This is something that the new Indian government can help catalyse without making many of the hard choices that reform measures usually entail. Many of the failings of the Indian healthcare system are due to spending in the wrong areas and misaligned incentives between payors and beneficiaries: spending needs to be allocated more towards preventative care and insurers need to become more focused on the life-time well being of the beneficiary.
This can be achieved through three policy changes:
- Make health insurance truly holistic: Currently, most health insurance policies in India only cover hospital-based care that requires admission. Because most insurers do not cover primary, preventative, or geriatric care, patients tend to consume less of these services, leading to higher costs down the road. India should encourage insurers to provide coverage for all medical procedures with a co-pay to prevent overuse. More holistic insurance coverage not only leads to better health outcomes for patients but also often lower costs for insurers.
- Make insurance less transactional: The turn-over on “group” insurance accounts which cater to corporate customers is very high and insurers rarely ‘own’ a patient for an extended period of time. This dynamic makes insurers less interested in the longer term health outcomes of their beneficiaries and makes offering products such as long-term care much more difficult. Deeper relationships between customers and insurance companies would make it more economical for insurers to focus on improving the health outcomes of their beneficiaries. Mandating longer policy duration is an easy way to fix this issue.
- Allow insurers to control costs: In India insurers are not actively allowed to manage healthcare costs as they are in the West. It is a much more passive system wherein hospitals deliver healthcare and insurers pay (with relatively little input in the process). By moving to more of a managed care model, which would allow insurers to dictate ALOS for procedures and pre-approve healthcare costs, the prevalence of unnecessary hospitalisation, tests, and procedures will likely fall.
These reforms would not only improve patient health outcomes (and lower costs) but also likely encourage the development of organised primary, home, and geriatric care industries in India. By taking a more proactive role in insurance regulation, the IRDA can do a better job of aligning patient and provider/payor interests all while lowering the cost and improving the quality of healthcare delivery.
– Zachary Jones, Senior VP, Portea Medical