Prime Minister Narendra Modi’s announcement on Independence Day that Ayushman Bharat health insurance scheme will be rolled out formally on September 25 is a boon for the poor and the under-privileged. The ambitious health insurance programme will give a coverage of Rs 5 lakh per family a year to 10 crore families chosen through the socio-economic caste census, primarily rural poor and identified urban workers. It is no doubt a game-changer if implemented to a tee. The best thing is the expenditure incurred in premium payment for the grand scheme will be shared between the centre and state governments. But where does that leave the ordinary middle-class citizens? Since you can afford to buy health insurance on your own, you have to get your own coverage. Yes, people like you and me have to ensure we are covered. Unfortunately, health insurance coverage in India is far from satisfactory. So, let Ayushman Bharat scheme be a call to action for the middle-class taxpayers to take their own cover.
Only 20 per cent of women aged between 15 and 49 years and 23 per cent of men aged between 15 and 49 years are covered by health insurance or a health scheme. While the new government scheme will no doubt cover many economically-challenged and vulnerable Indians, middle-class Indian families still adopt a very reactive approach when it comes to ‘mediclaim’.
Firstly, middle-class families are extremely under-insured. The bigger the family size, the less adequate the coverage. Even with a family size of 4-5 members, people still take a Rs 5 lakh total family floater policy. This means Rs 1 lakh per member. All of us know how insignificant Rs 1 lakh is when it comes to hospitalisation in a private hospital or nursing home. As a result, they have no other option than breaking the bank FDs, taking loans or worst selling off investments/property when hospital bills finally arrive; such bills often run into lakhs when major surgeries happen.
Secondly, an evaluation of claims shows a huge gap between medical treatment cost and claim amount received. When costs exceed Rs 3-4 lakh per treatment, a low insurance cover does not help. So, naturally the insurance company can only give claims as far as the sum assured is concerned. Treatment cost at private hospitals is 4-5 times than the government ones. Plus, medical treatment costs are soaring. For instance, a coronary artery bypass graft surgery, to improve blood flow to the heart, costs at least Rs 2.5-3.5 lakh at good private hospitals. Any type of hospitalisation, which continues for 7-8 days, can set you back a few lakhs at least.
Take insurance when healthy
The only way to fight against medical costs is to get adequate insurance coverage. Yes, that is the only way. It does not matter if you have corporate health cover from your employer. Every individual should be covered by an independent health insurance policy to prepare for the huge medical treatment costs lurking just round the corner. The best time to take the policy is when you are healthy. Health insurers cover not-so-healthy people at high premiums, which can defeat the very purpose of taking insurance. Plus, when you have pre-existing diseases, there is a period (2-4 years) when the patient cannot claim any costs from insurance company related to the pre-existing ailments if any.
As there are a lot of companies selling health insurance policies in India, selecting one can really become a daunting task. Apart from a lot of plans to choose from, companies use jargon and can confuse you even more. Here are a few factors one should consider when zeroing down on a plan.
Claims record - Companies will tell you how you should focus on the claims process and its ease, but you must also focus on the claims record of the company. Claims are when the rubber hits the road for insurers. Premium is what you pay, claims is what the insurer pays. Find out what is the percentage of claims paid by the health insurer in the last three years. Do not look at the amount of claims. Find out how many claims were received by the company and how many were actually paid. Then, compare it with competitors.
Claim processing time - Cashless is the new mantra. Insurance companies selling health covers swear by cashless systems, whereby the treatment cost of the insured patient is directly paid by the insurer to the hospital. There is no reimbursement step. Cashless claims are given only in network hospitals. Any potential health insurer buyer should check the time taken the insurer to process the claims. Often, there is a third-party administrator (TPA) involved, between the patient and insurer. Waiting for hours or even days for claim approvals during major surgeries or life-saving treatment can be painful.
Coverage nature - It is very important to know what is the exact coverage provided by a health insurance policy. There is no point in getting coverage for rare diseases, which sound terrible, but do not affect most people. It is more important to get adequate insurance coverage for ailments that are common and happen to every other patient. Watch out for the fine-print, which is often used to limit the insurer's liability. As you grow old, you will require wider coverage at an effective price. When you are young, a wider health insurance coverage is good but may not be even used once.
Pre/post hospitalisation coverage - Surgeries and hospitalisation costs are good. But, patients often spend a lot of money on pre hospitalisation and post surgeries. There are various diagnostic tests, medicines, other treatment and regular doctor visits. Choose an insurance plan which covers these aspects fully. A plan that covers high hospitalisation costs is good, but when the same plan provides financial cover for pre and post hospitalisation, it is great.
Value for money - Thanks to online insurance sellers, anybody can compare medical insurance policies based on premium. Price is what you pay, value is what you get. Find out why a health policy is being sold at Rs 15,000 annual premium when its competitors are charging Rs 18,000-20,000. There are no free lunches in this world. If two products are same, then the price difference to customers should not be huge. If the difference is substantial, the cheaper policy may be offering a stripped-down version. So, it is important to see the value a medical insurance policy covers, than just its price. But remember to study the features properly because many insurance policies ‘cover’ ailments and medical treatments which statistically have a very low chance of occurrence.
The author is a financial journalist with 13 years experience