Health Insurance Market Scenario

Health care system in India can be differentiated into multiple systems of medicine, mixed ownership patterns and delivery structures.The health expenditure by the country is around 5%, including 0.9% of public expenditure and 4.0% of private expenditure. Further,private expenditure is derived from 3.6% of out-of-pocket (OOP) expenditure and 0.4% of employees/community financing. The data shows that the investment in public health is low as compare to private health.

The health insurance market covers very smaller part of the total population (about 10%) in India. Presently, schemes like Voluntary health insurance schemes or private-for-profit schemes; Employer-based schemes; Insurance offered by NGOs / community based health insurance, and Mandatory health insurance schemes or government run schemes (ESIS, CGHS) are found in India.

Voluntary health insurance schemes or private-for-profit schemes

Here, buyers or health insurance policy holders pay premium to an insurance company to get private insurance. The insurance helps people in their ill time and pays part of their medical expenses.

Whereas, in public insurance sector, company like the General Insurance Corporation (GIC) and its Four subsidiary companies such as: National Insurance Corporation, New India Assurance Company, Oriental Insurance Company and United Insurance Company and the Life Insurance Corporation (LIC) of India provide voluntary insurance schemes. Some of the policies offered by the GIC are Personal Accident policy, Jan Arogya policy, and Raj Rajeshwari.

Regulatory control

The government of India has passed the Insurance Regulatory Development Authority Bill (IRDA) to enhance the entry of private health insurance companies in the market. The bill regulates, promotes, and ensures proper growth of the insurance industry, whereby protecting the interests of insurance holders. Companies like Bajaj Alliance, ICICI, Royal Sundaram, and Cholamandalam are actively participating in the market by offering various health insurance schemes.
Some of the policies offered by them are

  • The Health Guard scheme
  • Group health insurance policy by ICICI Lombard
  • The Shakthi Health Shield policy by Royal Sundaram Group

Employer-based schemes

The health insurance schemes offered by employers to their employees generally come under grouphealth insurance schemes. Applicable in both private and public sector, the schemes help employees in paying lump sum payment, reimbursement of health expenditure, and fixed medical allowance. Currently, around 30-50 million of total population is covered under these schemes

Insurance offered by NGOs / Community Based Health Insurance (CBHI)

Community based health insurance (CBHI) schemes offered by Self-Employed Women's Association (SEWA), Gujarat, Tribhuvandas Foundation (TF), Anand, or The Mallur Milk Cooperative in Karnataka come under non-progressive funds with flat rate premia. The schemes are launched to improve the access of health services, rather than making profit.

Government run schemes: Employee State Insurance (ESI) Scheme (ESIS)

Employee State Insurance Scheme helps employees at the time of loss of wages because of sickness, maternity, disability and death due to employment injury. The Employee State Insurance scheme has covered 91 lakh employees and more than 350 lakh beneficiaries over 22 states and Union territories across India. The scheme offers medical and cash benefits through Employee State Insurance hospitals (ESI hospitals) and diagnostic centers, dispensaries, and panel doctors.

Challenges and plans to handle them

In a low-income country like India, there is no infrastructure for collecting premium from the large informal health insurance sector. There is lack of communication and awareness among people regarding health insurance. So, it is needed to establish licensing and regulatory private health providers and to develop specific guidelines to decide appropriate services and fees of health insurance. Effective measurements are needed to be taken to select the target-groups and the issues related to the indirect costs associated with health insurance required to be solve as soon as possible.

It is seen that the design, implementation, and monitoring mechanisms of any scheme can decide its success in the market.

Initiatives taken by the government

The Government of India has taken initiatives to address issues related to poor access of public health insurance services across the country. The government is planning to increase the health expenditure of from 0.9% to 2.0% till 2010. The state government is trying to increase the health budget from 7% to 8% by 2010. The Tenth Five Year Plan (2002-07) is also trying to establish alternatives for health care financing to provide affordable health care to all.


American Medical Association (AMA) report, Competition in Health Insurance: A Comprehensive Study of U.S. Markets has found limited or low level of competition in health insurance market. The report has compared 294 metropolitan health insurance markets to the federal index of markets.

To increase the competition in the market, it is suggested that the federal regulators should take actions against the increasing number of merger and takeovers, which are directly or indirectly harming the patients only.

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