pre-approval may disentitle hospitalization claim.

14. U. S.A- Fee for Service Plans • Traditional kind of Health care policy • Insurance companies pay fees for services provided to the insured persons. • Offers choices of hospitals and Doctors anywhere in the country. • Insurer pays only part of Doctors fees and hospital bills. • Insured Person pays • a Monthly fee called premium • a certain amount of money in a year called deductibles say about $250 per annum per person. • A portion of the Bills called co-insurance . the ration can be 80:20

15. U. S.A- Fee for Service Plans • Most of the plans have a cap the insured is required to pay for medical Bills in any one year. It can be as low as $1000 or as high as $5000 inclusive of deductibles and co-insurance. • Two kinds of covers basic and Major medical • Basic cover or basic protection pays for • a.Room Rent while in hospital. • b.X-rays, prescribed medicines and the like. • c.Doctors visits • Cost of surgery, whether provided in or out of the hospital.

16. U. S.A- Fee for Service Plans • Major Medical insurance takes where the basic coverage leaves off. It covers the cost of long, high cost illness or injury • Some policies combine basic and major medical insurance coverage into one plan called comprehensive plan. • Most insurance plans pay only what they call a reasonable and customary fee.

17. U. S.A- Health Maintenance Organisation • Prepaid Health plans usually monthly premiums. • Comprehensive care for self and family • Doctors visit, hospital stays, emergency care, surgery, lab-tests,x-rays and therapy. • Usually delivery of healthcare is through its own group practice or through doctoes/healthcare professionals under contract. • Co-payment such as $ 5 for a doctors visit or $25 for hospital treatment.

18. U. S.A- Health Maintenance Organisation • HMOs typically provide preventive care, such as office visits, immunizations well baby check up mammograms etc • Members present a card like credit card at the Doctors office or hospital and avail of the services. • Longer wait than under a fee for service plan

19. U. S.A- Federal Health Insurance • Medicare-Federal health Insurance Programme for Americans aged 65 and above. • In two parts- Hospital Insurance known as Part A, supplementary Medical Insurance known as Part B-payments for doctors and related services. • Medicare- provides health care for low income groups, age, disablement,dependence being the criteria. • FEDERAL Programme administered by States. States decide eligibility and scope of health services offered.

20. U. S.A- Federal Health Insurance • Hospital Indemnity Insurance • Limited Coverage • Pays fixed amount for each day, upto a max. no.of days.

21. U.S- Health Insurance Trends • U.S spends 15% of G.D.P to Health care, a higher proportion than any other country • Still 14% of the America population-14 million are without health insurance. • Most of the rest of the population are left with inadequate and often expensive coverage. • 51 million insured Americans spent more than one-tenth of their income on health care. • 10.7 million insured Americans spent more than a quarter of their paycheck on healthcare. • 6.8 million insured Americans spent more than one-third of their income on health care.

22. U.S- Health Insurance Trends • Almost one in five Americans reported postponing seeking medical care. • Of these, more than one in three said the delay resulted in a temporary disability that included significant pain and suffering. • And more than one in ten said the delay caused a long-term disability. • Every 30 seconds, an American files for bankruptcy after having a health problem. • About half of all personal bankruptcy cases due to medical reasons.

23. U.S- Health Insurance Trends • Among those whose illness led to bankruptcy more than three in four had insurance at onset of the illness. • The majority of the medically bankrupt had been to college, had responsible jobs, and had been homeowners. • Private purchase of Health insurance is declining due to high cost. • Employer provided health insurance coverage is hardening as employers are refusing to bear the rising health insurance costs. Insurance Companies are refusing to grant cover at price affordable to employers.

24. U.S- Health Insurance Trends • From 2000 to 2004,premiums paid by workers rose nearly three times faster than the average U.S earnings. • Government support via social security schemes are not available in all the states and wherever available the protections is partly. • As a result the number of uninsured persons with inadequate protection are on the increase. • As a direct consequence of the above, US citizens are exploring low cost,high quality avenues for medical treatment. • Hence the increase in Medical Tourism to India.

25. Indian Scenario • “National Rural Health Mission”(2005-2012) document of the Indian Federal Government describes the Public Health as under:- • Public Health expenditure in India has declined from 1.3% of GDp in 1990 to 0.9% of GDP in 1999. The union Budgetary allocation for health is 1.3% while the State’s Budgetary allocation is 5.5% • Union Government contribution to pubic health expenditure is 15% while state’s contribution about 85%

26. Indian Scenario • Vertical Health and Family Welfare programme have limited synergisation at operational levels. • Lack of community ownership of public health programmed impacts levels of efficiency,accountability and effectives. • Lack of integration of sanitation,hygiene,nutrition and drinking water issues. • There are striking inequalities. • Only 10% Indians have some form of health insurance, mostly inadequate.

27. Indian Scenario • Hospitalised Indians spend on an average 58% of their total annual expenditure. • Over 40% of hospitalised Indians borrow heavily or sell assets to cover expenses. • Over 25% of hospitalized Indians fall below poverty line because of hospital expenses. • In the recent past lots of research and study were carried out on the state of Indian Health and Indian Health Insurance. Several Insurance Journals including IRDA Journals, Insurance Post, Insurance Chronicle etc have brought out well researched articles on the subject.

28. Indian Scenario • These articles and Government of India’s document on the subject reveals starling facts about the state public health and the health insurance scenario in India. Some of them are: • 71% of all deaths are due to Cancer,Health attack, Stroke and renal failure. • About 7o million people in India suffer from one form or other heart ailment. • Out of this 10% need bypass surgery. • Treatment for all these ailments costs between Rs. 3 Lakhs and Rs.5 Lakhs, which is beyond the reach of middle class population.

29. Indian Scenario • Span of life increasing. • More serious diseases occur during old age I.e between 60 & 80years • This age group is without any Insurance cover back up. • No social Security scheme of Government for providing healthcare treatment. • Tremendous escalation in the Cost of treatment • People needs to make provision to manage the economies of scale needed to manage the health of the entire family. Hence the need for health insurance arises.

30. Indian Scenario • India spends about 6.5% to 7% of GDP on Health care. • Out of this 1.5% is in the Govt. Sector and 4.7% in private sector. • Provision of Health care in the Country is the shared responsibility of the Centre, State and Local Governments. • Includes beneficiaries covered under ESIS,CGHS,Army, Railways,self funded,PSUs and Insurance products. • Most of the health care providers in the country are in private sector and are on fee for service basis.

31. Indian Scenario • More concentration of medical facilities in urban areas than rural areas. • ESIS and CGHS, a form of Insurance cover are not governed by Regulatory norms. • Health Service provision by Railways and Army are not governed by Ministry of Health. • The middleclass population of India is estimated to be around 350 millions. • Out of this about 30 million people employed in Central and State Govt, PSUs are enjoying the facility of healthcare whilst in service.

32. Indian Scenario • Problem area is after retirement. • Some charitable trusts or individuals try to contribute in the delivery of Health care to the needy people. • Traditionally, Indians have been a close knit society. In cases of illness the earlier joint family system, tendered to give best of the comforts to the sick persons – cost of giving such care was not an issue. • With the change in times all that have changed. • Expensive hospital,expensive treatments and medicines have come to stay.

33. Indian Scenario • It puts tremendous stress on family savings or sometimes wipe it out. • But still only less than 1% of the teaming population of India is covered by some form of Insurance protection. • The four Nationalised general insurance Companies introduced “Mediclaim” product in 1986. • Underwent various changes sine then. • Basically an indemnity based product for the reimbursement of eligible expenses under the terms and conditions of Coverage.

34. Indian Scenario • TPA- a recent development. • Some of the private players are also into medical covers. • Various plans under different ministries. • Working employees get provider facility if the ailment is of primary or secondary care level. Tertiary care is a problem area. • Retired personnel face worst situation. • They no longer may be residing near own facility. • Procedure delays in authorisation • Tertiary care which is required at a higher level as the person gets older makes it more difficult.

35. Indian Scenario • Defense Ministry sought help from the General Insurance Industry for retired army personnel and their families. • Some state government shave approached Insurers for administration of Health Schemes for their employees. • According to one study, the NGO sector might be covering more than 5% of the population. • Some of the important NGOs health care services are: • Child in Need Institute • SEWA • Street nit karni • Parivar Seva snatha etc

36. Indian Scenario • Some concerns,issues and challenges: • Low level of awareness. • Pre existing conditions and other exclusions. • Up front payment to hospitals • Reimbursement policies • TPA recent development. Claims procedure • Service standards. • High Claims ratios • Over utilisation of services.

37. Indian Scenario • Mostly Group /Corporate orientated. • Inadequate information regarding health,ailments, procedures, treatment costs. • Low level of medical penetration –the population to bed ratio in India is 1 bed Per 1000 as against the WHO norm of 1 bed Per 300