For the last century, healthcare delivery and financing in India has been shrouded by life insurance challenges and importantly, shares key landmarks with general insurance.
Despite some progress, the current state of India’s healthcare outcome leaves much to be desired. It has glaring challenges around high out-of-pocket spending, inequality of services, and fragmented social and regulatory standards. Since 2001, medical insurance has gained ground amid the proliferation of private health insurance (PHI) entities. However, it still remains a minor contributor in the current healthcare ecosystem.
Amid its ongoing transformation, a government-driven universal healthcare delivery and financing model is likely. However, PHIs still have a key role to play in shaping goals of access, cost and quality. With healthcare financing opening to private players, current challenges offer opportunities. A strong synergy between private and public players, complementing each other is a major objective. A focused approach encompassing public and private sectors and leveraging
emerging technology will play a disruptive role in the healthcare transformation ahead.
PHIs need to carefully design and implement their strategies in a 1.3 billion-strong population segmented in various strata. There are key trends around operational efficiency, integration and standardization and customer awareness – of which PHIs should be cognizant. Their response to these trends will likely de ne the cornerstones of success stories in India.
Since India’s independence in 1947, the government sector has been the backbone of the health- care ecosystem, including healthcare delivery and insurance. The term “insurance” is primarily associated with life insurance – the most popular form of insurance in India. There are two reasons for this- first, with low life expectancy and a tight-knit family structure, people primarily sought financial security. Second, life insurance has been traditionally positioned as a tax-planning tool.
Health insurance evolved slowly in tandem with general insurance with both sharing key landmarks. The growth of healthcare delivery too was limited in the pre-liberalization era. However, after economic liberalization in 1991, care delivery equipment, methodology, and process sharing from developed nations became mainstream. With the improvement in healthcare delivery and increase in disposable income, life expectancy had increased to 65 years by 2011. The Insurance Regulatory and Development Authority (IRDA) legislation in 2000 served as a key milestone in healthcare insurance. It opened up the health insurance industry to private players. Health insurance membership quadrupled between 2007 and 2011 (300 million in 2011) and is expected to be 600 million by 2015.
Current State of Health Insurance
Currently, healthcare delivery and financing is marked by around 72%2 out-of-pocket spending. India’s per capita spending on healthcare of $109 is much lower than the global average of $863.3 India trails in health
outcomes behind its South Asian neighbors like Sri Lanka and Bangladesh, which have comparable per capita income.4 There is a wide gap in healthcare delivery for the insured and for the total population.
Health insurance is dominated by government schemes. The major public health insurer in India is the government-owned General Insurance Corporation (GIC) and its four subsidiaries with about 60% market share. However, Private Health Insurers expanded rapidly in tier-1 and tier-2 cities post 2005 with products centered around ‘in-patient reimbursements’ and ‘cash-less payments’.
Health insurance in India, which covered around 11% of the population by August 2005, is provided through voluntary (2%) and mandatory (9%) health insurance schemes.5 The market share of PSU insurers in health insurance decreased from 64% in 2006-07 to 57% in 2008-09. The average annual premium growth in private sector was 47% compared with the PSU insurers’
*data source cognizant