Why the medical insurance for poor is anti-poor?

I have Rs.500,000 medical insurance coverage for my family of three for nearly 8 years now. The last renewal cost me 14K. Fortunately, or shall I say unfortunately, I’ve never availed any benefit from the policy. For three reasons:

  1. None of us have faced a serious health issues (Thank God!)
  2. Doctors’ consultancy, diagnostic tests, and other medical requirements like the ones related to teeth and eyes, are not covered by insurance.
  3. Doctors prescribe, and we pay for medicines; insurance company doesn’t reimburse the cost of medicines.

Excluding the insurance premium, I spend an average of 35-40K a year to meet my family’s medical needs – a small price for being generally healthy!

Let’s say, for a moment, someone in my family was hospitalized. Insurance cover will definitely help mitigate much of the expenses I’d incur. But only to an extent. For instance, insurance policy has set limits to all the following expenses in case of hospitalization:

  • Hospital room, board and nursing expenses
  • ICU charges
  • Surgeon, Anesthetist, Medical Practitioner, Consultant and Specialist fee
  • Medicine, oxygen, Anesthesia, Operation theatre, surgical appliances, diagnostic materials, X-ray, Chemotherapy, Radiotherapy, Cost of pace-maker, artificial limbs, etc.
  • Expenses relating to operation
  • Hospitalization of less than 24 hours
  • Post hospitalization expenses
  • Of course, most serious or chronic ailments are not covered by insurance for 2 to 5 years.

I know of scores of cases where a substantial sum had to be borne by the insured, despite having a medical insurance cover.

Also, cashless settlement is available in a limited number of hospitals, and claiming insurance reimbursement from insurance company is an arduous task. Sometime back, my colleague ran a hospitalization expense of Rs.125,000 for his son’s treatment. Of this, he had to bear 25K from his won pocket as it was part of exclusions. More agonizing was recovering the balance sum from insurance company – took him over three months, entailed number of nasty interactions with TPA; and he finally managed to get it out after issuing some serious threats.

A few years ago, my company handled a unique program for a tractor brand, where every buyer was offered a free personal accident insurance of Rs.500,000 to 1,500,000, depending on the model of tractor he bought. The response was terrific. But logistics – administration, filling of forms and their collection, printing and delivery of policy and customer support to educate –  cost as much as the policy premium. Yet, the tractor brand continued with the scheme. But the insurance company withdraw it! They found the claims far exceeded the premium collected collectively from all the assured persons. As claims were delayed, the brand also received poor publicity, leading to discontinuation of the scheme.  (By the way, the insurance cover was provided by leading government company.)

Offering medical insurance cover to the poorest to save them the misery of hospitalization expenses is an impractical idea, and will prove counter-productive. For three reasons:

  1. When the affected discover the list of exclusions and are asked to shell out additional money to meet the expenses, they’ll feel cheated, tragically realizing ‘all that glitters is not gold’.
  2. A vast number of poor visit hospitals for problems that require no hospitalization, only diagnostics tests, consultation and medicines, or what is generally called primary healthcare needs; none of these are covered under medical insurance. They spend a lot of money travelling to hospitals miles away, losing both money in hand and potential wages, plus fighting off disruption at home. The real solution is equivalent of neighborhood Mohalla Clinics’ launched recently in Delhi – small, modern clinics equipped to offer quality primary health care facilities, including diagnostic tests and free medicines. Slow to take-off, there are already 150 of them functional, having provided consultation to over 3 million patients already. Each clinic is consulting a hundred patents a day. Reviews are positive. But still great distance away from targeted 1000. (Click to watch this film by NDTV on Mohalla clinics)
  3. The scheme is unlikely to offer the poor any succor. Disenchanted, they will curse the government. Once committed, the government may find it difficult to go back on its word lest it faces embarrassment. Tax-payers precious money will simply go down the drain. Or should I say, only go on to enrich the hospitals, and to prop the balance sheets of insurance companies (perhaps not even that as cost of servicing such a scheme could be beyond their capacity – none, including the government insurance companies, have dealt much with the blue-collared workers).

We have lose-lose situation for key stakehlders. I’ve yet to factor the ingenious Indian minds who’ll be hard at work to figure how to ‘game it’. At the moment government think-tank is in a huddle to figure the program details.

Ideally, the government should junk it right away, and offer to replace it with a more workable healthcare plan. Unless, the government has other ideas. Like, this one: Use medical insurance as a pro-poor election stunt, with no intention of launching it in a hurry. Instead, announce early elections. If they win the next term, they get 5-year reprieve, and can do what they want at their pace and time. If they lose, they can sit in the opposition benches and harangue the new government for delay in launching it!

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