Beyond Ayushman Bharat: Indian middle class needs to be aware of health insurance

Only 34 per cent of India’s population were covered under any health insurance


An overburdened and under-financed public health care system, high cost of private health care and high reliance on out-of-pocket expenditure makes health care inadequately accessible to a majority of Indians. This doesn’t just include people living below the poverty line but also a large number of middle-class Indians for whom affording quality treatment for ailments such as heart disease or different types of cancers can be difficult. Some families end up losing their life savings in a bid to save a loved one from a dangerous disease; others end up in the debt trap.

According to the National Health Profile 2018, around 43 crore individuals or only 34 per cent of India’s population were covered under any health insurance in 2016-17. This included private individual or group insurance schemes as well as existing state government insurance schemes. The government’s flagship health insurance scheme Ayushman Bharat served as a highly positive movement in the direction of reducing the healthcare access gap by proposing to bring 10 crore households under a hospitalisation cover of Rs 5 lakh.

According to a report by CRISIL, the scheme will improve health insurance penetration to over 50 per cent from 34 per cent at present. However, this still leaves a large Indian middle class bereft of any health insurance coverage.

A number of factors inhibit the growth of private insurance among the Indian masses—relatively high cost of insurance, lack of awareness, paucity of innovative packages as well as absence of OPD coverage—are among the chief factors. Resultantly, out-of-pocket expenditure accounts for 57 per cent of the total expenditure on health in India. In contrast, this figure is as low as 7.18 in South Africa, 11.1 in the US and 13.7 in the EU. Closer home, in China out of pocket expenditure accounts for 34 per cent of total expenditure on health. Even among emerging economies, India is one of the least insured countries.

While India has pitifully failed to build a public health system that can provide quality health care services to all, it is imperative now to take measures to radically increase insurance penetration across the country to realise the goal of universal health care.

Rising incidence of non-communicable diseases

One of the most noticeable health care trends of this century has been a shift in the incidence of diseases from predominantly communicable to lifestyle ailments and chronic non-communicable diseases. Cardiovascular diseases (CVDs) have now become the leading cause of mortality in India with a quarter of all mortality attributable to CVD. The past 25 years have seen monumental growth of heart-related ailments with a study published in medical journal Lancet estimating that almost double the numbers of Indians are dying from heart disease today as compared to 1990. Incidence of various types of cancers has also gone up in recent years with environmental pollution, obesity, unhealthy lifestyles and rising life expectancy believed to be contributing to this surge.

Rising incidence of lifestyle diseases also imply rising cost of treatments. Unsupported by an insurance provider, this expenditure can claim your entire life savings or push you into debt. A study by the Public Health Foundation of India (PHFI) found that out-of-pocket health expenses drove 55 million Indians into poverty in 2017, and, of these, 38 million (69 per cent) were impoverished by expenditure on medicines alone.

Raising awareness of health insurance

Health insurance penetration has grown in India in recent years. However, its pace has rather been slow. Even among the growing middle class, there is lack of awareness and understanding of the need to make this preventive investment in healthcare. Educating consumers and explaining the benefits of preventive care remains a significant challenge.

The rolling out of the ambitious Ayushman Bharat programme has helped generate a lot of discussion and debate on the subject of health insurance which is a good sign, particularly in rural areas where penetration of health insurance has been specifically low. It will help educate people about the benefits of having an insurance cover and how it can help the covered individual avail cashless treatment in hospitals across the country.

There is an emergent need for creating more awareness through campaigns and messages that seek to explain the utility of health insurance and uncomplicated it for the common man. Simplifying the concept of health insurance is key to fill the gap in awareness. The awareness campaigns have to come both from the government as well as the industry. The insurance industry must work proactively to spread the right knowledge about insurance and help the common masses understand the nuances and benefits of buying health insurance.

Introduce new packages with OPD expenses

One of the most glaring problems in health insurance packages in the market currently is the lack of provision of any kind of OPD coverage. It must be underlined here that a large part of medical expenses of people, especially those living with chronic diseases such as diabetes, hypertension, heart disease, among others, comes from OPD expenditure. Many people believe whether buying a health insurance package that covers a random future hospitalization need without giving any visible benefit in the present is futile. Indian consumers want value for their money; often if they are paying a premium for coverage they don’t use, they tend to drop it or not renew it.

High cost of insurance also remains a challenge in a country like India where insurance expenditure is still considered a luxury. Apart from adding OPD coverage, it is also important for insurance brands to devise approaches and innovative strategies that focusing on the section of people who can afford insurance.

Debajit Sensharma is the CFO of Paras Healthcare