Healthcare insurance in India

The recent estimates released by Insurance regulatory and development Authority on the number of Indians having health insurance covers are significantly lower than the estimates given in the World Bank report.

According to the IRDA report, only 17% of Indians have health Insurance. This projects a gloomy picture of the state of healthcare system of India. Due to increasing health expenses more and more people are moving towards poverty. Majority of those covered under healthcare schemes are people living below poverty line. This is because most of the government sponsored schemes are targeted towards providing healthcare security to those living below poverty line.

As a result, for many Indians, especially the ones with low income backgrounds, healthcare is a costly affair and makes them vulnerable towards diseases and losing financial security. With low incomes, these people are not financially capable to invest in health insurance on their own without government aid. Lack of awareness on the benefits of health insurance is another reason of the low participation. Also due to prevalence of frauds in the insurance sector, people are apprehensive of taking health insurance.

The insurance sector is earning income from a limited consumer base, i.e. 17% of the population. On the other hand, with rising health issues, the claims it has to settle are rising. Therefore to maintain its revenue, it as to charge a higher premium, which further dissuades people from enrolling into health insurance programmes.

To remedy this, government should expand the ambit of its healthcare schemes to cover more and more sections of society. This can be done through insurance vouchers, direct benefit transfer, or even direct insurance for people from financially vulnerable sections. Aggressive awareness campaigns should be launched to educate people on the benefits of healthcare insurance.

Financial institutions should be encouraged to launch more and varied health related schemes that cater to different sections of society to ensure maximum coverage. More coverage will insure more capital flow which will enable the insurance sector to lower the premium rates to make it more affordable for general public. Policy initiatives should be taken to incentivize these institutions for launching such schemes.

Steps should be taken to reduce incidence on frauds in insurance sector.