One of the most important aspects of strengthening the health care system of a country is by providing financial protection against health shocks. The government of India provides such financial protection through the Ayushman Bharat – Pradhan Mantri Jan Dhan Yojana. Through this the government provides financial protection to the bottom 50 crores of the population, fully subsidized health insurance, which can be used to seek health care facilities. However at least 30% of India’s population, i.e., 40 crore people still lack financial protection.
The Niti Ayog in 2021, published a report “Health Insurance- For India’s Missing Middle” where it refers to the missing middle as the people lacking health insurance cover. The report states that “The missing middle is spread across all expenditure quintiles, in both urban and rural areas, though they are concentrated in the top two quintiles of rural areas, and top three quintiles of urban areas”. The government subsidises health insurance for the poor and underprivileged, while the comparatively well-off in the organised sector are covered by social health insurance or private voluntary insurance.
Despite the ability to pay nominal premiums, this group of population remains uninsured in the absence of a low-cost health insurance product. The Aarogya Sanjeevani hospitalization insurance product – launched by IRDAI (Insurance Regulatory and Development Authority of India) in April 2020, is a standardized health insurance product which provides basic benefits package which is common among all insurers. The limitations for this product are that it has high premiums, which is the reason why most people aren’t interested in buying and a two-to-four-year delay in covering several diseases and illnesses.
But this doesn’t meet the requirements for a health product that could fulfil the needs of this part of the population. Some modifications in this type of product could be that the delays should be reduced and all diseases and treatments should be covered on time. This type of product should also offer out patient benefits (It covers diagnostic testing, doctor consultations, and pharmacy bills). As pricing plays an important role in choosing health insurance policies, currently the Arogya Sanjeevni hospitalisation plan costs Rs 12,000 for a family of four, whereas most segments of this population can afford to pay Rs 4000- 6000 per family per year for hospitalisation insurance and Rs 5000 for out patient benefits.
The cost of health insurance, i.e., the premium, must be reduced to match the affordability of the uninsured. A private large and diverse risk pool must be introduced which focuses on group enrollment, and reduction in distributional and operational costs of insurers to bring down the price of premiums. Through regulatory procedures, the government should promote consumer trust and confidence in health insurance. For this segment of the society, the government should finance the health insurance partially, or the poorest among this category of people should be included in the PMJAY coverage.
A health insurance policy for this 40-crore population must have shorter waiting times, lower premiums, outpatient benefits, and be simple to comprehend and claim. These measures can together increase the outreach of insurance products and provide financial protection from health shocks which ultimately strengthens the health care system.
REFERENCES
The Hindu BusinessLine. (2021, May 28). 5 reasons why India’s healthcare system is struggling. https://www.thehindubusinessline.com/news/national/5-reasons-whyindias-healthcare-system-is-struggling/article34665535.ec
health insurance for india’s missing middle. (2021). https://www.niti.gov.in/sites/default/files/2021-10/HealthInsuranceforIndiasMissingMiddle_28-10-2021.pd
ABOUT THE AUTHOR
I am Pranjali Behl, having a keen interest towards finance and economics, especially insurance. Enjoy my article on "missing health insurance product for India".
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