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Covid-19 And Health Insurance In India: Time To Review Access To Healthcare In India

Health is a fundamental right covered under Article 21 of The Indian Constitution thereby its accessibility and affordability must be guaranteed. Healthcare in India is undergoing massive transformation, driven by rising health consciousness among majority of the population, liberalization of economy and the advent of private healthcare funding.

Health Insurance is more complicated than other segments of Insurance since formation, assessment and implementation of health sector policy is a complex task especially due to changes in the epidemiology and technology. It is critical to have a good understanding of Indian health conditions and to use insurance concepts while keeping sociological realities and national aspirations in view. The rising expense of medical treatment is out of reach for the common man.

Henceforth, health insurance has emerged as an effective method for funding health- care services in light of rising healthcare costs along with increased demand of healthcare services and lack of quality healthcare access to common man. Health Insurance is an agreement in which an insurance company undertakes a guarantee to pay for medical expenditures if the insured becomes ill or meets with an accident which requires hospitalization of the insured.

In general, insurance companies have tie-ups with prominent hospitals in order to give cashless treatment to the insured. However, in the absence of tie-ups with the hospital, the insurance company reimburses the insured's expenditures. The government also encourages health insurance by providing income tax benefits.

The health insurance sector was the most affected in the past two years due to the covid-19 pandemic thereby it underwent a slew of reforms in order to safeguard the greatest number of individuals in India. This project is an attempt to throw light on the conspectus of health insurance in India along with the function of IRDA vis-�-vis Covid-19.

Concept Of Health Insurance In India

The governing framework for health insurance is provided under IRDAI (Health Insurance) Regulations 2016. "Section 2(6C) of the Insurance Act, 1938, defines Health insurance business to include Policies providing benefits that are Sickness benefits, medical benefits, hospital benefits, surgical benefits (both in-patient as well as outpatient benefits), travel insurance and Personal accident cover."1

Persons who are purchasing the health insurance policy for the first time and are of the age of sixty five or below are covered under health insurance plan. When filling a claim for health insurance, an individual has 2 options, which are "Cashless Claim Process and Reimbursement Claim Process".

There are various types of health insurance which are hospitalization, PED covers, maternity, critical illness among many others. Recommencement of health insurance plan may be refused by the insurer if there was fraud or deception on the side of consumer at the time of preceding policy term or if the consumer was uncooperative.2
  1. Kinds of Medical Insurance Policies:
    • Policies that provide indemnification benefits. Indemnity contracts only reimburse the actual cost of harm.
    • Policies that provide fixed medical benefits.
    According to the fundamental principles of insurance contracts, general insurance is indemnification contract but life insurance is not. As a result, indemnity based health insurance policies can be provided by insurance companies and standalone health insurance companies. Fixed health insurance can be provided by life insurance companies in which an amount insured (fixed) is paid on hospitalization without taking into account the actual amount spent by the policyholder.

    Such as life insurance companies provide critical sickness coverage which comes within this category. These are predetermined amounts provided by the life insurance companies in the event of life insured suffering any of the illness covered by the contract of insurance policy.

    Life insurance companies are unable to provide personal accident or travel insurance coverage. Accident death benefit on the other hand can be offered as a rider by life insurance companies which mean that the amount assured is paid to the nominee if the person dies.  
  2. Health Insurance Coverage Term
    Once authorized by IRDAI, no changes to a health insurance policy will be considered until the original three-year period expires. Following the revision, subsequent changes may be considered only after a one-year interval. General and Health insurance companies provide health insurance policy of 1 year that can be recommenced at the end of the year.

    Premiums provided by such companies under health insurance plan can only be altered at the end of the year depending on claims experience. Three years is the minimum for the premium of life insurance to get altered. Premiums for "Group Health insurance plans" can be modified at the conclusion of the policy's term, according to the Group insurance contract of policy. Typically, "Group Health insurance plans" are offered for duration of 1 year.
     
  3. Portability of Health Insurance
    "Portability is the right accorded to the Policyholder to transfer the credit gained for pre- existing conditions and time-bound exclusions from one insurer to another insurer or from one plan to another plan of the same insurer."3 Benefits that are fixed within health insurance plans provided by a life insurer are not portable.

    The benefit of portability is the ability to carry on the credits accumulated as a result of holding a policy with the prior insurer. If a policyholder contacts an insurer either before 60 days or within 45 days of the insurance policy's expiration, the insurer may refuse the claim for portability. However, an insurer may, at their discretion, entertain a request for renewal even if it falls outside of the aforementioned time period.

    The new insurer has 15 days from the date the portability form is received to approve or reject the application. If the New insurer does not make a decision within the specified 15-day period, the request for portability is presumed approved.
     
  4. Reinsurance
    Reinsurance is often referred to as "insurer insurance or stop-loss insurance"4. Reinsurance is the procedure through which insurers transfer some of their risk portfolios to other parties through some form of agreement in order to reduce the likelihood of having to pay a substantial burden stemming from an insurance claim.

    The ceding party is the party that diversifies their insurance portfolio. The reinsurer is the person that takes a part of the possible responsibility in return for a percentage of the premium of insurance. Reinsurance protects the "insurer's equity and solvency" by increasing its ability to withstand the financial strain when unexpected and significant catastrophes occur by shielding it from cumulative individual obligations.

Health Insurance Schemes Prevalent In India

Schemes relating to health insurance can be broadly classified as follows: 5
  1. Government Run Health Insurance Schemes
    Employees State Insurance Scheme (ESI):
    This Social Security Scheme is aimed with an intention to provide "socio-economic protection" to their employees and their families in organized sector in case of any harm to the health such as injury during employment, sickness and maternity. This scheme offers medical treatment to the employees registered under "ESI Act of 1948" and is administered by the "Employees State Insurance Cooperation". Additionally, it offers financial help to compensate for the loss of his/her salary during the duration of his/her absence from the work owing to illness, maternity or workplace injury.

    Central Government Employees and Pensioners Health Insurance Scheme:
    This scheme was introduced in 1954 and covers employees of central government which are newly recruited as well as retired employees. This scheme covers maternity benefits, before and after hospitalization and pre-existing conditions. Likely, medical care, home visits, free medications and diagnostic services are various benefits provided under the scheme. The term of coverage of this scheme is for the entire life until the death of the insured.

    Aayushman Bharath Health Scheme: 6
    This scheme was introduced by PM Modi in the month of September in the year 2018 which is termed as the "game-changer initiative to serve the poor" and also called as "Modicare" which provides healthcare to the poor/deprived. This is the world's biggest government healthcare scheme. It provides a 5 lakh cover each year. There are 1354 illnesses covered. Treatment for heart bypass, knee replacements etc. would be provided at prices that are 15-20% lower than those offered by other Central Government Health Schemes. Benefits provided under the scheme can be availed at listed private hospitals as well as the government hospitals.
     
  2. Community Based /NGO Provided Health Insurance Schemes
    Community Based schemes are generally aimed at the poor/deprived people living in the communities. Generally, such schemes are administered by charity trusts or non-government organizations. Members in this scheme prepay a certain sum each year for specific services. The premium is fixed (not based on income) and hence not progressive. The benefits provided are mostly in the form of preventive care, however ambulatory and inpatient care are also included. Such schemes are often funded by donations, patient contribution and grants of government. These schemes are poorly managed and designed.

    As premiums are not based on an evaluation of individual risk status, there is frequently an issue of adverse selection. These schemes do not cover the poorest of poor. They rely on huge financial support and have low membership. "Some of the popular Community Based Health Insurance schemes are: - Self-Employed Women's Association (SEWA), The Mullur Milk Co- operative, etc."
     
  3. Health Insurance Schemes Provided by Employers
    Under this scheme, employers provide health insurance coverage to their employees through a Group Mediclaim Policy which is bought from the insurance company. The premiums are paid by the employees or by the employer or partly by the employee and partially by the employer. This would be determined by the company's HR policy depending on the employee's perks.
     
  4. Private Run Health Insurance Schemes
    In addition, there are several privately run health insurance schemes managed by General/Stand � alone health insurance companies that are regulated by IRDAI. Critical illness coverage is provided by the Life insurance companies. Any person can buy health insurance coverage by buying health insurance policy from aforementioned insurance companies.

Analysis Of Health Insurance Provided By Private Companies

The privatization of insurance industry seeks to boost the performance of the country's state insurance sector through benefits of the competition relating to reduced prices and higher levels of customer satisfaction.7 Alas, the ramifications of private insurance companies entering the healthcare industry are unclear. There are numerous challenging problems relating to development in this sector which requires deep review.

The role of private insurance differs according to a country or region's economic, social and institutional conditions. Protestors of private insurance contend that it will remove exiguous resources from the pool and increase the healthcare cost thereby leading to "cream skimming and adverse selection".

As per this point of view, privatization of health insurance generally ignores the social facet of health care. However, supporters of private health insurance on the other hand argue that it can reduce financial differences by providing customers with value for money and assisting them in avoiding waiting lines, poor quality care etc which are usually observed when one takes a free public healthcare.

Both points are valid in the sense that privatization of health insurance may be a helpful instrument to augment/ supplement prelevant health financing alternatives provided it is well managed and tailored to local requirements and preferences. Since healthcare services incorporate aspects of public goods, proper regulation and monitoring of insurers and providers of health care are necessary for privatization of health insurance to achieve its goal and fulfill its responsibilities.

This need is especially significant in India, where privatization of health insurance is growing as a major source of health-care finance. India, with its relatively developed economy and large middle class population provides the most favorable setting for the growth of private health insurance. This health insurance currently plays only a minor part in health- care industry; however it is steadily gaining traction.

It is not the sole option to India's serious health- care issues. Alas, it is an alternative that deserves and is currently receiving consideration from policymakers in the country. As a result, the question is not whether this instrument would be utilized in the near future, but whether it would be used to its full capacity to fulfill the requirements of the India's healthcare industry.8

Key Changes In Irdai Regulation Vis-A-Vis Covid-19

Regulations and modifications play an important role in determining the expansion of any industry including the insurance sector. The insurance industry of India "is regulated by the Insurance Regulatory and Development Authority of India" which undergoes a slew of reforms and advancements to make products of insurance far more consumer oriented.

This allows customers to get the most out of their insurance products and they begin to have far more faith in insurance for their financial well-being. In the year 2020, this industry underwent a plethora of reforms in order to safeguard the greatest number of people in India since it was the hardest hit this year owing to the Covid-199. The changes were made so that the insured people could better manage their health and remain sufficiently protected.

Following are the key developments made in the health insurance industry in the year 2020:
  1. Introducing Standard Health Insurance Plan: Arogya Sanjeevani
    In its tremendous effort to make good healthcare accessible to everybody, the "IRDAI" directed all the insurers to begin selling standard health insurance products that is Arogya Sanjeevani from April 1st, 2020, in its guidelines released on January 2nd, 2020. The rationale for introducing this was that the present plans are too complicated for general people to grasp. The commencement of a standard health insurance plan has aided in simplifying the purchasing process and has made a significant part in instilling great faith in consumers in this industry.
     
  2. Changes in the Health Insurance Sector as a Result of the Covid-19 pandemic
    Since the start of the Covid- 19 pandemic in India in the month of March 2020, IRDAI has constantly made efforts to address the crises through a plethora of steps to provide maximum comfort to the consumers.

    The inclusion of Covid-19 treatment under health insurance coverage was the first and most significant change in the insurance sector following the pandemic. Pandemics are typically not covered by the "health or life insurance policies". This was a good development, considering treatment for covid-19 costs between Rs 2 Lakhs � Rs 4 Lakhs for a 14 day hospital stay. People could receive effective treatment without fear of financial hardship since the pandemic was covered by health insurance.

    In addition, certain modifications were done to the underwriting rules for granting health insurance plans to consumers. It was instructed to all insurers by the regulator to provide "health insurance policies" to the consumers through "telemedical" wherever feasible if a necessary physical medical exam could not be performed considering the lockdown in the entire nation.

    The regulator even permitted the "use of e-KYC" for policy recommencement or the issuance of new policies to consumers. Customers were permitted to offer consent for the issuance of a health policy by "video KYC or OTP in lieu of physical signatures". This allowed people to stay at home and obey social distancing norms while still receiving insurance for financial well-being.

    Following the IRDAI's guidance, insurers launched COVID -19 health insurance plans called "Corona Kavach and Corona Rakshak". Both of these were established to give financial protection to persons with low incomes so that they could receive the finest covid-19 treatment available.

    In September 2020, it was permitted by the regulator to cover treatment via telemedicine under a health insurance policy which meant that a person could took a consultation sitting at his/her home and get the OPD charges covered under the health insurance policy.
     
  3. Standardization of Health Insurance Plan 10
    Refurbished health insurance policies were released on October, 1st 2020, providing consumers with broader coverage. Customers will benefit from the new plans since they will cover more diseases and treatments at lower costs. To meet to the demands and expectations of consumers, the definition of Pre- existing Diseases has been altered. According to the new guidelines, any diseases/ailments identified by a "physician 48 months" prior to the granting of health insurance would come under PED. To guarantee that policyholders with

    PED receive appropriate health insurance coverage, IRDAI has directed the insurers to include permanent exclusions only with the customer's consent. Furthermore, insurers cannot reject the claim made by a policyholder once the insured has paid the insurance premium for consecutive 8 years.

    This implies that, beginning with the 9th policy year, a customer's health insurance claim will not be denied unless you commit fraud or make a claim for permanent exclusion. A claim shall be settled or rejected within 30 days of receipt of the last relevant document. In the event of a claim payment delay, the insurer will be obligated to pay the policyholder an interest at a "rate of 2% "over the bank rate from the date of receipt of the last relevant document to the date of payment of the claim.
     
  4. Introducing an option of EMI for premium payment
    In the midst of Covid-19 pandemic, the IRDAI has made an alteration that allows consumers to pay their health insurance premiums in installments. The premium frequency can be set by the insurer which can be monthly, half-yearly or quarterly. The change will play a significant role in boosting affordability in the health insurance sector.

Conclusion

In the future, health insurance will grow at a tremendous pace. The major issue is to ensure that it benefits the poor and vulnerable in terms of improved coverage and health services at reduced prices while avoiding negative elements such as cost increases and misuse of procedures and technology in healthcare sector.

Healthcare in India is undergoing massive transformation, driven by rising health consciousness among majority of the population, liberalization of economy and the advent of private healthcare funding. In the year 2020, this industry underwent a plethora of reforms in order to safeguard the greatest number of people in India since it was the hardest hit this year due to the Covid-19.

With all this in place, the future of this insurance sector is bright, with many changes to the regulatory framework resulting in numerous modifications in how the company carries business and deals with its consumers.

Foot-Notes:
  1. The Insurance Act 1938 , s 2(6C).
  2. Dr. Rana Rohit Singh and Abhishek Singh,�A study of Health Insurance in India' (2020) 10(4) International Journal of Management, IT & Engineering.
  3. Health Insurance Portability'< https://www.policybazaar.com/health-insurance/individual-health- insurance/articles/health-insurance-portability/> accessed on 2 October 2021
  4. Reinsurance < https://www.investopedia.com/terms/r/reinsurance.asp> accessed on 2 October 2021.
  5. The Importance of Health Insurance'< https://cleartax.in/s/health-insurance> accessed on 2 October 2021
  6. What is Aayushman Bharath Health Insurance?< https://economictimes.indiatimes.com/wealth/insure/health- insurance/what-is-ayushman-bharat-health-insurance-all-you-need-to-know-about-what-is-covered-eligibility- more/articleshow/86449512.cms?from=mdr> accessed on 2 October 2021
  7. J Anita, Emerging Health Insurance in India- An overview
    actuariesindia.org/downloads/gcadata/10thGCA/Emerging%20Health%20Insurance%20in%20Indi a-An%20overview_J%20Anitha.pdf> accessed on 2 October 2021
  8. Rajeev Ahuja, �Health Insurance for the Poor in India' (2004) 123 Indian Council for Research on International Economic Relations
  9. Vaidyanathan Ramani, Important IRDAI regulations that changed the face of health insurance industry in 2020 < https://indianexpress.com/article/business/important-irdai-regulations-that-changed-the-face-of-health- insurance-industry-in-2020-7118541/> accessed on 2 October 2021
  10. Guidelines on Standardization of General Terms and Clauses in Health Insurance Policy Contracts < https://www.irdai.gov.in/ADMINCMS/cms/whatsNew_Layout.aspx?page=PageNo4157&flag=1.> accessed on 2 October 2021.
Written By:
  1. Aayush Akar - Students of National Law University Odisha
  2. Aarushi Prabhakar - Students of National Law University Odisha
  3. Nazish Prabhakar - Students of National Law University Odisha

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