Health Insurance

By Abdulla Israr & Simran Rani

HEALTH INSURANCE 

 

Description also available in video format (attached below), for better experience use your desktop.

 Introduction

Health insurance is a financial risk-sharing mechanism in which an individual or group pays a premium to an insurer, who in return agrees to cover medical expenses arising from illness, injury, or disability, as per policy terms.

Objectives

  • Protect individuals from catastrophic health expenditure

  • Improve access to healthcare

  • Promote financial risk pooling

  • Reduce out-of-pocket expenditure (OOPE)

Scope of Health Insurance

Health insurance covers:

  • Hospitalization expenses (IPD)

  • Pre- and post-hospitalization

  • Day-care procedures

  • Emergency services

  • Maternity benefits

  • OPD (in selected plans)

  • Critical illness

  • Preventive health check-ups

Applicability

  • Individuals & families

  • Employees (Group Health Insurance)

  • Senior citizens

  • BPL & vulnerable populations (through Govt. schemes)

  • Corporate organizations

  • Informal sector workers

2. Health Insurance in the Private Health Sector

Role of Private Health Sector

Private health sector:

  • Delivers 70%+ healthcare services in India

  • Acts as major service provider under insurance schemes

  • Plays a key role in cashless treatment

Features

  • Tie-ups with insurance companies & TPAs

  • Standard Treatment Guidelines (STGs)

  • Package-based billing

  • Pre-authorization requirement

  • Audit and claim scrutiny

Challenges

  • Delayed claim settlement

  • Package rate dissatisfaction

  • High administrative workload

  • Fraud & overutilization concerns

  • Patient dissatisfaction due to exclusions

3. Health Insurance in Developing vs Developed Countries

Developing Countries (e.g., India)

  • Mixed system (Public + Private)

  • High OOPE

  • Limited coverage in informal sector

  • Government-sponsored schemes for poor

  • Fragmented insurance market

Developed Countries (e.g., UK, USA, Germany)

  • Universal Health Coverage (UHC)

  • Strong public financing

  • Mandatory insurance systems

  • Well-regulated private participation

  • Emphasis on preventive care

Comparative Summary

Aspect

Developing Countries

Developed Countries

Coverage

Partial

Universal

Financing

Mixed

Predominantly Public

OOPE

High

Low

Regulation

Moderate

Strong

Equity

Unequal

More equitable

4. Different Health Insurance Policies – Analysis and Management

Types of Health Insurance Policies

  1. Individual Health Insurance

  2. Family Floater Policy

  3. Group Health Insurance

  4. Senior Citizen Policy

  5. Critical Illness Policy

  6. Top-Up & Super Top-Up Plans

  7. Micro-insurance & Rural Plans

Policy Analysis Parameters

  • Sum insured

  • Premium

  • Waiting period

  • Exclusions

  • Co-payment

  • Room rent limits

  • Network hospitals

Management Aspects

  • Risk assessment

  • Cost control

  • Fraud detection

  • Claim management

  • Customer grievance redressal

  • Provider empanelment

5. Concept of Combined Life Insurance and Health Insurance

Meaning

A combined policy integrates life insurance (death benefit) with health insurance (medical expense coverage).

Features

  • Death benefit to nominee

  • Health cover for hospitalization

  • Tax benefits (Section 80C & 80D)

  • Long-term financial security

Examples

  • Unit Linked Health Plans

  • Health riders attached to life insurance policies

  • Term plans with health benefits

Advantages

  • Dual protection

  • Better financial planning

  • Premium efficiency

Limitations

  • Higher premiums

  • Complex policy structure

  • Limited flexibility

6. GOI & State Government Policies in Health Insurance Implementation

Government of India Initiatives

Ayushman Bharat – PMJAY

  • ₹5 lakh coverage per family per year

  • Cashless & paperless treatment

  • Covers secondary & tertiary care

  • Targets poor & vulnerable families

Other GOI Schemes

  • CGHS

  • ESIC

  • Rashtriya Swasthya Bima Yojana (RSBY – earlier)

  • PM-JAY SEHAT

State Government Schemes

  • Aarogyasri (Telangana/AP)

  • Mukhyamantri Chiranjeevi Yojana (Rajasthan)

  • Mahatma Jyotiba Phule Jan Arogya Yojana (Maharashtra)

  • Atal Amrit Abhiyan (Assam)

Policy Goals

  • Universal Health Coverage

  • Equity in access

  • Financial protection

  • Strengthening public health system

7. Hospital / TPA / Insurance Company – Relationship and Problems

Key Stakeholders

  1. Hospitals – Service providers

  2. Insurance Companies – Risk bearers

  3. TPAs (Third Party Administrators) – Intermediaries

  4. Patients (Beneficiaries)

Workflow

Patient → Hospital → TPA → Insurance Company → Claim Settlement

Roles

  • Hospital: Treatment & billing

  • TPA: Pre-authorization & claim processing

  • Insurance company: Approval & payment

Common Problems

  • Claim rejection

  • Delay in pre-authorization

  • Package rate disputes

  • Documentation errors

  • Fraudulent practices

  • Communication gaps

  • Patient dissatisfaction

Solutions

  • Standardized treatment protocols

  • Digital claim management

  • Training of hospital insurance desk staff

  • Transparency in policies

  • Strong grievance redressal mechanism

Video Description

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