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The Collection Wed, 05 Mar 25 |
Multiple stories, multiple perspectives, one theme worth your time—every week. |
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This edition of The Collection features commentary from a guest contributor, Srivathsan Aparajithan, who has more than four decades of professional experience in hospitals, health tech, and medical insurance. Srivathsan is the co-author of Mission Possible: Paving the Road to Universal Health Coverage along with Swami Subramaniam.
Thirty-five years ago, when I entered the workforce, I joined what is now one of India’s most recognised hospital brands. At the time, we had a joint go-to-market initiative with a general insurer that had launched Mediclaim, India’s first health insurance product. The belief was that selling health insurance to hospital patients was the most effective way to drive adoption.
It didn’t take long to hit bumps on that road. These ranged from adverse selection, in which a policy is purchased only after a diagnosis, to downright fraud like policyholders presenting outpatient, non-medical expenses as medical payments. The insurance company was not equipped to directly address these problems, so it removed outpatient benefits and terminated the distribution partnership with the hospital.
Today, India’s insurance sector is better placed to deal with those issues, yet the product design and distribution methods remain stuck in the past. We need bold new approaches to grow the market—especially considering how the number of lives covered under privately purchased health insurance is still under 20% of India’s population.
The Ken’s Two by Two podcast recently explored how India’s health insurance space is ripe for disruption, and covered a constellation of operational issues that providers encounter.
Two By Two • 10 |
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Some 250 million Indians were covered under privately purchased group health insurance policies or individually purchased policies at the end of FY23, according to the IRDAI Handbook of Indian Insurance Statistics 2022–23. This form of coverage is different from government-purchased social health insurance, which covered around 300 million people at the time.
The truth is, India’s health insurance sector has been slow to advance for nearly four decades. Surely, new ways to encourage the adoption of health insurance have emerged since the advent of Mediclaim. One example is the General Insurance Council’s Cashless Everywhere initiative. Another is the high-deductible plan that has a lower premium but requires the policyholder to pay more healthcare costs out of pocket before the insurer covers its share. Such a plan was called a “top-up policy”, implying that Indians still required a “base policy”—the trusted Mediclaim!
The Ken wrote about Cashless Everywhere in February last year.
Health insurers’ ‘Cashless Everywhere’ is going nowhere
Small and large hospitals are up in arms against the General Insurance Council. Patients will get caught in the crossfire
There have certainly been attempts to branch out further. Narayana Health Insurance recently launched a new product, Aditi, that recognises the difference between surgical and medical admissions, and includes some elements of a high-deductible product to set itself apart from Mediclaim. Aditi is available in two cities and is still in its pilot phase, but it’s a step in the right direction. We need more insurers developing products that address Indians’ medical expenses more directly.
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To reconsider how health insurance should look like for consumers, we must examine their existing habits.
India is still a “sachet” nation, with many consumers preferring single-use packets over larger packaging. Product disruption in the insurance sector can take inspiration from that and break down health expenses into smaller components, much like how consumer product companies offer single-serving options. For instance, surgical admissions could be separated into ambulatory surgeries that do not require overnight stays and medical procedures that lead to multi-day admissions.
Insurers need to find ways to reduce premiums and attract the missing middle—individuals who aren’t eligible for government insurance schemes but are priced out of private coverage—according to Girish Rao, chairman and managing director of Vidal Health, one of India’s largest third-party administrators.
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Matchmaking between cash-strapped hospitals and the booming insurance market, startups like Gmoney and Digisparsh are chasing the 10 million patients seeking reimbursements
The “sachet” approach to insurance can achieve this.
The first step is to segment utilisation into primary, secondary, and tertiary care—going from general purposes to highly specialised treatments. Insurers can then create products to address each segment separately, even directing consumption to healthcare-delivery organisations that are at the appropriate level. Customers can select their own mix of “pocket-sized” insurance products that work in tandem.
For instance, imagine specific sachet policies for cardiac procedures like angioplasty or coronary artery bypass, or ones targeted at young couples whose only major medical expense is related to pregnancy.
As The Ken wrote in June 2024, health insurance for pregnancy-related care is a particularly thorny area.
What do health insurers have against pregnancies?
Here’s how you can make sure you don’t pay the price for that
Product innovation is a fertile space for insurance companies, and each insurer could easily build a portfolio of products that are designed to seamlessly work with products from other insurers.
Notably, health insurers are already familiar with sachet policies. They sell versions of this to enterprises, which embed the insurance into their products. If you’ve ever used Uber for transportation, for instance, then part of your payment was for an insurance policy active for the duration of that ride.
Thankfully, the Insurance Regulatory and Development Authority of India (IRDAI) now recognises that public-sector insurance alone can’t serve all Indians’ needs. After multiple delays, the first phase of Bima Sugam, which is being built as a not-for-profit marketplace that aggregates all health insurance products across India, may be launched by mid-2025. The IRDAI had asked insurance companies to inject Rs 300 crore as initial capital by the end of February.
While Bima Sugam would be a rival of existing marketplaces like Policybazaar and Insurancedekho, it’s meant to make it easier for anyone in the country to browse and buy insurance policies.
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Once Bima Sugam goes live, it could be an ideal channel for Indians to discover varied sachet policies that serve their health coverage needs.
All insurers need to do is come up with enough of them to make a difference.
You can read this week’s entire collection below. Please write to [email protected] with your thoughts or leave a comment on our website or app edition.
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Srivathsan Aparajithan has more than four decades of professional experience in hospitals, health tech, and medical insurance. He is the co-author of Mission Possible: Paving the Road to Universal Health Coverage along with Swami Subramaniam.
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