Health savings account best way to promote OPD product: Mayank Bathwal, Aditya Birla Health Insurance
This can help reduce the out-of-pocket expenditure because more than 50% of the overall healthcare expenses are related to OPD, Mayank Bathwal CEO, Aditya Birla Health Insurance tells ET Wealth.While the ‘use and file’ regulation will make product launch faster, will it not dilute the product quality?
This point was strongly debated between the regulator and industry before the change was made. There are always pros and cons with any decision you make. The pro here is that it gives the opportunity to insurers to work faster, but the onus is also on them. The regulator has made it clear that the insurers must follow guidelines and meet policyholder protection norms. The regulator will review the products later and if these do not meet the norms or there are gaps, it can ask the insurers to stop sale. It will also impact their future ability to launch ‘use and file’ products. Not that we weren’t careful earlier, but now that we know there will be no review by the regulator before launching products, we will be extra careful. The accountability and responsibility rest entirely with the industry to make sure that we do the right thing with this wonderful opportunity.
What are the main reasons for high out-of-pocket expenditure (OOPE) and what are the ways to reduce it?
There are two reasons for out-of-pocket expenses. One, people don’t have insurance and, two, even if they have it, it does not cover all the healthcare expenses. So an effort needs to be made to get more consumers into the health insurance fold, whether it’s through retail, corporate or government. Moreover, insurance covers only hospitalisation, while more than 50% of the overall healthcare expenditure is related to OPD, incurred in doctor consultations, medicines and diagnostics.
So we will have to bring OPD into insurance. There is an effort on the part of the regulator and insurance companies to find ways to do so, and there are various global models to follow. The best way to promote an affordable, relevant and meaningful OPD product is through a health savings account, where you put aside a pool of money towards discretionary OPD expenditure. As an insurance company, we can offer the benefit of volume contracting, cashless experience, large network, capture the health data and analyse the risk data. So there is an opportunity here and we will have to do this because OPD is not a pure risk product. There are ongoing discussions and regulatory change is required for this, but I’m hopeful that the product will be out.
Why is healthcare inflation so high in India and how can it be curbed?
This is a sensitive issue because I’m not sure if the healthcare fraternity will want to accept that prices are not fair. As players, we do feel that there is a segment where the pricing is not fair, and during Covid, it misused the situation and jacked up the prices. The government has tried to regulate it and we, in turn, have taken steps to put a cap on pricing.
In healthcare, there is a social impact and you have to be prudent and fair. It’s an ongoing conversation, but because there’s no unified healthcare regulator, it’s difficult to regulate. Also, since insurance penetration is low, the overall negotiation power of the insurance industry is low. Ultimately, this will benefit the consumer because if you reduce the cost of healthcare delivery, it will reduce the premium. Even now, the average claim size is on the higher side and some of us have had to increase the prices. A constant dialogue and intervention by the government is the only way to do it, but it’s not an easy issue to address.
Senior citizens are invariably forced to make OOPE. Is there a way to address their problem?
For senior citizens, there are two issues to address. One, how can we create a product for senior citizens who have the ability to pay but want comprehensive insurance? This means not only hospitalisation, but chronic health conditions like diabetes too. How do you create a product for such existing conditions, not just for hospitalisation? We have attempted this in one of our products, which is only for senior citizens who can pay, but it has some affordable versions as well. Two, there are some segments of senior citizens who want lower priced products.
This can happen in 2-3 ways. First, get the young and healthy early into insurance so that the pool increases and automatically the price comes down. Second, we can reduce the GST for those above 65 years of age. If we lower the GST from 18%to 5%, the 13%premium cost will automatically go down for senior citizens. Third, perhaps the government can make it mandatory for healthcare providers and hospitals to reduce the prices of services for senior citizens. This is required in our country because insured or not insured, this segment with more health conditions needs affordability.
What is the intent behind Activ Fit launched by you recently?
India has the youngest population in the world, with 65% below the age of 35 years, but the bulk of population buying health insurance is above 35 years. Insurance is a business of volume, where one segment subsidises the other. So, if we want to make insurance inclusive and affordable for senior citizens, we have to get the young and healthy segment into insurance. Through our research, we found what would make insurance attractive for the younger population, and this is the context in which we have launched Activ Fit. It will not only provide coverage to the young who are below 35 years, but also potentially for our seniors.
With Activ Fit, if you are in good health, you get an instant, upfront premium discount of up to 10%, after health risk assessment and facial scan. From fourth year onwards, you get a 5% discount on premium and 10% from the seventh year, which will last a lifetime. You can also get up to 50% premium discount as HealthReturns if you stay healthy.
This story originally appeared on: India Times - Author:Tax Cognition
