DOUSE THE FIRE. It had been months that I was not keeping well, RUNAWAY HEALTH COST INFLATION IS HERE TO STAY. HOW TO ADAPT TO THE NEW NORMAL

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1 DOUSE THE FIRE RUNAWAY HEALTH COST INFLATION IS HERE TO STAY. HOW TO ADAPT TO THE NEW NORMAL BY TEENA JAIN KAUSHAL It had been months that I was not keeping well, says New Delhi-based Mridula Gupta. It is only now that I understand why I had been losing weight and had increasingly frequent bouts of fatigue along with loss of appetite. Gupta tried to reason out that her failing health was due to stress. But deep down, she perhaps knew there was something more to it. In spite of that, she kept postponing a visit to the doctor. Her daughters were about to enter college and the family already had a home loan to service. So, she just didn t want to add another expense to the family budget. Gupta's deteriorating health, however, did not allow her to put off her visit to the doctor for long and, finally, she was diagnosed with cancer. Devastated, the Guptas were staring at the unknown. It was only the beginning of their emotional and financial crisis. The first few weeks left the family poorer by `2 lakh while she was still being diagnosed for cancer. Then, every session of chemotherapy eroded their savings further by `1 lakh each. The mounting medical bills left the Guptas grappling with their household budget and, at the same time, they were running-up debts. The Guptas, like a host of other Indian families, are the victims of rising healthcare costs across the country. A report by Ernst & Young, Universal Health Cover for India August 2012, says almost 80 per cent of urban and 90 per cent of rural households in India would have to spend almost half of their annual household expenditure to meet the average cost of in-patient treatment, resulting in a high degree of financial hardship. It is estimated that 3 per cent of India s population slips below poverty line each year because of healthcare expenses. Experts say, healthcare cost in India is growing at per cent every year twice as fast as the general price inflation. Moreover, the changing nature of diseases from infections to lifestyle ailments that could need repeated hospitalisation has started taking its toll on their finances. Consider this: the cost of treating hernia has gone up to `30,000 from `15,000 over the past few years, while hospitalisation costs after suffering a heart attack could cost you around `2 lakh-3 lakh. The reasons behind the sharp rise in healthcare costs are many technology is one of the primary reasons, as hospitals are investing more on equipment to keep pace with advanced treatment procedures. For instance, though the benefits of radiation therapy and CyberKnife, an advanced procedure, to treat cancer are the same, you would have to shell out around 7-8 times more for the latter. The other major area of concern is the scarcity of middle-level hospitals, which forces people to go to private hospitals and, therefore, pay hefty medical bills. According to the All India National Family Health Survey in 2004, 68 per cent of people do not use public facilities because they think that these hospitals deliver low quality care, while 47 per cent do not use the facilities because they are not located nearby. The third, and most disturbing fact, is that patients who are covered under a health cover are often forced to go through certain tests and procedures that are not needed, which, in turn, 22 OUTLOOK MONEY 20 FEBRUARY ANIL PANWAR 20 FEBRUARY 2013 OUTLOOK MONEY 23

2 THE SPREAD Select health insurance policies on the basis of your requirement INDIVIDUAL HEALTH PLANS Apollo Munich Bajaj Allianz General HDFC ERGO General** ICICI Lombard General Royal Sundaram PLAN NAME Optima Restore Health Guard Health Suraksha Complete Health Insurance Total Health Plus; Gold Plus; and Platinum Plus ENTRY AGE 91 days-65 years years 91 days COVER AMOUNT (` LAKH) unnecessarily increases the cost of treatment. Moreover, the healthcare business is going through a transition, where people prefer to go to a tertiary care facility instead of the neighbourhood nursing home. Though these centres have better diagnostic facilities, one has to shell out more for the services. According to statistics, the out-of-pocket expenditure in India, as a percentage of total healthcare expenditure, is currently around 70 per cent. However, rising healthcare costs is not the only menace. Following a consistent rise in medical bills, health insurance companies are also considering raising the cost of insurance products by around per cent. Insurers say that the current premium rates were fixed around five years ago based on the costs at that point in time and, therefore, an increase is imminent this year. This is more so because only a handful of insurers have made underwriting profits. According to the most recent annual report released by the Insurance Regulatory and Development Authority (IRDA), the underwriting losses of the four public sector companies rose by 66 per cent to `7,549 crore in The investment income of the insurers, however, jumped by 23 per cent to `7,842 crore during the same period. Moreover, public sector non-life insurers underwrote a premium of `25,151 crore in up by 21 per cent. COVER FOR PRE-EXISTING ILLNESSES CI* RIDER 3, 5, 10, 15 After 3 years No 1.5, 2, 3, 4, 5, 7.5, 10 2, 3, 4, 5, 7.5 & 10 6 years days- 65 years 3, 4.5, 6, 7.5, 10 After 4 years After 4 years After 2 or 4 years After 3 years No Yes Yes No ADDITIONAL FEATURES Bonus of 50% of the basic sum insured for every claim-free year accumulating up to 100% No restrictions on room rent, wellness centers, dental services Higher variants offer covers for maternity, dental care, contact lenses, spectacles, hearing aids Free health check up coupons or discount coupons. e-consultation with doctors, specialists An assured 10% increase in sum insured is available subject to a maximum of 5 slabs Automatic recharge of sum in- Care 91 days Religare Health 2-60 After 4 years No sured in case claims exhaust your Comprehensive onwards coverage at no extra cost Star Health and 5 months- Discounts ranging between 5% Medi Classic After 4 years No Allied 80 years and 25% for every claim-free year Tata AIG 2, 3, 4, 5, No sub-limits across MediPrime 91 days After 4 years No General 7.5, 10 hospitalisation benefits Expenses on ayurvedic, unani, and The New India Mediclaim 2-5 After 4 years No homeopathic treatment; Assurance years up to 25% of sum insured * CI: Critical Illness; ** The renewal age limit for HDFC ERGO's Health Suraksha is 75 years; For the rest, there is no age limit The performance of insurance companies has also a lot do with the mental make-up of Indians, who typically shy away from buying insurance when they are young and consider it only when they approach old age. Therefore, unless more young people start buying health covers, premiums are going to go up as well. Says Antony Jacob, chief executive officer of Apollo Munich Health Insurance Co.: Health insurance products are not different from any other product and service, which have inflation as the touching factor. So, to expect health insurance product pricing to not change from time to time is not right. It will definitely change to the extent inflation impacts the product, the industry or a company. So, how will we cope with rising medical bills, financially? DEALING WITH RISING HEALTHCARE COSTS According to the E&Y survey, per cent of reported ailments are estimated to remain untreated due to the hefty cost of treatment. And, you may be just a diagnosis away from a catastrophe. So, here we offer a few tips to avoid being trapped in the web of rising medical costs. Emergency fund. The fund for all emergencies must not be touched unless there is indeed an emergency-like situation. You must not lock the money in long-term instru- 24 OUTLOOK MONEY 20 FEBRUARY

3 ments, but keep it in savings accounts or invest in liquid funds. But, remember that they are not high-return investments, so do not stash more than you really require. LADDER-UP YOUR COVER Individual health plans (IHP). We always recommend you buy an individual health insurance policy as the first level of protection that reimburses hospitalisation costs. Family floaters (FF). For those with families, you must opt for family floater policies, where the benefits remain largely the same as in individual plans, but the sum insured can be utilised by any or all the members of your family covered under the policy. The premium is also lower than individual plans. To get a floater policy an individual becomes the proposer and buys it along with his or her spouse, dependent children and parents. Critical illness plans (CI). These are benefit plans, i.e., they pay the entire sum insured (instead of reimbursing the cost of medical treatment) once the policy is triggered off. It can be bought either as a separate policy or as a rider attached to your life or health insurance policy. This is not a substitute for a mediclaim policy, but adds a layer to your health protection. Ideally, you should buy in your 40s to fight those old age diseases. Daily hospitalisation plans. These are benefit plans that reimburse medical expenses on a daily basis, up to a predefined limit. They meet hospital expenses that are not covered by IHP, FF or CI plans. It should be the last level of protection in your insurance portfolio. THE ROAD AHEAD Among the many changes the insurance industry is likely to witness in 2013 is the transformation of health insurance products. Says Mukesh Kumar, head, strategy planning, HR and marketing, HDFC ERGO: Insurance companies are now focusing on customer-friendly products. With the implementation of the proposed health insurance guidelines, policyholders can expect customer-oriented and simple health products which will benefit and suffice to cover their and their family's medical needs. There will be long-awaited changes as the health insurance industry lags behind on many parameters. There are no standard definitions of key terms, which makes it even difficult for a policyholder to decode each and every policy before buying. To pick and choose the best plan for yourself, you would have to sift through a host of products before taking a call because you might not get the lifelong renewability option with all products or there might be a cap on the covers. But, now things seem to be looking up and here's how your health policy is expected to get better this year: Entry and exit age. Many health-related problems generally start cropping up in the late 50s. But, unfortunately, this is the time when many insurers stop offering you a cover. Acting on the deluge of complaints by policyholders, the Insurance Regulatory and Development Authority The plan must offer lifelong renewal option and cover you in old age (IRDA) has come out with a draft health guideline stating all insurers should increase entry age to at least 65 years with no exit age for such policies. Impact. This will be a big step forward because, currently, many people are denied cover during their old age. Says Jacob: I like the standardisation and definitions, among other things, but one of the things which I didn t appreciate is the proposal to offer life covers with critical illness plans. Today, the product is reasonably well priced and there is good offtake in the younger generation and online plans seem to be picking speed. But if you have a lifelong cover, insurers will have to price the entire range of products because the severity and the frequency of critical illnesses above a certain age keeps going higher and higher. As a result, the people who are clean and clear (healthy) will drop off and it would only be those with some issues who would continue with the policy. Standard definitions. One of the most common reasons for insurance-related disputes is that the policyholders do not fully understand their policy. To resolve the issue of differences in definitions of key policy terms, IRDA has recently come out with another exposure draft on standardisation in health insurance policies (for both life and general insurers). In the 132-page report, the regulator has defined 46 terms that are commonly used in health insurance, ranging from deductibles to day care treatment. Exclusions of certain illnesses in the policy is yet another common reason for rejection of claims. To address the issue, IRDA has proposed standard definitions of 203 excluded items, such as dental care and vaccination, among others. Impact. The selection of a health insurance policy would become easier once the policy structure, key terms and, in THINGS TO WATCH OUT FOR Preexisting illnesses are generally covered after 48 months. For some ailments, waiting period can be shorter Read exclusions carefully, so that you know what is covered and what is not Find out the basic conditions that need to be fulfilled before making a claim, including 24-hours hospitalisation, timeline for claim intimation Decide on cover amount after considering rising medical inflation and, accordingly, go for it Read the policy document with care to find out about sub-limits or co-payments to avoid hassles Graphics: ANIL PANWAR particular, the exclusions are standardised. Says Bhargav Dasgupta, managing director and CEO, ICICI Lombard General Insurance Co.: The new set of draft guidelines, once it goes through, is pathbreaking and very positive in every sense of the term. It is not something that the IRDA is kind of pushing down our throat. All the actual terms have been debated and discussed with most of the companies in the industry and comments have already been taken. Fundamentally, it will help in terms of bringing transparency and better understanding of terms and, in the long term, that can only benefit customers. Claims. To streamline the claim process, standard preauthorisation and digitised claim forms have been proposed by the IRDA. The draft says: By implementing the claim form in an optical character recognition format, the ability to transfer data from a handwritten paper-based form to IT systems has been enhanced, thus, reducing the data entry issues for both TPAs (third-party administrators) and insurers. The regulator has also proposed that insurers may stipulate a time limit, but in case of not submitting claim documents on time, insurers should not repudiate such claims unless the reasons of the delay are categorically enquired about. Impact. Pre-authorisation forms will enhance the ability of insurance providers to obtain a timely prior authorisation. Says Joydeep Kumar Roy, CEO and wholetime director, L&T General Insurance Co.: The guidelines talk of third party administrators not having the authority to either sanction or deny a claim and claims, solely, and have to be authorised by the insurer. If this is to be implemented, the TPA will actually be of no use because the benefit of outsourcing, i.e., to take call on the claims, is gone for the Up next x : The Roundtable pg 28 insurance company. The only piece of processing which would make it economically feasible for the insurance company, today, is claim authorisation. If it goes, I don t think TPAs will remain viable anymore. Renewability. The IRDA draft also states that a health insurance policy has to be renewed and should not be denied arbitrarily by the insurer under any circumstances. And, if denied, the insurer shall provide the policyholder with reasons for not renewing the health insurance policy. However, IRDA also said that in cases of fraud, moral hazards or misrepresentation, the policies may be terminated. Impact. The renewal of policies will offer the much-needed protection even during old-age to policyholders. WHAT TO DO? The rising cost of medical care is increasingly becoming a serious issue in India. We advise you to periodically review your health coverage and adjust it in tune with your changing needs. Buying supplementary covers, such as a critical illness policy, could also help you in matching up with the escalating bills. You must also be careful while picking a health policy. Buying a wrong policy is as good as not having any. Though the impending health insurance guidelines promise better products for the Indian consumer this year, you still need to watch out for the following before buying a policy. Limited coverage. Buying a policy is not enough as you also require to understand the illnesses that your policy covers. It is equally important to know what is not covered under your policy. You must also take special care to decode the various terms and jargons used in the policy. Each health insurance policy has its own set of exclusions and waiting periods. Do read them up before buying a policy. Restricted renewability. Opt for policies that offer lifetime renewability so that you can take care of all your problems during your sunset years. Underinsured. Buying a health policy is not enough. You need to buy the policy keeping medical inflation in mind. You must accordingly go for a larger health cover. Incorrect medical declaration. Policyholders tend to hide their pre-existing illnesses out of fear that the insurance company might either deny them a policy or will charge them a higher premium amount. But it is important for a policyholder to be upfront with the insurance company about his or her medical conditions. Policy conditions. Read the policy documents carefully to know in advance the hidden clauses, such as sub-limits, deductibles and co-payments. Gupta has now recovered. The insurance policy that her husband had bought helped meet her medical bills, but only a part of it. For the remaining amount they had to liquidate fixed deposits and other investments. It s true that you can't fight with destiny, but at least you could prepare in advance to deal with some of life s uncertainties. teena.j@outlookindia.com 26 OUTLOOK MONEY 20 FEBRUARY FEBRUARY 2013 OUTLOOK MONEY 27

4 THE HEALTH INSURANCE ROUNDTABLE 2013 HEALTH COST RISE INEVITABLE Why are healthcare costs shooting up by per cent a year and why do you need to be prepared? Last fortnight, Outlook Money brought together seven CEOs from health and life insurance companies, Antony Jacob, Bhargav Dasgupta, Anuj Gulati, T.R. Ramachandran, Amarnath Ananthanarayanan, Joydeep Kumar Roy, P. Nandagopal, and expert Monish Shah in a roundtable moderated by Outlook Money s Teena Jain Kaushal to look for answers. Excerpts. x OUTLOOK MONEY Why are healthcare costs and health insurance premiums rising so rapidly? Will they keep rising in the future? x ANTONY JACOB It is a fact that medical bills or medical inflation is running faster than general inflation. But it is very difficult to put a number in terms of what it s running at. Now, is this a problem? I think it is an issue which needs to be addressed and we, as stakeholders, do have to play an active part. Are we doing something about it? Yes. I can speak for myself as a company, we track it very closely. We try and beat the medical inflation number and we see the trend in our own medical cost. So far we have done well. On the group (policy) side, we do a lot of wellness- and preventive-related processes. We work with providers around the country, try and negotiate better rates. We do certain things at our end to see how we can actually reduce the average claim cost. So far, it has been a good experience working with the providers and doing things which we have full control of as an insurance company. And because of that we are able to see that the healthcare cost which we finance through our insurance products are running at lower than medical inflation cost of the country. AMARNATH ANANTHANARAYANAN CEO & MD, Bharti AXA General Insurance Demand far exceeds supply. You have development at the very high end, with speciality hospitals and at the lower end, with nothing in the middle x BHARGAV DASGUPTA Let me come back to the underlying point about inflation of health insurance premium. I see that there are three or four key factors. One is the underlying increase in healthcare cost. While there is no clear number, but the estimates range between 13 per cent and 15 per cent, which is higher than the (wholesale price index) inflation in general. The other factor is generic inflation. The third deals with technological developments in medicine. So, if you look at just a typical cancer treatment there are certain procedures, let s say radiation vis-a-vis more modern treatment like CyberKnife, whose costs are 7-8 times more. But equally, the efficacy and the outcomes are much better. That, in a sense is beneficial for the patient. That aspect is something that we are quite happy to see. The other reason we find (high) health insurance inflation is some of the unfortunate hospital malpractices. If you go to a hospital for a treatment, the first question that you are asked is: Do you have any insurance? And if you do have insurance, the treatment protocol seems to change. There is unnecessary treatment and overutilisation of some of the tests, which unnecessarily increases the cost. Speaking for ourselves, we also have our own internal systems where we manage costs. We don t depend on third-party administrators. And our experience is similar in terms of our claims inflation being lower than that of the industry. We believe that it is an important service to consumers. I think it is important for the insurance industry and the hospital industry to come together to find solutions to reduce healthcare inflation because, at the end of the day, if this keeps going up, consumers will suffer. Clockwise (from left): Amarnath Ananthanarayanan, CEO & MD, Bharti AXA General Insurance; T.R. Ramachandran, CEO & MD, Aviva Life Insurance Co. India; Joydeep Kumar Roy, CEO & Wholetime Director, L&T General Insurance Co.; P. Nandagopal, MD & CEO, IndiaFirst Life Insurance; Teena Jain Kaushal, Special Correspondent, Outlook Money, Antony Jacob, CEO, Apollo Munich Health Insurance Co.; Bhargav Dasgupta, MD & CEO, ICICI Lombard General Insurance Co.; Anuj Gulati, Managing Director & CEO, Religare Health Insurance Co.; and Monish Shah, Senior Director, Deloitte Touche Tohmatsu India Photos: TUSHAR MANE 28 OUTLOOK MONEY 20 FEBRUARY FEBRUARY 2013 OUTLOOK MONEY 29

5 JOYDEEP K. ROY CEO & Wholetime Director, L&T General Insurance Co. Medical costs are not rising uniformly throughout the country. It is high in the larger cities, while it is going up at a far more benign pace in the remaining parts of India x ANUJ GULATI I will just add one other aspect. It s more from the supply side. Now, there are better tertiary care facilities available in the metro cities. So, earlier, I went to a neighbourhood nursing home. Now, I have the option of going to a tertiary care facility where better treatment is available to me. There is a better set of doctors and diagnostic facilities. A simple hernia operation earlier would have cost me Rs 15,000, which will now cost Rs 30,000. Is there more patient safety? Is there better clinical outcome? Probably yes. But it is coming at a higher cost. So, fundamentally, what we have to realise is that the whole economy itself is in a transition and the whole healthcare delivery business is going through a significant transition. There is a lot of supply side gap being met. In that sense it also is fuelling inflation specific to this business. While the choice remains with the consumer, it is our responsibility to make the consumer aware. A basic principle of insurance is that the insured member should behave as if he or she was not insured. When we build our policies, we try and design some controls within our policies. We have realised a level of intervention where even before the treatment starts if you are able to intervene and make the consumer aware (of facts), the consumer understands. x MONISH SHAH In terms of unmet needs, affordable healthcare is probably the largest unmet need for the Indian population across all spectrums. Having said this, if you look at healthcare spend, the problem is actually MONISH SHAH Senior Director, Deloitte Touche Tohmatsu India While a hike in health insurance premium is imminent and high premium will be the new normal, in the future the cost of premiums will go down due to higher volumes P. NANDAGOPAL MD & CEO, IndiaFirst Life Insurance Unlike the past when doctors followed medical protocol, now they right away go for advanced diagnostics because they want to cover themselves against litigations more systemic. Though we have a very good public health spend plan and while Government is increasing it to make it (healthcare) more affordable and the average citizen has better access and quality, it is going to be a slow burn. So, the gap that needs to be filled up is happening right now by private spend. And that private spend is always going to chase profitability and will, hence, push up the cost. Having said this, this spend imbalance is probably what the industry will witness in the coming years and there will be headwinds for the next 3-5 years. If we look at it historically, I believe that detariffication also led to removing of whatever cost subsidy that existed on health premiums per se. And probably that was one of the reasons as well why it was not properly priced. Now, it is fairly priced per se in terms of services. Having said that, there are still inefficiencies in the system. The question over here is what pushes the cost up and whether you have underwritten, i.e., identified, the patient-specific factors which influence the pricing. The answer is no and it will remain no for coming times simply because the data and expertise are not available. So, that is something which the industry will have to live with in the coming period. There are still certain factors which are within the control of the health insurance industry, such as how you manage claims processing and promote wellness. Having said this, I think that one of the factors which would probably solve the issue is rise in volumes. That s what most of the players and the government is betting on, besides increase in financial or health literacy which would then increase the numbers and make it more affordable. x T.R. RAMACHANDRAN Just three quick points to add to what Bhargav and Anuj have already mentioned. One is the fact that it is inevitable that premiums will go up; they have to go up. The fact is unless more people who don t need insurance buy insurance, you cannot afford to pay claims for those who need insurance. That s the underlying principle of the entire industry. I think that both the expectation as well as the marketing need of the hour is to get more young people into the premium-paying category. The second point is that aside from rising health costs, which is sort of creeping inflation, a World Health Organization (WHO) 30 OUTLOOK MONEY 20 FEBRUARY

6 there? Unless the basic infrastructure problem is sorted out, healthcare cost will go up and, unfortunately, the insurance industry will increase their premiums. Insurers can help by decreasing fraud by getting into negotiations with hospitals. x JOYDEEP KUMAR ROY First, I think this issue about rising medical costs is not uniform across the country. It is largely urban and really in the large cities where inflation is high. In smaller cities, it is also due to the equipment, better facilities, land cost of the hospital, amortization schedules and depreciation, because that s also a business. Overall, India is still one of the cheapest medical cost nations. Cost is way below (those in) developed nations. So, if you are considering the top cities, the medical costs are going up at anywhere between, say, 15 per cent and 20 per cent per annum. But that s not, as of now, true for the rest of India. It is going up, but going up at a far more benign pace. The availability or perceived availability of high quality medical care is skewed. And this imbalance will increase. If I open a hospital at an urban location, I can charge more because there are so many more people who are insured, or so many people who can afford it vis-a-vis opening it in the rest of India. Now, if we have insurance premiums which are same, then, in a way, the poor are paying for the rich. So, first, I think geographic dispersion needs to be dealt ANUJ GULATI MD & CEO, Religare Health Insurance Co. A large part of price correction has been in group health portfolio which is over 50% of the market and is still underpriced, while in retail health insurance rise has been far lower with. We have differential premium for the same cover, for the same product, depending on where you want to take it. It can be indexed to a sort of a medical cost index which we can prepare. So, somebody in Mumbai will pay more, somebody in, say, Belgaum, will pay less. That s the kind of thing that I think needs to come in. Otherwise, technically, somebody who is at a location where medical costs are lower actually pays for somebody whose medical cost is higher. This is not something which can be cured in one stroke. Secondly, hospitals are unregulated as far as pricing is The participants at the Outlook Money Health Insurance Roundtable in Mumbai on 24 January 2013 reports suggests that Rs 41 per capita spend has gone up to something like Rs 67 in the last three years. Aside from that, I think what most Indians, middle-class Indians, get crippled with is the catastrophic consequence of a healthcare event. So, one is, if you are getting treated for cancer, whether its radiology or have a CyberKnife or whatever, there is also the loss of job and income for the family. You have to sell the family property or jewellery (to raise the money to fund the treatment). That is still the primary way of funding that catastrophe because they have not taken insurance in the first place. I think that cost should not be underestimated. The argument around whether premium will go up is a foregone one. But how many of the even financially literate are aware that you get tax deductions under Section 80D (of the Income Tax Act, 1961) and the post-tax cost of premiums is not high. So if Rs 10,000 arguably will go up to Rs 12,000, it is not that a big a deal compared to what you lose if you don t have it. x AMARNATH ANANTHANARAYANAN With inflation everything is going up. I don t see why premium should not be going up. The healthcare cost will go up and, therefore, premium will go up. So, there is nothing that you can avoid on the front of healthcare costs. Again, there is nothing new about this. Why healthcare cost is going up is because there is not enough emphasis by the government on creating the infrastructure. If hospitals are charging exorbitant rates, it is because demand far exceeds supply. So what is the government or the healthcare industry doing to actually ensure that if 100 beds are required, at least 95 are there? What is happening is that you have development at a very high end, with all these speciality hospitals, and then, you have these aanganwadis at lower end, with nothing in the middle. So, anytime you want to get admitted (to a hospital), either you go to a very very expensive hospital, or to government hospitals where, depending on the quality of care, you may or may not get what you want. I think that s where the focus needs to be rather than just on rising insurance premiums. Because the worst thing about group insurance is that if group insurance is there for most of the private sector, after retirement those benefits don t carry on. Then what happens to people who are used to having health insurance, understand the importance of health insurance and suddenly, at the age of 50 or 60, they don t have insurance? Where do they go? How do they go 32 OUTLOOK MONEY 20 FEBRUARY FEBRUARY 2013 OUTLOOK MONEY 00

7 Up next x Insurance Made Easy pg 35 T. R. RAMACHANDRAN CEO & MD, Aviva Life Insurance Co. India You need more younger people to pay premium. Unless more people who do not need insurance buy covers, you cannot afford to pay claims to those who need insurance concerned. There needs to be a uniform ICD (International Classification of Diseases) code-based or any other protocolbased understanding that a disease should be treated in a particular way. In a way, the overall healthcare index of the country will go up if predictable treatment happens everywhere. It doesn t cost much to do it. Actually, overall costs should come down because of the inherent effect of standardisation of everything, including equipment. In the last few years, the insurance claims paid have always been more than the premiums raised as a whole. As an industry, that is not a sustainable situation. And I don t expect the claims paid will get less. We can keep on cutting claims, but you have to retrace premiums to an acceptable level at the same time. Some bit of standardisation in treatment protocols in hospitals will bring down medical cost, will bring in predictability and better healthcare. Consequently, the premiums will be always kept in check. x P. NANDAGOPAL Any student of economics will tell you that when prices are going up, the reason for it is a mismatch between demand and supply. So, if the demand for quality medical care is much higher because of Rashtriya Swasthya Bima Yojana, whatever kind of schemes, but the supply is not catching up, prices shall go up. The question that we have in front of us is: Are the prices justified? I come from a family of doctors and my grandfather is a doctor. He says if you are a good doctor, use only three powerful instruments and you can diagnose anything. He used BHARGAV DASGUPTA MD & CEO, ICICI Lombard General Insurance Co. It is important for the insurance industry and the hospital industry to come together and find solutions to reduce healthcare inflation. Otherwise consumers will suffer the most ANTONY JACOB CEO, Apollo Munich Health Insurance Co. In the future, it is reasonable to expect the rise in health insurance premiums to be in line with the overall inflation and this will occur in cycles of months to say they are the stethoscope, the knee hammer and the thermometer. Technology has changed because, one, the style of living and expectation from customer has changed. If a doctor uses only these three instruments, however qualified he is, however credible he is in the market, most of the customers, perhaps, will not go to the doctor. These days the doctor actually gets advice from the patients on the kind of treatment required and, if they don t do that, the patient won t trust them. This is a behavioural change which is actually causing inflation in the medical costs. Another thing is that behavioural change is not necessarily in response to the level of awareness about health issues, but some pseudo knowledge we all have. I suffer from the same problem and most of the people also suffer from that. That causes some kind of anxiety syndrome in people's minds. From the experience of others, customers believe that unless they go through a, b and c they are not getting the best treatment. That particular syndrome will definitely be heightened if you are an insured person because the costs are not theirs. It is part and parcel of the companies. Let us also recognise it from the doctor s perspective. They are not very comfortable in doing only the very basic things because of the litigation associated with wrong diagnosis. Good hospitals don t want to take a chance. So, previously the doctor used to have a medical protocol, where he would start with basic things, find out the reaction and then proceed. Now, he right away goes to a very advanced diagnostics as he wants to cover himself against the risk of unnecessary litigation. So, we have got to address it at a behavioural and technology level and, then, at supplydemand, infrastructure level, and also at the litigation level. Then there is the other important thing that industry can do. I strongly believe that the partnership model is the best way. Do we have a partnership model in the industry between insurers, customers and medical infrastructure providers? Each is always at loggerheads with each interest group. The problem is the customer doesn t trust the insurance company, the insurance company doesn t trust the doctors and doctors really can t trust insurance companies for the kind of professional expertise they demonstrate. feedback@outlookmoney.com 34 OUTLOOK MONEY 20 FEBRUARY