An Interesting read by our Co-founder & CEO Mr. Chris George Featured in Entreprenuer.com
Healthcare out-of-pocket-expenditure (OoPE), group health insurance (GHI), and universal health coverage (UHC). The acronyms that should matter to every Indian family
Indians spent $45 billion, in 2015-2016 on medical expenses, paid from savings or borrowings, accounting for over 60 per cent of India’s entire healthcare expenditure that year. One dreads to know the updated estimates post the pandemic.
Why do Indians spend from their pocket for healthcare?
Think back to conversations with the family CA, who prescribed getting health insurance when filing tax returns to manage tax liability. Tragically, managing health risk is often, diametrically opposite to our desire to manage financial risk.
For most Indians, health insurance has been a tax-saving measure at best and cost reimbursements at its worst. For 300 million employed Indians, that consideration is almost always left to their employer. For the unemployed? Well, they depend on the government.
My friend Rahul and his wife were expecting their first child and were shocked to be told that the maternity hospital they chose was not covered in their company-paid insurance. He was informed that his policy covered a ‘network’ hospital a bit far away from home, but disappointingly just covered INR 50,000 of his expected INR 2 lakh expense.
Rahul’s experience is not unique. Trapped in the quagmire of ‘inclusions and exclusions’, most individuals never know the true nature of their health insurance policy, until they find the bitter truth in their time of need.
With only 18 per cent Indians in urban areas and 14 per cent in rural areas covered under health insurance schemes, India’s health insurance penetration is one of the lowest in the world. Seven of 10 individuals in the country are not insured and if insured, the cover frequently proves to be inadequate i.e. under-insured OR more significantly, uninsured. The result? Five crore Indians are driven below the poverty line every year on account of OoPE (half the people worldwide impoverished by healthcare expenses).
The Union Budget 2018 sought to address this issue through the National Health Protection Scheme (NHPS), to provide a cover of INR 5 lakh to over 10 crore families. An ambitious plan, although its implementation and funding are yet to be detailed.
Nevertheless, this is a step in the right direction towards ‘Universal Health Coverage (UHC) defined by WHO as “all individuals and communities receive the health services they need without suffering financial hardship”. A goal for any nation to aspire to.
How do Indians pay for OoPE in healthcare?
By selling their buffalo for a brain scan. I’m not trying to be facetious; search online for “selling a buffalo for a brain scan”. The mismatch between need and support causes OoPE to be covered through personal savings, sale of personal assets, and debt: from friends, family and sometimes from usurious lenders.
GHI is not employee health benefits
Indian companies, led by insure-tech companies have begun defining GHI as ‘employee health benefits’. But, that’s an incomplete definition.
ESIS (Employee State Insurance Scheme): Employers with 10-plus employees make a 4 per cent deduction on an employee’s payroll (INR 21,000 CTC & above). This ‘insurance for employees’ by the government covers nearly 10 per cent of India’s population, however a paper by ‘Dvara Research’ reports high dissatisfaction among beneficiaries.
Corporate health and wellness programs: A mere 15 per cent of India’s workforce (about 75 million), are covered under corporate health and wellness programs that typically include telemedicine, health checks, gym and pharmacy reimbursements, ‘health talks’ or Zumba classes and now vaccinations.
GHI: On paper, group insurance for employees extends ‘comprehensive coverage’, yet in reality, they are not adequate at all. Since these ‘group policies’ include umbrella covers, higher claims make them unviable over the mid- to long-term. Increased claims (like during this pandemic) can increase policyholder’s renewal premiums significantly.
Add to this, the ‘sub-limits’ set by health insurers for expenses like hospital room rent, ambulance charges, doctor fees, etc., leading to higher OoPE.
So what’s missing?
In the Indian healthcare ecosystem, the individual fights the battle alone with healthcare providers. The insurance companies that are supposed to fight for them are focused on reducing their claims, leading to a high-friction customer experience. The government finds itself overwhelmed in other ways and unless public healthcare catches up, dependence on private healthcare facilities will continue to rise as will healthcare costs.
In my opinion, what’s missing is money and a marketplace. Healthcare remains one of the last great industries that hasn’t been democratized by e-commerce. The Indian healthcare industry is fragmented, opaque and ‘subvention-rich’; essentially the healthcare payments ecosystem is ripe for disruption.
Imagine better healthcare choices, financial support for OoPE, and better insurance. Someone who fights on your behalf with the providers to deliver an experience that puts the control back in your hands.
Therein lies the solution: Help Indians take control of their healthcare.
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