The Impact of Health Insurance in Low and Middle Income Families!

India is still a developing country and doesn’t boast of world-class medical infrastructure to take care of every medical need of its citizens. The public medical service sector comprising of government hospitals, community health centers, etc. are present in adequate numbers, but without the desired infrastructure in terms of latest equipments or trained staff. The onus thus falls on private health care and their cost of operations makes them prohibitively expensive from a common man’s point of view. Without having enough of a health insurance, getting treatment at a private facility is almost impossible.

Going by figures, less than one-fifth of India’s population or only about 21.6 crore people are covered under any health plan. Out of those covered, nearly 70% have got coverage offered by various government schemes. With such poor penetration of insurance products, it is no surprise that nearly 63 million people are pushed towards poverty every year. Most citizens are compelled to pay out of pocket (OOP) when it comes to availing medical care.

The reason is expensive medical treatment as non-communicable diseases have become almost 60% of the total illnesses portfolio. For example, an average cost of a normal childbirth in a decent hospital in Mumbai is Rs. 40,000/-. Similarly, the average cost of angioplasty in Delhi is approximately Rs. 2.5 lakhs. These are average prices and if we consider medical inflation, it is growing at an average rate of 12-14% per annum.How is a poor person expected to meet these heavy costs without an insurance plan?

For any health calamity, the patient’ family has to arrange funds on their own, whether from their savings, borrowings or by selling their assets. Only if they are made aware of cashless health insurance along with other health plans can a better quality of life be expected of them.

No doubt the government is making efforts. The overall government spending on citizens’ health has gone up to 30% of total health expenditure and OOP has come down to 58%, but it is still high compared to global practices. However, the public sector contribution to health care is only 1% of GDP rather than going up substantially to cater to a growing population.

This is the reason the government’s sponsored health insurance schemes are slowly gaining ground. The most prominent one is the Rashtriya Swasthya Bima Yojna (RSBY), which is an inpatient health plan for the poor. Under this policy, the poor can get coverage for up to 5 members of the family for 700 medical tests and treatments at pre-fixed prices. The limit for total inpatient treatment is fixed at Rs. 30,000/-.

The most important thing to be considered is that having a health plan can help the low income and middle income families tremendously. With family health insurance, one can live off peacefully without having to worry about medical expenses in times of emergencies. As the insurance sector tries to increase penetration in the hinterland of the country supported by efforts by various NGOs as well as awareness programmes being run by the government, there is still hope. It is expected that ordinary citizens from the lower strata of the society won’t have to sell or mortgage their assets to get medical care.

Not only a health policy covers hospitalization expenses, but it also provides for pre and post hospitalisation cover along with lump sum benefits in case of critical illnesses. Especially with cashless health insurance, one can get the medical treatment started immediately without having to worry about arranging cash for advance payments.

For low and middle-income families of India, health plan is a must. Whether one goes for individual health coverage or family health insurance depends on an individual’s needs. Here’s hoping that awareness makes people invest in health plans to secure their future rather than just save taxes!

Harjot Singh Narula

Harjot Narula is founder and CEO of ComparePolicy.com, an IRDAI approved insurance web aggregator focussed on selling online insurance for companies. Harjot has more than a decade of experience in software development and has also spent 5 years in US working for the mortgage and risk management industry.

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