Health is a fundamental right covered under Article 21 of The Indian
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.
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.
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
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
- Kinds of Medical Insurance Policies:
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.
- Policies that provide indemnification benefits. Indemnity contracts only
reimburse the actual cost of harm.
- Policies that provide fixed medical benefits.
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.
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.
- 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
- 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.
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
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
- 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
Central Government Employees and Pensioners Health Insurance 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.
- 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."
- 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.
- 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
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
Following are the key developments made in the health insurance industry in the
- 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.
- Changes in the Health Insurance Sector as a Result of the Covid-19
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.
- 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.
- 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.
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
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
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.
- The Insurance Act 1938 , s 2(6C).
- Dr. Rana Rohit Singh and Abhishek Singh,�A study of Health Insurance in
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- Aayush Akar - Students of National Law University Odisha
- Aarushi Prabhakar - Students of National Law University Odisha
- Nazish Prabhakar - Students of National Law University Odisha