· 4.2% of India’s national GDP is spent on healthcare[1]
· Out-of-pocket expenses contributes nearly 60% of the total healthcare expenditure in India, with a very minor contribution from private insurance plans
· Make healthcare a fundamental right as high out-of-pocket expenses and catastrophic health events are pushing households below the poverty line
March 03 2016, 12.29 PM IST || Pocket News Alert
Bangalore, 3 March 2016: Swiss Re held its 12th Asia Health Symposia in Mumbai last week. This is the first time the Symposia took place in India. Themed “Financing the healthcare needs of India”, the event brought together high-level executives and representatives from some of India’s top healthcare providers and insurers to examine pertinent issues ailing healthcare financing in India.
Speakers at the Symposia included Alam Singh, Health insurance consultant and health information entrepreneur; Kaushik Sen, CEO, Healthspring; Dr. Prakash Subbarayan, Executive Director of Star Health & Allied Insurance Company Limited; Nachiket Mor, Senior Advisor to The Bill and Melinda Gates Foundation; Nirupama Kamdar, CEO, Life Insurance Round Table, S.S. Gopalarathnam, Managing Director of Cholamandalam MS General Insurance Company Limited; Varun Dua, Founder and CEO, CoverFox Insurance; Yegnapriya Bharath, Joint Director, Insurance Regulatory and Development Authority of India; Sujata Sounik, Principal Secretary, Public Health Department, Government of Maharashtra; Clarence Wong, Chief Economist, Asia, Swiss Re; Paul Murray, Chief Pricing Officer, Life & Health Products, Swiss Re; and Marianne Gilchrist, Head of Solutions Groups, Life & Health Asia, Swiss Re.
India has one of the biggest health protection gaps amongst the countries in Asia. The gap is projected to increase by 12.3% annually to US$214 billion by 2020[2]. India will face a shortfall in healthcare financing of close to US$43 billion in 2020, which will require additional fiscal spending or higher out-of-pocket funding by individuals. The government and society will have to spend more in the future to make up for the growing demand for healthcare services due to higher income growth and a large population. In addition, out-of-pocket expenses account for nearly 60% of the total healthcare expenditure in India, with a very minor contribution from private insurance plans and a catastrophic event will wipe out one's entire savings.
With the emerging middle class estimated to grow almost ten-fold from 50 million people at present to 475 million by 2030, the demand for quality healthcare and speed to access services will be greater. An expanding insurance market like India requires a sustainable and dependable healthcare and insurance infrastructure. Active co-operation and engagement among the industry and government is therefore required to build a robust healthcare eco-system.
In her opening speech, Kalpana Sampat, Managing Director of Swiss Re Services India, called on the industry to collaborate and find solutions together, and work towards closing the protection gap in India. "In India, 50% of the population is below the age of 30 and the working population is expected to grow by 40% in the next ten years. Managing the health of this population will be crucial as health not only impacts individual income, education and demographic trends, but also the country’s economic growth. Since progress and development is dependent on good health of its working population, it is imperative for India to prioritise and invest in the healthcare sector,” she said.
Doubling health insurance penetration by 2020
The Symposia also examined the evolving healthcare needs of emerging India and fundamental gaps in the healthcare system:
· Only 288 million (22.2%) of India’s population are covered by health insurance, of which 214 million are insured by government schemes; another 48 million are covered by group insurance, while 25 million others use individual or family floater plans[3].
· The interests of payors and primary care providers should be aligned so that there can be collaboration to build primary care benefits into health insurance products.
Participants at the Symposia agreed that increased consumer awareness along with easier access to healthcare were essential to drive penetration and double health insurance coverage in India by the year 2020. One of the possible models to insure the entire population of the country could be that the government gives a base cover to the bottom of the social pyramid while private insurance companies cover the levels above.
However, progress in this direction is hindered by certain long-standing issues. For one, national health records are not available in India. Hospitals today are characterised by billing systems, not health record systems. Moreover, inconsistent alignment of interests between insurers and healthcare providers, and inadequate pricing of group medical portfolios make it difficult to manage sustainability of health portfolios. There is a need for improved healthcare infrastructure across the country, backed by the government.
Digitising the interface and information flow between hospitals and insurers could help to resolve many of the conflicts between the two, and ensure proper care and convenience for the insurance claimant. Experts speaking at the Symposia opined that insurers should come together to push for this level of infrastructure.
Furthermore, there is not enough focus on primary healthcare in India, nor is enough spent on vaccination. Insurance products are often not quite aligned with primary care, which accounts for almost 70 percent of the nation’s healthcare needs. Health insurance claims are also often rejected on the basis of thin arguments or mere technicalities. This needs to be corrected if consumer trust is to be gained and built in the insurance company and its products.
There are also gaps in the products suite provided by insurance companies today. An estimated 700 million Indians would need a different product proposition with suitable price points. This poses a huge opportunity for insurers in the country and would trigger growth in insurance penetration.
It is therefore important to understand the different needs of the consumer who, today, need more than just financing from their insurance provider. Insurers should capture and analyse consumer data and health records so as to be able to design relevant, customised products for the different consumer segments.
Marianne Gilchrist, Head of Solutions Groups, Life & Health Asia, Swiss Re, who moderated one of the panel discussions, added “Health insurers and providers need to work together to stabilise rising healthcare costs while improving patient outcomes. Effective collaboration would entail demonstrating leadership to drive action through innovation and transparent communication to close the protection gap in the country.”
Figure 1: In emerging markets, government expenditure and out-of-pocket spending are the major payment channels for health expenditure
Source: Global Health Expenditure Database, WHO, Swiss Re Economic Research & Consulting
Swiss Re
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of about 70 offices globally and is rated "AA-" by Standard & Poor's, "Aa3" by Moody's and "A+" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed in accordance with the Main Standard on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: www.swissre.com or follow us on Twitter @SwissRe.
Swiss Re has been associated with Asia since 1913 and has over 1,500 employees in Asia-Pacific. The company's Asian headquarters is in Hong Kong.
