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| Cover daycare procedures, says Irda chief |
| BS Reporter / Chennai/ Hyderabad Jan 26, 2012, 00:29 IST |
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Insurance Regulatory and Development Authority (Irda) chairman J Hari Narayan has asked health insurance companies to devise products to cover daycare procedures.
Stressing the need for responsiveness from companies to changes that are coming through technological advancements in the medical field, he said, “the number and scope of daycare procedures have to expand within the context of insurance policies to enable these kind of procedures to take effect and be incorporated.”
The present policy according to which the companies approve treatments only if the patient stays for 24 hours in a hospital was leading to unnecessary increase in costs with no useful purpose. A couple of decades ago any intervention with heart was a headline news. Now removal of an arterial block by placing a stent has become a daycare procedure, Hari Narayan said
He also asked them to come up with innovative policies to cover medical expenses outside hospital care where the total spending by people was twice as high compared with that of hospitalisation.
The total spending on healthcare requirements in the country is about Rs 3 lakh crore of which a little less than Rs 1 lakh crore is the actual spending that has to do with hospitals. However, the health insurance companies have focused only on procedures or packages that come with hospitalisation because the systems outside the hospitals are instable, he said.
Though the problem of fraud and fake bills was a matter of concern, he said it still provided scope for enormous growth in the health insurance industry. The actual payouts by insurance companies to hospitals at Rs 15,000-16,000 crore this year, was only 20 per cent of the total spending by people on hospitals and only 7 per cent of the total healthcare expenditure, he said at a seminar organised by the Institute of Insurance and Risk Management here.
The health insurance segment, which accounts for 25 per cent of the total non-life business as compared with about 16 per cent some 4-5 years ago, is expected to increase to 32-33 per cent by this year, according to Hari Narayan. It grew 30-36 per cent in the past few years to become the second most significant sector after motor insurance in the non-life space.
Last year, health insurance premiums stood at Rs 11,483 crore while the same was Rs 9,661 crore up to December in the current financial year, registering the lowest growth of 18 per cent in the last many years.
The Irda chairman also asked the companies to desist from offering low premium for group insurance products, a major reason that bleeds the whole health insurance industry on account of great mismatch in premiums they collect and claim they have to settle.
“They are pushing topline growth for no particular purpose. And I don't think it is an effective strategy. In the short-term, it might work but in the long-term it will destroy the whole industry,” he said. As the companies spend 20 per cent towards business acquisition, the claim ratio of 70 per cent would be reasonable compared with the present 100-odd percent.
The companies should also bring in products to cover treatment of HIV and chronic diseases like diabetes, a gap that exists in health insurance sector, he said.
Riding the tiger
On the government’s decision to finance health insurance cover for the masses, the Irda chairman termed it as a decision to get on to the tiger and said it was very difficult to get off. While state funding in health insurance posed greater challenges like increase in costs, the regulator and the companies had no choice but to find solutions to these challenges, he said.
He also cautioned the governments against direct funding by replacing insurance companies. “I wouldn't really recommend direct transaction between government and third party administrators as it creates an unequal situation.”
Replacing insurance companies would lead to a lot of issues including rising claim amounts as this kind of system is more susceptible to leakages, according to him.
He also said TPAs that administer medical claims directly reimbursed by the government would no longer be considered as TPAs under the present definition. “We have to take a regulatory view at it,” he said.
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