Buying Health Insurance

Have you ever bothered to know the cost of different medical treatments/procedures before deciding the size of your health cover?

Will you buy a Rs 3 lakh family floater health cover without knowing the cost of a by pass coronary surgery or a liver transplant or any other critical illness, which can afflict any one in your family? If it is so, it is like buying a pair of small-size jeans without knowing the size of your over-stretched waist.
HEALTH COST: That medical inflation far outpaces overall inflation is known. The oft-quoted figure for healthcare inflation in India is 15 per cent a year compared to overall inflation of 6-7 per cent in the past few years. We sift through official and unofficial data to find out how medical costs have been increasing in India. A health insurance report published by the Insurance Regulatory and Development Authority (Irda) of India published in 2011 says the average claim in case of major diseases was Rs 1,34,550 in 2009-10 compared to Rs 98,101 in 2007-08, a compounded annual growth rate of 17 per cent. Notably, the average claim paid in 2009-10 was just Rs 23,000.
The report considered cases where the amount claimed was more than Rs 40,000 as small claims for diagnostics tests and medicines without major treatment, etc, could have distorted the overall data disproportionately.The report suggests a 57 per cent rise in average claimed amount for circulatory diseases (heart attack, high and low blood pressure etc) from Rs 1.53 lakh in 2007-08 to Rs 3.56 lakh in 2009-10. The average claims made in nervous system-related diseases (multiple sclerosis, paralysis etc) increased 14 per cent from Rs 1.10 lakh in 2007-08 to 1.28 lakh in 2009-10. The average claims made in case of blood-related diseases increased 11 per cent from Rs 96,000 in 2007-08 to Rs 1.07 lakh in 2009-10.
While the rates discussed earlier were indirectly arrived at from the 'amount claimed' data, to know the current costs, we asked third-party administrators, or TPAs, insurance brokers, hospitals and insurance companies. However, not all of them were 'keen' on sharing the prevailing rates. What we received from a TPA, an agency hired by insurance companies to service health insurance claims, is the tariff list approved by the General Insurers' Public Sector Association (GIPSA). Medimanage, an insurance broking company, also provided a list of rates for some common medical treatments/procedures, which it says is the average cost across the country and hospitals.
The two lists show wide disparity in rates. Raju M V, vice-president, technical, TTK Healthcare, says GIPSA-approved rates are lower than the actual medical costs. The average cost of coronary artery bypass surgery as per GIPSA was Rs 1.4-1.8 lakh in 2011-12 compared to the average 'actual' cost of Rs 2.5 lakh. The cost of angioplasty (widening of blocked blood vessels) was Rs 1.5 lakh according to GIPSA rates while the 'actual' cost was around Rs 2.5 lakh. General Insurance Public Sector Association (GIPSA) is a body of four public sector general insurers-New India Assurance, United India Insurance, National Insurance and Oriental Insurance Company. To contain losses due to 'inflated' medical bills charged from the insured, these insurers decided to standarise rates for 42 medical procedures across categories of hospitals for settling cashless claims.
The network of hospitals that agreed on the rates stipulated by GIPSA forms the preferred provider network or PPN. There are 928 hospitals in the PPN across eight cities in the country-Delhi (188), Mumbai (165), Bengaluru (122), Chennai (125), Ahmedabad (91), Hyderabad (87), Chandigarh including Jalandhar, Ambala and Mohali (87) and Kolkata (63).
MEDICAL INFLATION: DEMAND-SUPPLY GAP?: Why are healthcare costs increasing at a double-digit rate despite use of technology? Shouldn't the spread of technology bring the medical costs down? Shortage of good doctors and surgeons is also a reason. Sudhir Sarnobat, co-founder and chief executive officer, Medimanage Insurance Broking, says there is a clear demand-supply gap of good doctors in India. "You can count on your finger the number of good surgeons and doctors in any particular field," he says.
According to Ministry of Health data, India had one doctor per 2,000 people as of 31 July 2011. Another reason could be private sector dominance in the healthcare industry in India. A World Health Organisation report in 2011 said the private sector accounted for 68 per cent healthcare spending in India. Popularity of cashless facility offered by insurance companies is also one of the reason for higher treatment costs.
According to an Irda report, the 'cashless' basis of settlement is costing more for all types of diseases. In 2009-10, charges for arthopathies (disease of joints) and mental disorders were more than double those under the reimbursement facility. For 11 diseases, the charges were more than 50 per cent compared to those under the reimbursement facility.
KEEPING PACE: Do you think your cover is enough given the double-digit health inflation? If you feel it's not, you can buy a separate policy or increase the cover by opting for a top-up insurance plan. The latter is cheaper and more viable. If you have a Rs 5 lakh cover and want to increase it to Rs 10 lakh, you can buy a separate health policy, which will cost around Rs 6,000 a year, or opt for a top-up plan, which will cost just Rs 2,000 a year. Prospective buyers must check the costs of different medical procedures and treatments to get a sense of how much cover they may need for any possible medical emergency in the future.They can also check the GIPSA rates, which are easier to access, if TPAs, insurers or hospitals are not willing to share the details.