November 12

The way to get affordable health care


Health care inflation continues to be very high. Experts estimate this to be in the range of 15% to 20% p.a. Based on one’s health, location and age, a family floater cover of Rs. 10 Lakhs to Rs. 20 Lakhs can become a minimum health cover in the present times and this can easily touch Rs. 50 Lakhs with inflation in the retirement age in the years to come. Not everyone can afford to take a sizable health cover with say ICICI Lombard or Apollo Munich etc.  The nationalized health insurers anyway don’t offer covers beyond Rs. 10 Lakhs. The senior citizens often don’t get a health cover even if they are ready to pay high premium.

As the penetration improves, we can expect better features, possibly reduced premiums and availability to senior citizens. IRDA seems to be doing a decent job with customer friendly measures (e.g. Life loan renewals, no individual claim loading, no sub-limits). At some point in time, we can expect government to roll out health care schemes for masses, in line with the Western and European countries. So we can expect lot more good things in the years to come. But then lot of this could be wishful thinking. How do we handle it today?

One way to address this is to look at group health insurance schemes. The health covers offered by employers normally have better features and higher chances of claim getting settled. This is obviously possible due to the volumes that the corporate clients can offer compared to a standalone retail client.  The Army and Central Government too offer Group Health covers and especially the Army Health Cover seems to be working well with lifelong support. Individuals can take advantage of Group Health cover schemes facilitated by most Nationalized Banks.

Punjab National Bank, Union Bank, Bank of Baroda, Canara Bank, Indian Overseas Bank, Syndicate Bank and India Bank provide affordable group health cover to the customers who hold account with them. The Banks tie up with Insurers and due to the scales, they are able to offer very competitive rates. In most of these schemes, there is no age wise premium but just an average premium is applied across all the ages. So for senior citizens and people in 50’s, this can be inexpensive option. For a couple with two minor age children, the premium for 5 Lakh family floater can be ~ Rs. 7,000 in most of these schemes.

This does come with its own limitations. For the price one pays, the service expected cannot be great. Also, an individual cover is always safer than a group cover. In a group cover, there is a dependency on the facilitator. As an example, based on the cost structure or regulations, the banks may change the design of the scheme, make it expensive or may discontinue for new clients or stop it altogether. But then, it’s better to have some cover rather than having no cover at all. Such group health covers can be particularly helpful for senior citizens, those with health history or those who cannot afford regular covers.

The challenge is that few options available today are grossly insufficient. On the other hand, at every corner in this country, we have some or other association. Rather than waiting for regulators to improve the offerings or the Government to bring in revolutionary changes, Citizens should start group health cover initiatives within their own groups. Even a size of 50 people is a good start though for long term stability, the group sizes should be much higher. This is easier said than done but than if we all go back and push to our society, community, area, college, school, business and professional associations then at some point in time, this revolution can start.

One challenge observed is that in most cases people are managing such associations on honorary, and hence on a best effort basis. For an initiative like group health cover, a professional approach should be taken. Investment may be needed to appoint right intermediaries, research on available options, negotiate best possible deal with best insurers and then to keep an eye for quality checks.


Health Insurance

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