Insurance regulator calls for standardising city hospital costs

NEW DELHI: Calling for standardisation of hospital healthcare costs within a city, the Indian insurance regulator on Monday suggested measures like introducing community group insurance products to bring down distribution costs and ensure companies are not burdened with fictitious claims.

Inaugurating a health insurance conference here organised by industry chamber Ficci, the Insurance Regulatory and Development Authority of India (IRDAI) Chairman T.S. Vijayan said that the aim of "responsibility and responsiveness" in delivering health insurance services should be added to the goal of achieving affordable health insurance in the country by 2025.

"The time is perhaps ripe to look at introducing community group insurance products to bring down distribution costs and determining the genuineness of health insurance claims," Vijayan said, while noting that the authenticity of claims by the insured could be verified through members of a community or group so that insurance companies were not "unnecessarily burdened with fictitious claims."

The IRDAI chief also underlined the need for standardisation of costs of healthcare from one hospital to another in a city. 

"This analysis could be done procedure-wise in a particular city to allow the insured to opt for a hospital of his choice," he said. 

Moreover, Vijayan emphasised the need to bring down out-of-pocket expenses of patients, currently estimated to be at 62 per cent of all healthcare costs. 

"This is extremely high and leads to impoverishment of the patients. In comparison, out of pocket hospital expenses in developed countries such as the US and UK are 20 per cent and in BRICS countries about 20-25 per cent," he said. 

Lauding the goal of achieving "inclusive, accessible and affordable health insurance by 2025", Vijayan said: "To this could be added another aim, that of responsibility and responsiveness in the delivery of health insurance service." 

In this connection, private player Apollo Munich Health Insurance has introduced a cover where part of the payment during the earlier years can be used to fund higher rates in future. Health insurance rates rise progressively with the age of the insured.

The advantage for the customer in paying a higher rate at present is that the premium is eligible for tax relief.

Under Apollo Munich's Health Wallet plan, a part of the premium goes toward reserve benefits, which can be used to fund health-related costs not covered by the insurance. The unused reserve amount gets carried forward every year and earns a 6 per cent bonus. 

This accumulated reserve can also be used to pay up to 50 per cent of the renewal premium, after five continuous renewals. 

The reserve funds can be used for out-of-pocket expenses such as purchase of medicines, vaccinations, dental expenses, diagnostic tests, spectacles, contact lenses, medical devices like blood pressure and sugar monitors, as well as for consultations with medical practitioners.