ASSIGNMENT No.

INSURANCE & RISK MANAGEMENT (IRM)

What are the Application & Benefits (psychological & monetary) of Health Insurance Plan with respect to GDP of India?

Application & Benefits (psychological & monetary) of Health Insurance Plan with respect to GDP of India

Health Insurance | Mediclaim Insurance What is Health Insurance? It is a contract between the Insurer & the Insured wherein the former agrees to pay to the latter hospitalization expenses to the extent of an agreed sum assured in the event of any medical treatment out of an illness or an injury. In the nutshell the Health Insurance is a policy which covers you & your family against medical expenses due to sickness, accident etc. The Insured in return has to pay a regular premium to the insurer. Why you need Health Insurance? It is indubitable that Health Insurance has become an important element in ones life owing to increasing medical costs these days & uncertain environment; it comes to your rescue acting as precautionary measure in todays tough time while acting as a life saver boat in case of any medical contingency. If you dont have Health Insurance, you end up paying hefty medical bills in the event of hospitalization out of illness or injury, therefore insuring your family against Health Insurance is a must thing & should surely be a part of your regular financial planning. All we have is our health which needs to be protected & taken care of by acquiring the best health insurance policy suited for us. Types of Health Insurance Plans Health Insurance Plans are segregated into three categories, firstly the Mediclaim Plans by NonLife or General Insurance Companies, secondly the Hospitalization Cash Policy by both Life & Non-Life Insurers and thirdly the Critical Care Plans offered by both Life & Non-Life Insurers. Mediclaim Policy is basically a reimbursement plan offered by General Insurers wherein the insured gets reimbursed of the total bill amount of the medical expenses to the extent of an agreed sum assured. It includes the room charges, ICU charges, surgery & doctor charges etc. It includes a lot of exclusions which the policy holder must read before buying the Mediclaim. The Mediclaim includes the following two further categories: 1) Family Floater Plan: It is a very common plan these days which covers your entire family under one premium payment giving coverage to the family members together. This plan is being offered by almost all the General Insurance Companies with a specific criterion of covering individuals in the age group between 90days and 55years. 2) Group Mediclaim Insurance: It is the second variant of Mediclaim which covers a group of individuals simultaneously. This form of insurance includes the category of Employers Health Insurance Cover wherein the sum assured normally varies between Rs. 15,000 and Rs.5, 00,000.

Hospitalization Cash Policy is a plan offered by both Life & Non-Life Insurers wherein the Insured gets pre-determined cash benefit on a daily basis irrespective of the hospitalization expenses being incurred. It is not a fully comprehensive health insurance plan because it doesnt cover the cost of medical treatment but pays lump sum amount to the policy holder on per day basis during the treatment/hospitalization. It acts a complimentary plan to the Mediclaim plans. TATA-AIG General Insurance & Royal Sundaram offer Hospital cash benefit plan among Non-Life Insurers. Critical-Care Plan: It is offered by both Life & General Insurers covering an individual for certain specified critical illnesses like cancer, stroke etc. This is also offered as a rider by Life Insurance companies for quite some time now attached to their Life Insurance Plans. You must take a cover either as a rider or as a standalone plan in your portfolio. Health Insurance Tax Benefits Health Insurance products are eligible for tax benefits under section 80D of the Income Tax Act, 1961. Premium paid under health insurance holds a tax deduction up to Rs 15,000 for you, your spouse and dependent children. Further more you can also claim another Rs. 15, 000 for tax deduction for your parents, in case of senior citizens (65 years or more) the above deductions are increased to Rs. 20,000 Family Floater Plan-in detail For instance a person wants a health insurance for himself, his spouse & their children, the Family Floater plan offers insurance coverage to the entire family under one premium payment. Lets take an example wherein the person insures himself, his spouse & the dependent children with the individual insurance plans with a sum assured of Rs. 1 lakh each, he ends up paying premium ranging between Rs. 1000 - Rs. 2000 for each family member. On the other hand if the person would have opted for the family floater plan with the sum assured of Rs. 3 lakhs, the total premium would surely be less than the separate premium payments in individual health insurance plans. Moreover the separate health plan holds the cover of only Rs. 1 lakh as against Rs. 3 lakhs in case of the Floater plan thus helping the family in case the medical treatment costs go beyond that. Cashless Hospitalization Cashless settlement implies that an individual doesnt have to settle a hospital bill out of his pocket; rather the bill gets settled directly by the insurance company. When you buy a Health Plan you are issued a Health Card along with the policy documents which would entitle you to get cashless claim at any of the companys network hospitals. What do you do in case of a claim? You should walk into a network hospital & get the treatment done & the bills paid through the Health Card. In case of hospitalization you need to give the card number to the network hospital, you must pre-authorize from the TPA (Intermediary between the Insurance Company & the

hospital) & will process the cashless settlement after the verification of your policy details. You should know the formalities required for cashless settlement as some insurance companies are required to be notified 48 hours before hospitalization. If you dont opt for cashless settlement, you need to settle bills at the hospital and get them reimbursed later. Health Insurance Covers & Benefits There are many different types of benefits and whether you are eligible for them will depend on different factors such as your income, capital, national insurance contributions and overall household circumstances. Claiming benefits can be confusing and lots of people find it useful to get specialist advice. As well as mental health organizations, Citizens Advice or other local advice centres should be able to help. Some of the application forms are very long and it takes time & patience to fill them in. Department of Work and Pensions (DWP) staffs that check these forms often have little experience of mental health problems so it is important for each answer to be given carefully and with sufficient detail. Employment and Support Allowance Since 27th October 2008 if you are unable to work due to ill health you can make a claim for Employment and Support Allowance (ESA). This benefit replaces Incapacity Benefit (IB) and Income Support (IS) based on incapacity and Severe Disablement Allowance (SDA). When you apply for ESA you will be assessed to see how your illness or disability affects your ability to work and carry out everyday tasks. This is called a Work Capability Assessment. If you have been receiving IB, IS on the grounds of incapacity or SDA this will continue to be paid, however the DWP are hoping to move everyone over to ESA gradually. You can get more detailed information about ESA in our Employment and Support Allowance section. Disability Living Allowance Many people with mental illness receive Disability Living Allowance (DLA) which is paid in addition to other benefits regardless of capital. It is paid to people who have difficulty in going out alone - themobility component; and/or who need help with personal care - the care component. The application form is very long and your relative would probably benefit from getting help with its completion.

Carer's Allowance

As a carer, you might also qualify for Carer's Allowance, or perhaps an extra amount of Employment Support Allowance called a carer's premium. The rules are complex and expert advice is usually needed. More information about this benefit can be found in our Carer's Allowance section. Housing and Council Tax Benefit If you or your relative is on a low income, there is help available to help pay rent (Housing Benefit) or Council tax (Council Tax Benefit). These benefits are available from the local authority rather than the Department of Work and Pensions. They are reduced if the claimant has more than a certain amount of savings and stop if the savings exceed a certain amount. Help with health costs Help with the cost of prescriptions may also be available. These are free for people receiving Income Support or Employment Support Allowance (income related) or Pension Credit and are at a reduced rate to people on a low income. Rethink Advice and Information Service Factsheets The Rethink Advice and Information Service produces information on issues related to mental illness. You can find their factsheets in our Mental Health Shop Room & Boarding expenses: There are further limits to this feature varying from company to company. Ambulance Charges: They are normally covered upto Rs.1000. ICU charges, doctor, consulting, anaesthetist and surgeon fees, operation and other diagnostic and surgical material costs are covered. Day-Care expenses such as Chemotherapy, Dialysis & Radiotherapy etc. Pre & Post Hospitalization Expenses which normally are 30 days prior and 60 days after hospitalization. Cashless Hospitalization is offered by almost all Non-Life Insurers.

Important Pointers in Health Insurance You must read the policy exclusions & the limitations in various covers properly before buying a Health Insurance plan because you should know what all covers your policy include & exclude. You should note the number of network hospitals covered in the Insurers list of network hospitals as this will help you to get cashless & hassle-free claim. You must read the names of critical diseases being covered before buying a Critical-Care plan. You must know that the medical expenses incurred within the first 30 days of buying the health insurance plan are not covered unless the injury has occurred out of an accident. You must disclose all the Pre-Existing diseases to the insurer before buying the health plan as the insurer doesnt cover them, now a days General Insurers have started covering these diseases normally after 3-4 years varying from company to company.

Health insurance contribution in GDP

The Union Budget has given no indication of the central governments plans to double Indias public health spend from 1.2 per cent of GDP to 2.5 per cent in the next five years. At Rs 30,702 crore, the health allocation in the Budget is approximately 15 per cent higher than the previous years Rs 26,897 crore, but as a proportion of the countrys GDP, it remains stagnant at 0.3 per cent over the past several years. In an interview, Srinath Reddy president of Public Health Foundation of India who headed a panel that suggested the increase in health spend and a government-funded framework for providing accessible and affordable healthcare tells Joe C Mathew that it is too early to doubt the Centre's intentions. Edited excerpts: The High Level Expert Group (HLEG) on Universal Health Coverage (UHC), which was constituted by the Planning Commission and chaired by you, has categorically stated that the state cannot shy away from the responsibility to provide essential healthcare to all citizens. It has downplayed the role of health insurance. How realistic are these suggestions? I believe the government must commit a higher share of public funding to health. Without that, it is impossible to reconfigure the countrys healthcare system in an equitable manner. The question is how to spend the amount. The easiest way is to put it into an insurance scheme and ask private players to provide the services. But this can only achieve partial results since it will gradually result in the escalation of costs beyond a manageable level and also the services will not reach all people. Second, insurance schemes cover low-frequency, high-cost treatments and not low-cost illnesses that occur commonly. These schemes will not take care of preventive care,

early detection or primary healthcare. Moving beyond insurance, an assurance has to be provided by the government, which has to act as the guarantor of UHC and ensure its success and sustainability by mobilizing all societal resources and advancing multi-sectoral actions. Can you elaborate on this point? Also, what will be the role of health insurance providers and the private healthcare sector, which is a dominant player in tertiary care in India? What the government needs to do is to put in money to build and refurbish public health infrastructure, increase the number of healthcare providers, strengthen the countrys community health centres, primary health centres and district hospitals, and create a network of publiclyfunded healthcare institutions. Private players can be part of this network through service contracts. Primary, secondary and tertiary care must be integrated in such contracts. We are talking about a system similar to the one being talked about in the US by the Obama Administration today. They are now proposing Accountable Care Organizations (ACO) that will provide a full range of medical care for patients. A recent article in The New York Times predicts the end of American health insurance industry by 2020 once such ACOs groups of doctors, hospitals and other healthcare providers are in place in that country. We have to develop our own model but the key principles are: dont fragment healthcare and dont neglect primary care. Reviving public health network has been seen by many as a futile exercise owing to its past failure to address the needs of common citizens. How do we ascertain its success now? Let us admit the fact that we have allowed the public healthcare system to decay. It was underresourced and ill-managed. Does that mean that the system was a failure? We [HLEG] have suggested measures to strengthen the quality of services, to turn them more accountable and make them work. It is a long-term vision that stretches over two Plan periods [2012-2022]. While there are certain suggestions that can be immediately implemented, others will take time. For instance, free supply of essential medicines in public health institutions can start during this Plan period [2012-17] itself. It would cost the government Rs 6,000 crore to roll out this scheme nationally. The panels recommendations had raised the hope of some changes in budgetary allocations to the health sector. It has not happened. The Planning Commission is yet to adopt your recommendation in the Plan document. Do you see this as the governments unwillingness to accept you suggestions? No. All early indications are positive. Prime Minister Manmohan Singh has repeatedly emphasised the need for increasing the total government health expenditure to 2.5 per cent of GDP by the end of the 12th Plan. He has asked the Planning Commission to motivate states to allocate more funds for the sector. Many of the suggestions, including the proposal to supply free medicines have been highlighted by the prime minister

I believe that the final picture will evolve only by July-end, when the full Planning Commission meeting and National Development Council (which has representatives from all states and Union Territories) consider the proposal. Without these approvals, the Union Budget could not have been the appropriate platform for such policy announcements. HLEG members are also sensitising various stakeholders, including civil society groups, on the major recommendations. There have been three major developments in the sector: the new pharma pricing policy being worked out under a Supreme Court directive, the governments plans to amend the Competition Act to monitor all pharmaceutical takeovers (by foreign multinational corporations) and the recent Indian Patent Offices decision to grant compulsory licence to make low-cost version of a patented cancer medicine. Do you think these are in line with your view to make medicines and treatments available at affordable rates? Yes. Price control is necessary in medicines. And the government is looking at the extent to which it is required. We have recommended pooled procurement of essential medicines as one of the ways to bring down prices. It can be carried out even at the hospital level and several private hospital chains are already doing it. Its value has been best demonstrated by the public system in Tamil Nadu. In the case of mergers, our view is that mergers and acquisitions should be allowed only if they do not interfere with the affordability and availability of drugs. We have suggested a model in which larger financial control can be allowed, but legal voting rights, when it comes to decisions of national interest, should remain with the people representing Indian interests. On compulsory licensing, we have now given a message to the world that we can do it if need be. We should also strengthen our public drug-making facilities to manufacture medicines in case of a national emergency. I have always believed that non-communicable diseases (like cancers and heart diseases) are public health emergencies in slow motion. Public-private partnerships (PPP) are the most talked about model in healthcare. Despite some individual successes, the model, by and large, is seen with mistrust by the government and private hospital managements. How do you intend to bring private players on board in the larger UH system? As suggested earlier, the contract method allows private hospitals to treat government-funded patients without any formal PPP as we see today. Our position is that a vaguely constituted PPP will be unsatisfactory to both the parties. But if you bring them together through a clearly defined contracting in mechanism private players, too, can participate and gain through the huge volume of health services that is needed under universal health coverage.