Health Insurance: Standard Models
1. Indemnity Health Insurance Plans
These are traditional reimbursements based policies. GIC’s Mediclaims is an example as the insured pays premiums towards a sum insured and he is then reinsured for his bills. The advantage of this model is the amount is the amount of freedom given to users in their choice of hospital and doctors. They can expect to be reimbursed for the contracted amount irrespective of where and from whom they have sought treatment. The disadvantage is that because of poor utilisation management the costs are too high and it is the most expensive health plan. In India GIC’s Mediclaims policy covers only about 25 lakh lives.
2. Fee For Service Insurance
This is a traditional healthcare policy, which offers the widest choice of doctors and hospitals. It is an in-between product between indemnity based and the preferred organisations. However, there are certain restrictions introduced by way of coinsurance and deductibles, i.e. a minimum amount specified in its policy below which no claim is payable. Its advantage is that it offers freedom of choice for the insured but it does not include any preventive and routine checkups as a part of the plan. it could be a good in-between for the Indian market as it readies itself for a transition to the managed care program.
3. Preferred Provider Organisation
This is an association which contracts with a group of doctors, dentist’s hospitals and other healthcare service providers to provide care at prearranged rates or discounts. Members pay more for going out of the network. The advantage is that it offers patients preventive care, checkups and is relatively cheap. The disadvantage is that it restricts choice. Most PPO’s require that a member choose a primary care physician to assure that hospitalisation occurs only when absolutely necessary. In India, this model could be looked at with Fee for Services, as a step in the direction of total managed care. However this model will need to be advertised and explained well to the insurable public. At the same time it will also need hospital support in the shape of better management practices and systems.
4. Health Maintenance Organisation
This provides comprehensive to voluntary enrolled population at a predetermined price. Members pay fixed periodic fees directly to the HMO and in return receive comprehensive health care service as often as needed. HMO’s typically provide preventive care, office visits, immunisation, etc. in all HMO”S members are either assigned or choose a doctor. Though they are typically the cheapest option they also need an acceptable level of health infrastructure and management practices in place before they can take off.
Implications for India
Harish Vasvani, a businessman had a Mediclaims policy for years. Recently he was admitted to the Hinduja hospital in Mumbai for a gallbladder removal, an operation that would cost him lakhs of rupees. When he called his development officer at New India Assurance a GIC subsidiary he was told about the benefits of joining paramount health care as a subscriber for Rs. 650 for three years. He was told that they would arrange for the money to be paid to the hospital and get the amount reimbursed from New Delhi. He remembers that the last time he was operated upon he had to pay first, wait for a month and then received the money. Third party administrators like paramount health care, which have 450 hospitals allover India, working with NIA own Mediclaims policy have taken the responsibility of claiming away from the corporate clients and individuals.
GIC had three options to face the private sector participants in the market it has ruled for so long. One involves creating a separate subsidiary to handle the health insurance business exclusively. The other recommended that a healthcare division be built up within the GIC itself. The third option was to set up a managed care service company with equity participation from the four subsidiaries and a private partner – a specialist in healthcare which could give it IT support as well. This idea of launching a managed care services company- a model that could be well replicated by the four subsidiaries was to provide an umbrella to the TPA’s, the hospital networks, and other key players and finally gradually move towards managed care. There is one snag though. An efficient managed care system presupposes the presence of a well regulated and provided for healthcare infrastructure with transparent and uniform rates as far as possible.
Mr. Vimal Bhandari, executive director IL&FS feels that there is a lack of benchmarking services in India. There is a sheer shortage of beds. The WHO recommends 2-3 bed per 1000 people and the ratio in India is 0.8 per 1000. Royal and Sun Alliance CEO in India, Anthony Jacob believes one of the biggest problems of moving to managed care is that the lack of recording norms and reporting systems.
Dr. Vivek Desai a hospital management consultant believes that accreditation of hospitals will become mandatory if the nation is to move towards managed care. And the initiative is to come from the private sector as well as the government at par with other infrastructure sectors. A curious anomaly of the Indian healthcare sector is that while the government spending in the plan outlay has been declining that of the private sector has been increasing. An NCAER survey of more than 18000 households revealed, that 75 percent of illness in high-income households and 55 percents in low-income households was treated by private doctors. Even a small step ahead to garner some of this into premium will mean that more Indians can avail of a wider range of health insurance cover at a cheaper rate.
1. Indemnity Health Insurance Plans
These are traditional reimbursements based policies. GIC’s Mediclaims is an example as the insured pays premiums towards a sum insured and he is then reinsured for his bills. The advantage of this model is the amount is the amount of freedom given to users in their choice of hospital and doctors. They can expect to be reimbursed for the contracted amount irrespective of where and from whom they have sought treatment. The disadvantage is that because of poor utilisation management the costs are too high and it is the most expensive health plan. In India GIC’s Mediclaims policy covers only about 25 lakh lives.
2. Fee For Service Insurance
This is a traditional healthcare policy, which offers the widest choice of doctors and hospitals. It is an in-between product between indemnity based and the preferred organisations. However, there are certain restrictions introduced by way of coinsurance and deductibles, i.e. a minimum amount specified in its policy below which no claim is payable. Its advantage is that it offers freedom of choice for the insured but it does not include any preventive and routine checkups as a part of the plan. it could be a good in-between for the Indian market as it readies itself for a transition to the managed care program.
3. Preferred Provider Organisation
This is an association which contracts with a group of doctors, dentist’s hospitals and other healthcare service providers to provide care at prearranged rates or discounts. Members pay more for going out of the network. The advantage is that it offers patients preventive care, checkups and is relatively cheap. The disadvantage is that it restricts choice. Most PPO’s require that a member choose a primary care physician to assure that hospitalisation occurs only when absolutely necessary. In India, this model could be looked at with Fee for Services, as a step in the direction of total managed care. However this model will need to be advertised and explained well to the insurable public. At the same time it will also need hospital support in the shape of better management practices and systems.
4. Health Maintenance Organisation
This provides comprehensive to voluntary enrolled population at a predetermined price. Members pay fixed periodic fees directly to the HMO and in return receive comprehensive health care service as often as needed. HMO’s typically provide preventive care, office visits, immunisation, etc. in all HMO”S members are either assigned or choose a doctor. Though they are typically the cheapest option they also need an acceptable level of health infrastructure and management practices in place before they can take off.
Implications for India
Harish Vasvani, a businessman had a Mediclaims policy for years. Recently he was admitted to the Hinduja hospital in Mumbai for a gallbladder removal, an operation that would cost him lakhs of rupees. When he called his development officer at New India Assurance a GIC subsidiary he was told about the benefits of joining paramount health care as a subscriber for Rs. 650 for three years. He was told that they would arrange for the money to be paid to the hospital and get the amount reimbursed from New Delhi. He remembers that the last time he was operated upon he had to pay first, wait for a month and then received the money. Third party administrators like paramount health care, which have 450 hospitals allover India, working with NIA own Mediclaims policy have taken the responsibility of claiming away from the corporate clients and individuals.
GIC had three options to face the private sector participants in the market it has ruled for so long. One involves creating a separate subsidiary to handle the health insurance business exclusively. The other recommended that a healthcare division be built up within the GIC itself. The third option was to set up a managed care service company with equity participation from the four subsidiaries and a private partner – a specialist in healthcare which could give it IT support as well. This idea of launching a managed care services company- a model that could be well replicated by the four subsidiaries was to provide an umbrella to the TPA’s, the hospital networks, and other key players and finally gradually move towards managed care. There is one snag though. An efficient managed care system presupposes the presence of a well regulated and provided for healthcare infrastructure with transparent and uniform rates as far as possible.
Mr. Vimal Bhandari, executive director IL&FS feels that there is a lack of benchmarking services in India. There is a sheer shortage of beds. The WHO recommends 2-3 bed per 1000 people and the ratio in India is 0.8 per 1000. Royal and Sun Alliance CEO in India, Anthony Jacob believes one of the biggest problems of moving to managed care is that the lack of recording norms and reporting systems.
Dr. Vivek Desai a hospital management consultant believes that accreditation of hospitals will become mandatory if the nation is to move towards managed care. And the initiative is to come from the private sector as well as the government at par with other infrastructure sectors. A curious anomaly of the Indian healthcare sector is that while the government spending in the plan outlay has been declining that of the private sector has been increasing. An NCAER survey of more than 18000 households revealed, that 75 percent of illness in high-income households and 55 percents in low-income households was treated by private doctors. Even a small step ahead to garner some of this into premium will mean that more Indians can avail of a wider range of health insurance cover at a cheaper rate.