IRDA for state-backed health insurance scheme

The Insurance Regulatory and Development Authority (Irda) has strongly come out in support of an upcoming government-backed health insurance policy aimed at providing health cover to a large population of the country.

“Why not have a state-backed health insurance coverage for people when practically all the governments in the world have similar coverage for their citizens,” asked Irda chairman J Hari Narayan. He was referring to a meeting of a group of experts in the Planning Commission today on the new health insurance scheme which is in the works.

Stating the cover could be on the lines of the Rashtriya Swasthya Bima Yojana, he said Irda had to see the contours of the scheme once it was ready. A government-backed health scheme involved risks, too. “One such could be that the pricing may go up,” he said, while addressing the launch of Health Forum, a self-regulatory body that Irda constituted to address the issues of the health insurance sector.

According to the Irda chairman, government-sponsored health insurance schemes provide cover at various levels to 189 million people, while the non-government sector covers 22 million people under group schemes. Seven million people are covered under individual policies. Per capita pricing of these policies stands at Rs 110 in government schemes, Rs 219 in group health insurance schemes and Rs 5,500 in individual policies.

Though the per capita price is lower in government schemes, they are more efficient in terms of loss ratio, especially those underwritten by public sector health insurance companies. The health insurance sector in the country is growing at 45 per cent annually, and would soon touch Rs 35,000 crore in business this year, Narayan added.

Irda will notify a comprehensive health insurance regulation after taking into account the issues of non-standardisation of procedures, coverage of patients with HIV/AIDS and mental illnesses and the prospect of the bringing Ayush (alternative medical systems) into health insurance. “We will bring the regulation after the Health Forum takes a look at it, and comes up with its recommendations,” the chairman said.

The consultative body includes General Insurance Council (non-life), Life Insurance Council, multistake holder groups of Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry, besides the Health Forum formed with the representatives of health insurance companies, third-party administrators, hospitals and other stakeholders.

Narayan came down heavily on unviable methods adopted by companies, especially in group schemes, saying nothing prevented Irda from taking action against such practices. “So far, we have maintained a restraint, which will not last forever,” he said, stating the regulator might prohibit companies from marketing such products.

Referring to rising complaints from policyholders in the health insurance sector, he said unhealthy pricing practices had been putting a lot of stress on the management of the companies, leading sometimes to refusal of the claims. However, he ruled out prescribing the pricing either of policies or of healthcare services — and said it was up to the companies and the self-regulatory body to handle the issue.

The loss ratio in group health insurance schemes ranges from 94 per cent to 112 per cent, while Irda maintains the ideal loss ratio should be around 75 per cent. Individual policies that command a per-capita premium of Rs 5,500 has a loss ratio of just 40 per cent.

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