Health Insurance In India

Health Insurance in India is a recent phenomenon. Two decades ago, there was no health insurance. In 1980s, the Public Sector General Insurance Companies in India introduced Health Insurance for Indian Citizens with the nomenclature "Mediclaim Insurance". Despite high levels of awareness in the masses and high cost of hospitalization, this particular insurance is still not bought but is sold by the agents. The Mediclaim Insurance covers hospitalization expenses only and where hospitalization is not possible, domiciliary hospitalization is also covered under the insurance plan to a limited extent. There is no insurance covering domiciliary treatment, which itself is becoming costlier by the day.

The high cost of Medical Education and the difficulty in getting admissions to medical colleges has resulted in the medical assistance to ordinary citizens being phenomenally high. Even a visit to a general practitioner costs anywhere from Rs.50 to Rs.250 depending on the kind of sickness. For a person with ordinary means of earning, even this becomes prohibitive and many a time people resort to self medication to avoid payment of Consultation Fee to the Doctors. The situation becomes all the more difficult when a case is referred to a Specialist, whose appointment is not easy to get and whose consultation fee can range from Rs.200 to Rs.2000 depending upon the seriousness.

At the time of independence, medical treatment was very cheap. Most of the doctors were general practitioners and they used to supply medicines also from their own clinics. Hospitalization was through government hospitals, where the treatment was either free or was very cheap. It was within the reach of an ordinary citizen with limited means of earning.

Situation has changed in that even the government hospitals now charge fees which are beyond the means of ordinary citizens.

Government's budgetary allocation to Health care is abnormally low and the medical profession has no more remained a Social service but has become a Business. In fact, a majority of good hospitals are now owned by corporates whose main aim is Profit and not alleviation of pain.

Of late, Private Insurers in General Insurance Market have come with some really good health insurance plans. But these too are not meant for poor people. The General Insurance Companies providing mediclaim insurance are restricting covers and increasing premiums every year because of unfavourable experience.

Life Insurance Corporation of India (LIC) the Govt. owned Life Insurer in India has now come out with its first-ever Health Insurance Plan. This gives hope that in near future, other life and general insurance companies will also come with innovative health insurance products which will focus on health facilities to ordinary people with limited means. Greater attention has to be paid to providing some kind of cover for domiciliary treatment.

Marketing of Life Insurance in Rural India

It is said, "India lives in villages". How true it is, is known from the fact that more than 70% of Indian Population resides in Villages, which are reported to be close to 5,50,000 in numbers. There is a general impression that all people living in villages are poor. This could have been said to be true about 60 years back, before India attained independence. But it is not true today. In fact, during last 10 years, the living and economic conditions in villages have improved considerably. This is particularly true ever since the Indian economy opened up after 1991. It is true that still a large part of rural population, close to 26%, is living in sub-human conditions. These people are aptly called "People Below Poverty Line" (BPL). Most of these people do not own land and depend on agriculture as Landless Agricultural Labourers. They are seasonal workers and get employment only at the time of sowing and harvesting of crops.

But there is a large number of persons residing in villages, who either own land or cultivate rented land or are engaged in other pursuits like shops, poultry farming, honey-bee farming, horticulture, sericulture or any other ancilliary jobs. These people are fairly well-placed with a reasonable level of earning.

Before nationalization of Life Insurance in India, in 1956, life insurance was mostly available to people living in towns, cities or metroes. But after nationalization, Life Insurance Corporation of India (LIC), the Govt. company engaged in marketing life insurance, did a wonderful job by propagating the concept of life insurance in rural areas,through appointment of agents, posting Development Officers and opening Branch Offices. These steps resulted in the rural population also benefiting from life insurance like urban folks. In fact, by rough estimates, 45% of LIC's Business and 55% of LIC's Policies are being secured from rural areas.

After the opening up of Life Insurance Sector for Private Operators from Oct. 2000, Insurance Regulatory and Development Authority (IRDA), the regulator, laid down statutory requirements for all insurers to tap the Rural Market.

Luckily, the private sector insurers have also started initiatives for penetrating the rural market through innovative distribution channels and specialized products for rural folks. In fact, advent of Micro-insurance is a step in this direction.

NGOs engaged in welfare activities in villages can play a vital role in propagating the concept of life insurance and helping villagers to buy life insurance. Commission earned by these NGOs can be used for general welfare of the villages at large, like providing toilets with latest sanitary fittings, opening schools, constructing Panchayat Bhavans, Chaupals etc.

These steps will not only help the villagers to take advantage of life insurance but also improve the living conditions of the village folks.