Health Insurance - how will it react now?
In a recent development in the health insurance sector, the public and private health insurance companies striked off the cashless facility from the most of the hospitals in the metros. This created such a splash that the lesser important news of taxing the cashless facility (a service tax of 10.3% levied on availing cashless facility) went practically unnoticed. The insurance companies had been negotiating with the hospitals for the last 6 months to reach an agreement on pricing of procedures. Lack of positive response from the hospitals left the insurance companies with no choice but to remove the cashless facility.
The point to wonder here is that the correction did happen and the claim ratios will come down a notch. But the cost of this correction is a penalty that the consumers should pay - in terms of shelling out the total sum and claim from insurance (without assurance that all of it will be reimbursed) or pay 10.3% tax in the hospitals were the facility is still available. That is huge, considering the poor infrastructure and the lack of health education in the country. This could have been easily avoided by the government / regulatory body intervention. Instead of having the market correct itself, government could have forced the hospitals to cheat less, charge less.
One argument here is that regulating could mean stunting the growth of the health industry. However, Firstly, the health insurance is not making a hell a lot of money any way. And, health is a social issue and should be looked at as one, and not draw comparisons with life insurance / automobile / retail segment. It is grossly inappropriate. The role of the government / regulatory bodies should be pro-poor (specially in a country with (appx) 60% population living in poverty) and take proactive steps in protecting them. Secondly, have we learnt anything from the financial meltdown? - it is better to act than wait for the disaster (correction) to happen.
Now what will happen (and we have to see how companies tackle this) is that even lesser people will go for health insurance (current penetration of health insurance is less than 10%). This is paradoxical that the cashless facility was taken out to reduce claim ration, but this move is going to hurt the top-line of the company.
The point to wonder here is that the correction did happen and the claim ratios will come down a notch. But the cost of this correction is a penalty that the consumers should pay - in terms of shelling out the total sum and claim from insurance (without assurance that all of it will be reimbursed) or pay 10.3% tax in the hospitals were the facility is still available. That is huge, considering the poor infrastructure and the lack of health education in the country. This could have been easily avoided by the government / regulatory body intervention. Instead of having the market correct itself, government could have forced the hospitals to cheat less, charge less.
One argument here is that regulating could mean stunting the growth of the health industry. However, Firstly, the health insurance is not making a hell a lot of money any way. And, health is a social issue and should be looked at as one, and not draw comparisons with life insurance / automobile / retail segment. It is grossly inappropriate. The role of the government / regulatory bodies should be pro-poor (specially in a country with (appx) 60% population living in poverty) and take proactive steps in protecting them. Secondly, have we learnt anything from the financial meltdown? - it is better to act than wait for the disaster (correction) to happen.
Now what will happen (and we have to see how companies tackle this) is that even lesser people will go for health insurance (current penetration of health insurance is less than 10%). This is paradoxical that the cashless facility was taken out to reduce claim ration, but this move is going to hurt the top-line of the company.
posted by Avi at
1:36 AM
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27 comments
