Why we need health insurance?

Health Insurance is a kind of insurance that provides coverage for medical expenses to the policy holder. Depending on the health insurance plan chosen, the policy holder can get coverage for critical illness expenses, surgical expenses, hospital expenses etc. A Health insurance plan helps cushion your family finances from unexpected and large medical expenses.

Currently, there are 28 General Insurance companies and 6 standalone Health Insurance companies in India that offer health insurance. The Insurance Regulatory and Development Authority of India (IRDAI) regulates the health insurance industry in India.

Why health insurance holders are not happy??

High Premiums:  

All is not well in the fast-growing health insurance industry. Incurred ‘claims ratio’ is defined as the percentage of the total premium collected that is paid out as claims by an insurer. When the claims ratio is very low, it indicates that the insurer is charging excessively from the customers. As per a study, the claims ratio of standalone private health insurers in 2016 was significantly low at 58%, indicating high premiums being collected.

Overcharges by Hospitals:

If you have a health cover, there is a 90% chance that an empaneled hospital will charge you more. Higher tariffs for insured patients lead to a higher payout for the insurance companies which, in turn, leads to higher premiums. 

Sub-limits, exclusions and claim denials galore: 

Decoding a health insurance policy document can be tough, given the complex list of terms and conditions. Despite increased awareness about sub-limits, pre-existing diseases and other exclusions, many policy holders are distressed by claim denials or reduced payouts. For example, if your hospital segregates room rent and resident doctor’s charges in the bill, chances are your insurer will not foot resident doctor’s charges.

“Technically, resident doctor’s charges are supposed to be included in the room rent. Therefore, the insurer will not pay for any separate resident doctor’s charges” is the general stand taken by many health insurance companies.

Certain drugs used in critical illnesses are not covered:

Despite being a critical illness, there is no blanket approval for all the treatment procedures meant for fighting cancer. “Certain cancer drugs are excluded by some insurers. For example, a few chemotherapy drugs when administered intravenously are covered but if taken orally will be outside the scope of cover. Similarly, most drugs that fall under the umbrella of immunotherapy are not covered,” clarifies an officer of a health insurance company.

One in two health insurance policy holders are not happy 

As per an online survey conducted by a financial daily in April 2019, almost half the health insurance buyers (48%) are not satisfied with the features and benefits of their policies.

Some of the major findings are:                   

Higher renewal premiums due to inflation:

Steep hikes in renewal premium topped the list of policyholders’ complaints. “Hike in renewal premiums is a reality. It is linked to inflation as is the case with any other product or service. With increasing cost of healthcare in the country, the premium rates also need to be revised periodically to offset the inflation,” said Ashish Mehrotra, MD and CEO, Max Bupa Health Insurance, as quoted by the daily.

Poor claim settlements:

The survey further showed that almost 60% of the people who filed claims were dissatisfied with their experience. Almost 65% of the unhappy respondents blame it to partial claim settlement due to various exclusions. About 42% said they were unhappy because of the delay in processing of claims.                                                                                                                   

Unambiguous terms and conditions, lesser exclusions, better service and lower premiums is what the policyholders expect from health insurance companies.