For the Indian healthcare system, public healthcare expenditure is abysmally low which forces almost 2/3rd of the entire population of the country to seek treatment in a privatised setting which often leads to high out-of-pocket (OOP) expenditure. As per estimates, thirty per cent of India’s population or 40 crore people do not have any sort of health insurance. Low financial protection often pushes families to catastrophic spending and impoverishment.
Though the government launched Ayushman Bharat Yojna to provide insurance coverage for almost 70 crore people in the country, a huge part of the population (nearly 30 crores) still remains uninsured. The factors that lead to such a high proportion of uninsured people in the country are coverage gaps in the government-launched scheme, the overlap between different schemes and lack of affordable insurance schemes in the market. Unless these concerns are addressed, the health insurance penetration in India will continue to remain low and make the healthcare system further unsustainable.
Healthcare Financing in India
Various state governments of India as well as the central government have come up with diverse health insurance schemes in order to tackle the burden of high out-of-pocket expenditure. Over the past decade, private insurance in the country has also undergone huge change as far as the number of people covered is concerned. For example, almost 24 percent of people with health insurance coverage in 2018-2019 were covered under private health insurance. Similarly, health insurance has gained momentum in India with a growth of 17.16% in gross direct premium on a year-over-year basis, reaching Rs 516.38 billion in FY20.
“The sudden growth can be attributed to numerous factors like insurance privatisation, the arrival of standalone healthcare insurance providers, the inception of third-party administrators, excessive OOP expenditure, increased healthcare costs, health insurance portability and a gradual shift of attention towards non-communicable diseases from communicable diseases. However, with high OOP and low public spending on healthcare, healthcare financing in India remains a big challenge,” says Dr. Shankar Narang, COO, Paras Healthcare.
How to Increase Uptake of Health Insurance in India
There are certain steps which can be taken to increase the adoption of health insurance in the country. Dr Narang shares ways to increase the uptake of health insurance.
Better Knowledge of Schemes and Awareness
Proper knowledge of insurance schemes can increase the utilization and uptake of health insurance. It has been observed that people usually opt for insurance schemes when they have good knowledge of the scheme, have heard about it from close friends and family or through advertisements. Mass media can be used to make people more aware of health insurance schemes. Other than that, hospitals, healthcare facilities, ASHA workers and Anganwadi centres can also be used to enhance consumer confidence in the schemes.
Consumers Need Empathy
After the outbreak of the COVID-19 pandemic, consumer preferences have gradually changed and people are preparing themselves for future shocks. Thus, it becomes imperative on part of the insurers to make sure they understand every impact – from financial to mental to physical. On top of that, it is essential for health insurance providers to connect with consumers with warmth and empathy, truly acknowledging the after-effects of the pandemic.
Offer Products based on Consumer Needs and Preferences
The pandemic has certainly shifted the attention to financial well-being solutions and new health protections. This is an opportune moment to grab the opportunity by offering health insurance based on customer needs and preferences. The idea should be to provide relevant guidance and scalable solutions that would pave the way for future relationships.
A Lending Hand from the Government
The government can provide its data and infrastructure as public goods to enhance distributional and operational efficiencies among private healthcare insurers. To increase health insurance coverage, the government can also offer the PMJAY’s platform and network, especially the information and technology capabilities. This will further make it easier and faster to scale and lessen operational costs, especially in underserved markets. The government can also share its own databases like the NFSA, PM-KISAN and more with insurance companies in the private sector after taking the customers’ consent. This can foster the outreach of health insurance to potential customers.
Over the coming years, the government has made a commitment to increase public health spending in India to 3% from less than 1% of the GDP. Increased public spending can thus be utilized to establish a universal medical insurance scheme in the country that can assist in reducing the burden of out-of-pocket expenditures in health.
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