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—even the non-covid-19 ones—have been inconvenienced.
Having health insurance in such a situation would have brought a great deal of relief and assurance, but the experience suggests otherwise. For instance, a colleague’s mother who was tested positive 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 later with the insurer.
Then there is the issue of paying a huge chunk of the hospital bill because some insurers are not willing to pay for costs heads that appear inflated and can be excluded—personal protective 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 ways 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 brought to the fore some unprecedented and some very well-known challenges, like the ecosystem in which healthcare and insurance interact with each other. 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.
Being an indemnity policy, this standard product will cover the cost of hospitalization expenses due to covid-19 with the option of two add-ons: a quarantine cover that pays for quarantine due to diagnosis or suspected infection and hospital cash cover.
The idea of the product is to “address the basic health insurance needs of insuring public related to Covid-19″. But after a careful read through the features, not only does it look like a rushed job in trying to put something out there it’s also difficult to ascertain who it helps really.
For instance, the product comes with a co-payment clause of 5% which means the insured person will have to pay 5% of the hospital bills. Then there is 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 and ₹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 account 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. Capping the room rent only means more out-of-pocket expenses for the customers. 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. Insurers may outright refuse cover or exclude treatment of pre-existing ailments or any related complications for up to four years.
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 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 (4 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 stayed 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 but from a customer’s standpoint, the need for having a comprehensive health insurance can’t be stressed enough.
If the covid-19 product does make it to the market and you don’t have a regular health plan already, avoid the product if complications arising out of a pre-existing condition are not covered.