The Indian healthcare system is well defined on paper and was effectively implemented in the early years of independence. However over the last few decades the system of healthcare delivery has changed a lot with the advent of liberalization. We have well known public healthcare providers co-existing with private service providers. The Public health systems in most states barring Kerala and West Bengal have not progressed with the times and today cater predominantly to lower economic strata of the society. The Middle class has started relying on private nursing homes and hospitals owing to better hygiene and availability of better healthcare professionals. India spends about 6.5 to 7% of GDP on Health care (official estimates hover around 6%) out of which 1.3% is in the Govt. sector (this accounts for 22% of overall spending) and 4.7% in private sector (78% of overall spending).
Though healthcare costs in India is one of the lowest in the world, it is increasing at a fast pace .If proper measures are not taken by all of us jointly, it could reach price levels of the western nations making life difficult.
What is Health Insurance?
Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for a premium. The insurance rate is a factor used to determine the amount, called the premium, to be charged for a certain amount of insurance coverage.
Cost of Insurance
Like mentioned earlier, the cost of health coverage has been going up and it is inevitable to maintain premiums at same levels. The reasons for this can be classified into two:
Macro Economic Trends: These are factors relating to the country as a whole. The factors include interest rates, law of supply and demand with respect to professionals, facilities, overall health status of the population and many more. This trend develops over a period in time if we do not take sufficient measures in our individual and group capacity.
Group insurance behavior: For most of us health insurance is provided/facilitated by the organizations that we work in. The organization helps in securing the best possible rates for insurance cover for all its employees and pays a combined premium for this. However at the end of the year when the policy is reviewed, if it is found that the insurance company has paid out more amount than it collected as premium towards financing the healthcare needs of the organization’s employees, they increase their premiums in the subsequent years to make up for their loss. This is called as claim loading and can vary between 40% to 400%.
We all can join hands together and ensure that we act responsibly when it comes to utilization of benefits. This will lead to containment of claims and if done continuously can lower the insurance premiums over a period of time
Wednesday, January 21, 2009
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