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Health Insurance Policy In India

​​Over the last 50 years India has achieved a lot in terms of health improvement. But with respect to health indicators, India is still way behind many developing countries like China, Vietnam and Sri Lanka. In case of government funded health care system, the quality and access of services has always remained major concern.

A very rapidly growing private health market has also developed in India. This private sector bridges most of the gaps between what government offers and what people need. However, with explosion of various health care technologies and general price rise, the cost of medical care has also become very expensive and unaffordable to large segment of population. The government and people have started exploring various health financing options to manage increasing cost of care and changing pattern of diseases.

As per the statistics, out of the total health expenditure in India of Rs 3 lakh crore, the spending on hospitalization accounts for Rs 1 lakh crore in the country. Against this, the existing level of health insurance​ premium was worth Rs 6,000 crore only. Which means that a majority section of the Indian population does not have an insurance cover. Thus, there is a great opportunity to be tapped.

This is with respect to both volumes and profitability, therefore, the scope for expansion is vast. A better approach may be to look at specific functions where demand can be met or stimulated, like targeting the chief wage earners and more importantly, moving to rural India. The main thrust of a new insurer’s strategy should be to stimulate demand in areas that are currently not served at all.

If insurers are to take advantage of India’s large population and reach a profitable mass of customers, new distribution avenues and alliances will be imperative. This is also true for the nationalized corporations, which must find fresh avenues to reach existing and perspective customers. There would be substantial shifts in the distribution of health insurance in India.

Article by Manish Dara