Govt planning measures to curb health insurance premium, arbitrary fees

Kolkata: The runaway cost of medical treatment is one of the biggest sources of financial insecurity that continues to torment the modern individual. The government is trying to curb the expenditure and one of the recent steps that it undertook was to abolish GST from the premiums that common people have to pay for life and health insurance policies. But clearly more needs to be done and the Centre is trying to work out ways on measures to curb the rapid increase in health insurance premiums.

To provide some relief to the common individual, the Centre is holding a series of discussions with stakeholders such as regulator IRDAI, hospital groups and insurance companies. The steps that are being discussed include premium caps, commission controls and digital claims processes. A few significant suggestions have been sent to the insurance regulator but a final decision is pending.

According to a recent report, medical inflation in India is set to touch 11.5% by the year 2026. It is much higher compared to the global average of 9.8%. This is one of the key reasons why health insurance premiums are constantly marching north. The Centre believes that this quick rise in medical inflation is having an adverse impact on health insurance. The cost of hospital treatment is adding to the cost of treatment and is padding up the claims of patient parties on insurance companies. The Centre wants hospitals and insurance companies to maintain transparency in billing as well as device steps to control costs.

According to reports, one of the steps the government is considering is imposition of a cap on health insurance premiums. The idea: insurance companies should be restrained from raising them arbitrarily. There has been a spurt in the premiums of premiums for policies of senior citizens. IRDAI, too, is concerned with it.

Experts also point out that one of the key reasons for rising cost of health insurance is the rising commission for agents. According to the current practice, as much as 20% of the new policies and 10% on renewals can comprise the cost of insurance. If standalone health insurance companies are considered, management costs can comprise up to 35% of premium amount. Both the government and the regulator want to tightening this system to curb costs for the policyholder.

As has been the common experience of many and as the regulator has found out in many cases, insurance companies pay less compensation than expected. The government is reportedly planning to integrate all claims onto a digital platform, which can accelerate the process of claim settlement faster and more transparent through the National Health Claims Exchange. Needless to say, it will also reduce customer dissatisfaction.

There are also instances of disputes between hospital managements and insurance companies. Hospitals claim that their margins are very low but medical technology and resources are quickly becoming more and more expensive. On the other side of the fence, insurance companies accuse hospitals of overcharging and overbilling, which directly raises the burden of claims on the insurer. The government wants both to sit down and work out a solution which offers a fair deal to the policyholder.