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!
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!
Comments
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.