Irdai’s Covid-19 health insurance product misses the point, completely
Covid-19 in India has exposed deep fissures in the healthcare system from which horror stories are crawling out. Anyone who has needed medical attention in the last two months will have a horrifying account to tell: from hospitals turning ghostly running on meagre staff, to patients being refused admission, to bills being inflated, there are many ways in which patients have been inconvenienced.
Having health insurance in such a situation would have brought huge relief, but the experience suggests otherwise. For instance, a colleague’s mother who tested clear for covid-19 was asked to pay upfront by a reputed hospital. It didn’t matter that she had a health insurance policy: the hospital wasn’t taking any chances negotiating with the insurer later.
Then there is the issue of huge out-of-pocket expenses because some insurers are not willing to pay for costs heads that appear inflated and can be excluded—personal protective equipment kits (PPE) expenses being a case in point.
The insurers don’t want to pay inflated bills and hospitals reeling under low footfall and new cost heads are employing every possible way to recover costs. As a result, customers who just want to get treated and want their insurance policy to pay for the treatment are bearing the brunt.
The pandemic has exposed the noxious lines in the ecosystem in which healthcare and insurance interact. More than ever, there is now an urgent need for better synergy between hospitals and insurers in handling claims.
So when the insurance regulator circulated an internal draft on a standard health insurance product to cover covid-19 from 15 June, it seemed like missing the point altogether, given that the regular health insurance policy insures the coronavirus infection and the new draft doesn’t really address the problems being faced by customers.
The idea of the product is to address basic health insurance needs related to covid-19, but after a careful look at the features, not only does it look like a rushed job in trying to put something out there, but it’s also difficult to ascertain who benefits from it.
For instance, the product comes with a co-payment clause of 5%, and a cap on room expenses. The policy has capped room, boarding and nursing expenses at 2% of the insurance cover, subject to maximum of ₹5,000 a day ( ₹10,000 a day for ICU).
While rating health insurance plans in the market, we downgrade policies that come with cost caps, and given the escalated cost on interpret of covid-19, a room rent cap of ₹5,000 would mean a significant out-of-pocket expenditure. A well-known multi-speciality hospital in the NCR region, for instance, is charging ₹18,500 per day as bed charges in the isolation ward and the rates for other hospitals in the same league are unlikely to be much different. Why then come out with a policy when there are health insurance plans in the market available without such caps?
Perhaps, the product would make sense for someone with underlying conditions like diabetes because the impact of covid-19 on persons with co-morbidities can be ravaging and buying a regular health plan may not be possible for someone with pre-existing ailments.
But the draft only causes more confusion as it states that the coverage under the policy after the expiry of 48 months for any pre-existing disease is subject to the same being declared at the time of application and accepted by them.
A plain interpretation of this could mean that if a person with, say, diabetes got hospitalized on account of covid-19, the insurer could technically refuse the cover due to the complications arising out of the underlying “pre-existing" condition. This completely defeats the point.
The draft also states: “Expenses related to the treatment of a pre-existing Covid-19 will be excluded until the expiry of 48 months (four years) of continuous coverage." After reading that, you wonder if there was any thought given at all in drafting this product.
There are many parts in the draft that look like a careless lift from the health insurance regulations and important issues like handling of costs pertaining to PPE kits has been kept out.
The product, in its current form, doesn’t cut much ice, and what may hurt further is the pricing, given it’s a policy that insures covid-19. It’s unlikely that this policy will come cheap. Customers should exercise extreme caution in buying this product and focus on a regular health plan instead.
Deepti Bhaskaran is editor, personal finance
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