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Medical Insurance Industry

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Introduction God heals and the Doctor takes the fees. Benjamin Franklin In today's scenario medical care is expensive and costs are zooming upwards day-by-day. A person acquires medical insurance for the same reason as other kinds of insurance - to protect oneself financially. By going in for medical insurance, you can protect yourself and your family if struck by disease. While no one wants to fall ill, the last thing one wants to worry about when is whether one will be able to afford good medical care. On the other hand, if you have been prudent enough to obtain insurance, many of your costs can be covered by a third-party payer, namely, the insurance company, thus relieving you of considerable anxiety and concern. The traditional form of health insurance is called indemnity insurance (also known as fee-for-service), in which the insurer pays for the cost of covered health care services after they have been provided. In most indemnity insurance plans the patient is free to choose his own doctor or hospital. In India, the insurance business is still a monopoly, so that, for all practical purposes, the only medical insurance policy available for most of us is MediClaim, through the subsidiaries of the General Insurance Corporation (GIC). The government does have special schemes for its employees: the ESIS (Employee State Insurance Scheme) and the CGHS (Central Government Health Scheme). Many employers now provide medical insurance as a standard perquisite to many of their employees - this is called group insurance - and the premium is less than a stand-alone personal insurance policy. In many cases, the employer pays part of the cost or all of it. Not all employers, however, offer health insurance. Your employer may not subscribe to a health insurance scheme, especially if you work for a small business or work part-time. In such a situation, you might still be able to obtain group insurance (and thus save money) ...read more.


One of the major problem is that there is no regulatory body to keep a watch on healthcare providers. Also when a person buys a policy, no HIV test is done. Besides, the pre-medical tests are also minimal. As an outcome of an unregulated healthcare market in India, whether it is a cashless service or reimbursement directly to the policy holders, medical billing has gone beyond all reasonable norms and ethics of the health domain It is noted that of the 100 per cent mediclaim policyholders, 50 per cent are individually insured, while the remaining 50 per cent are employees of corporates. Paradoxically, this employee population too contributes considerably to the loss ratio of health insurance. Severe competition has brought down the price of corporate policies, eroding the actuarial premium base. Therefore skewed claims ratio is due to corporate mediclaim policies. Also a factor worth noticing is that Corporate mediclaim policies are offered at rates lower than the government promoted Universal Health Insurance Scheme, which public sector insurers are ready to shun stating that they are non competitive. There is a heavy cross subsidy from Fire and Engineering portfolios of the non life insurers towards health insurance portfolio owing to the existence of a tariff regime. Corporates use health insurance as a bargaining tool while deciding to offer the more lucrative and profitable portfolios of Fire and Engineering to the insurance companies." As a result health premium in overall quantum terms for the same numbers decrease, claims cost either remain static or increase thereby adversely affecting the claim ratio, and TPAs fees which are linked to premium gets reduced while their workload increases in view of increase in number of claims being reported. Hospitals have learned to manipulate and health insurance is turning into a loss-making product with 80 per cent to 100 per cent being the premium percentage while 140 per cent to 200 per cent being the claims amount. ...read more.


Most importantly, clearly state what action you want your insurance company to take to solve the problem. Keep copies of all your correspondence ! Don't be afraid to ask your physician and your insurance agent to contact the insurance company on your behalf. If your problem is not solved by your initial letter, you should appeal to a higher level within the insurance company. Remember that you are dealing with a bureaucracy and you will need to be persistent! You can fight for your rights, either by tackling the company itself, or through legal action, if need be. . Conclusion To sum up the main problems, which have been identified, are: Problems faced by the insured * Absence of provider network * Getting admission in hospital of choice without payment * Avoidable investigations * Inefficient TPA operations * Ignorance about pre-existing conditions * Liquidation of assets for payment of bills * Less involvement of insurance companies in claim settlement Problems faced by the insurer * Increasing trend in incurred claim ratio * Inadequate pre-insurance health checkup * Proposals are not filled up properly - in many cases vital information is held up * Inefficient TPA operations * Reluctance by TPA to pass on the customer data * Younger people are not interested * There is tremendous demand for the cover from elderly and sick people * Overstay / avoidable investigations / overbilling by hospitals One of the main reasons for the unpopularity of the mediclaim is Mediclaim is the lack of appropriate marketing efforts in selling these products. To popularize the schemes It is important that proper marketing is done. Government has taken steps to make the scheme more acceptable by exempting the premium paid by individuals from their taxable income. This provides 20-40% subsidy on the premium to taxpayers. Still efforts need to be made by all the parties involved ie insured, insurer, TPA, hospitals, etc to make harness this scheme to its fullest and make it a success. The TPA business is relatively new in India and that is one of the reasons for the problems faced by policyholders. ...read more.

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