Healthcare, in this fast-changing dynamic economy of India, stands as a paradox: marked by impressive advancements, yet fraught with significant financial risks for the average citizen. In fact, as Nithin Kamath, co-founder of Zerodha pointed out, the fact is that most Indians are just “one hospitalisation away from bankruptcy.” This points to the critical importance that people must attach to getting comprehensive health insurance in a country where medical costs have rocketed and where safety nets remain at best tenuous. And doctors are not an exception. Corporate hospital do not differentiate between a doctor and a common, when it comes to billing.
Healthcare’s Growing Cost India has medical inflation as one of the highest on a basis of 14% across Asia. It is this unexpected rise in the medical costs that have put a colossal strain on individuals with limited insurance cover. It is estimated that 71% of the Indian workforce pays out of pocket for healthcare and only 15% are supported by their employers through health insurance, according to a “Health Report of Corporate India 2023” by insurtech company Plum. It is these very gaps which show the precariously placed majority of Indians—where a single case of medical emergency could dry up life savings.
The Importance of Full Health Insurance The personal experience of Nithin Kamath is a good example that health crises can be very unpredictable and without proper insurance, it may as well be the cause of financial devastation. Kamath suffered a stroke back in February and attributed factors such as not having enough sleep and overwork, combined with the stress from his father’s passing, as a possible cause of his health scare. His ordeal highlights just how strong a health insurance plan can be in shielding individuals from the financial fallout of unexpected medical emergencies.
Kamath supports the idea that Indians should have a proven track record of an insurer for at least five to ten years, together with a claim settlement ratio that falls between 80 to 90%. In other words, the higher the claim settlement ratio, the more chances the insurer is reliable. Also, Kamath advises that one chooses a provider that has a network of hospitals between 5,000-8,000 in number and an incurred claim ratio (ICR) in the range of 55-75%, because this will ensure the provider is not merely settling claims but also financially sound.
Challenges of Indian Health Insurance Sector Although health insurance is available, people from India are unable to cope with the complexities and inefficiencies built into the claims process. In a survey of 39,000 participants in 302 districts by Local Circles, 43% reported facing problems at the time of claim settlements. The most common factors are a lack of full information regarding policy exclusions, ambiguity created by technical jargon, and pre-existing conditions that lead to the rejection of claims. This weakens trust in the insurance system, leaving most people underinsured or completely without insurance, further worsened by the financial risks associated with health.
Socioeconomic Implications of Inadequate Insurance The financial risks of treatment in medical care are humongous and have deep socioeconomic implications for the country. The costs of care in India lead to indebtedness and financial ruin for a large number of people, as the majority of the population depends on out-of-pocket expenditures for care. This is compounded by the fact that there is no widespread system of health insurance provided by employers; in this scenario, the lower and middle-income families are hit the hardest since they would not have built up the necessary savings to cushion themselves in case of an emergency.
Moreover, not having comprehensive insurance can impact the quality of care one might access. People with no insurance or cheap-quality policies may delay treatment, seek out cheap but low-quality care, or even forgo treatment because it is too expensive. The actions and behaviors could result in worse health outcomes and higher long-term costs for the individual and the health system.
Strategies for Financial Protection and Policy Reforms This is the point that one should be taking a comprehensive health insurance policy to save one from such eventualities. A good health insurance policy should cover not just the in-patient expenses should one get hospitalised, but it should take care of the outpatient benefits, critical illness, and wellness. Employers also have a crucial role here. Companies that extend the right kind of health insurance benefits can save their employees from the financial jolt caused by a medical emergency and at the same time help in ensuring a better, more efficient workforce.
There is an urgent need to strengthen the health insurance regulatory regime for the government and policymakers. That is to encompass stricter enforcement in terms of openness and visibility of the clauses in the policy, easier claims besides binding the insurers to give comprehensive coverage appropriate for all citizens irrespective of their health or wealth.
How to Choose a Health Insurance Plan In view of these challenges, Nithin Kamath provides some practical tips on how one could go about selecting a health insurance plan. He does it through a detailed guide, stressing the following three major steps so that individuals make a choice for the best possible coverage:
- Selecting an Insurer:
- Track Record: Opt for insurers with more than a decade’s experience for credibility. Those with five to ten years are okay, but anything under five years should be avoided.
- Network of Hospitals: An ideal insurer will have a network of over 8,000 hospitals; decent will be with numbers between 5,000 and 8,000; anything less than 5,000 should be avoided.
- 3-year Avg CSR (Claim Settlement Ratio): Anything above 90% is good, between 80-90% it’s okay, but below 80% do avoid.
- 3-year Average ICR (Incurred Claim Ratio): An ideal range is between 55% and 75%, meaning a good balance between paid claims and financial stability.
- 3-year Avg Volume of Complaints: The lesser the volume of complaints, the better. A low volume indicates better customer satisfaction.
- Essential Features:
- No Co-Pay: Avoid plans that offer a co-pay, as this can prove expensive over the course of a policy in the way of out-of-pocket.
- No Room-Rent Limit: A room plan with no room-rent limits is better since otherwise, you may have to bear a large expense when your room rent goes above the restricted level.
- No Sub-limits on Disease-wise Basis: Avoid buying plans with sub-limits for capping the cover for a particular disease, as it may result in paying a large amount from your pocket.
- Low PED (Pre-Existing Disease) Waiting Periods: Plans with shorter waiting periods for pre-existing conditions are better.
- Pre & Post-Hospitalization Care: Choose the plans that cover at least 30 days prior to hospitalization and 60 days after hospitalization, as these expenses can be quite high.
- Restoration Benefit: This is an option in which the sum insured gets topped up again after a claim, and it is mostly in family covers.
- Daycare Treatments: Look for plans that cover daycare treatments that are less than 24 hours, which can still be expensive.
- Good-to-Have Features:
- Domiciliary (at-home admission) Cover: This includes treatment at home when hospitalization is not possible.
- Free Annual Health Checkups: Regular health check-ups may help to detect health problems at the early stages.
- Alternative Treatments Cover: Cover for treatments such as Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy would be a benefit.
- Loyalty Bonus & Wellness Discounts: This is designed to encourage cost savings and health behavior establishment.
Final Words
The warning by Nithin Kamath is going to be an eye-opener for millions of Indians. In a country where healthcare costs are rising rapidly, and insurance coverage is negligible, the financial risks associated with hospitalisation can hardly be overstated. Most Indians need comprehensive health insurance, not just because they want it but to protect their financial futures. As medical inflation continues to go through the roof, the need to buy the right insurance plan—one with a fabulous claim settlement history, a wider network of hospitals, and clearer terms—keeps increasing. Adequate insurance coverage and changes in policy, which are most needed in this segment, can make India head toward a future where health care will be accessible and affordable, and most importantly, it will not jeopardise the financial stability of the people. But if these reforms do not come through, then it will continue to be a sorry state of affairs that most Indians are just one hospitalisation away from bankruptcy, which hits the lives of millions of families across the country.
Dr. Prahlada N.B
MBBS (JJMMC), MS (PGIMER, Chandigarh).
MBA (BITS, Pilani), MHA,
Executive Programme in Strategic Management (IIM, Lucknow)
Senior Management Programme in Healthcare Management (IIM, Kozhikode)
Postgraduate Certificate in Technology Leadership and Innovation (MIT, USA)
Advanced Certificate in AI for Digital Health and Imaging Program (IISc, Bengaluru).
Senior Professor, and former Head,
Department of ENT-Head & Neck Surgery, Skull Base Surgery, Cochlear Implant Surgery.
Basaveshwara Medical College & Hospital, Chitradurga, Karnataka, India.
My Vision: I don’t want to be a genius. I want to be a person with a bundle of experience.
My mission: Help others achieve their life’s objectives in my presence or absence!
My Values: Creating value for others.
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Prahlada Sir,
Very rightly emphasised by you, the dire need for having health insurance by one and all, including doctors, because…..
"Health insurance is like a sturdy umbrella that shields us from the torrential rains of unexpected medical emergencies. Just as an umbrella protects us from getting drenched, health insurance safeguards our finances from getting drained due to sudden medical expenses.
Imagine a robust tree that withstands fierce storms, bending but never breaking. That's what health insurance does – it helps us weather the storms of medical uncertainty, providing a safety net that catches us when we fall.
In India, where medical costs are rising like a runaway train, health insurance is the brakes that prevent financial derailment. Without it, a single medical emergency can push a family into financial ruin, like a fragile leaf crushed by a speeding locomotive.
Having health insurance is like wearing a seatbelt while driving – it's a precaution that ensures our safety and well-being, even when unexpected twists and turns come our way. It's a wise investment that yields peace of mind, like a steady stream that quenches our thirst for financial security.
In a country where medical expenses can be a devastating earthquake, health insurance is the earthquake-resistant building that stands firm, protecting our hard-earned savings from the tremors of unexpected medical bills."
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