Wednesday, October 09, 2013

Health insurance companies as villains




Most of us buy a health insurance policy for our peace of mind . We know that medical care can be expensive , and we need to have a financial cushion which will ensure that we can afford the right medical care when we fall ill. This is the pitch which insurance companies use when they advertise their policies. They promise excellent customer service  and hassle free claims payments.

The reality can be quite different. For most people health insurance companies seem to be villains, who are happy to collect their annual premiums , but when it actually comes to paying the claims for medical care, they create all kinds of problems and hassles . They make the patient's life even more difficult when he is ill, so that at a time when he should be concentrating on getting well , he is forced to concentrate on filling out forms , so that the health insurance company will reimburse what he feels are his legitimate dues.

Most people interact with their health insurance companies only twice – when paying their annual premium; and when submitting a claim.  Even renewing the policy can be a painful exercise . The premiums seem to keep on increasing year after year and customers start wondering what value they are getting out of renewing their policy. They feel quite well – and after spending over Rs 25000 annually for a policy, they start wondering whether it is cost effective for them to renew it or not. I haven't been ill in the last 3 years and am spending so much money on this health policy. Is it cost effective for me to do so ?I am paying my premiums – and getting nothing in return !

The angst is much worse when you do fall ill and need to submit a claim for reimbursement. When you are sick, you go to your doctor, and you expect your insurance companies to foot all your medical bills, without asking any questions. After all, isn't this what you've been paying them for so far ?

The reality is very different. The insurance company will now find all kinds of excuses and pretexts to reject the claim. Some favourites include:

  • Your paperwork is incomplete;
  • You did not seek preauthorisation:
  • The treatment does not meet our criteria of medical necessity;
  • Your doctor is charging too much and we will not pay the full amount;
  • Your condition was pre-existing.


When patients are forced to read the fine print in their policy ( which was never explained to them when they were lured into signing up) , these rejections can come as a rude shock . Patients believe that it's their doctor who should make the medical decisions as to what treatment they need  ; and that as the medical expert, he has the right to decide what technology should be used, no matter what its cost. The company's job should not be to try to second guess the doctor, but to simply pay up. After all, they are merely financial intermediaries – and haven't they collected thousands from you over the years when you were healthy ? Why are they refusing to pay up now ?

In the past, insurance companies would pay up without asking questions. However, they are now pushing back, because the new technology can be extremely expensive , even though it has not been proven to be better. However, the patient feels cheated. He naively believes that new is better – and that if the doctor wants to use the newest, superior technology, the insurance company should pay for this, rather than try to force him to use older technology , which is cheaper ( and presumably not as good).

This is one of the reasons why health insurance companies in India have such a bad reputation. Things are much worse in the US , where most health insurance plans are considered to be villains . They are seen to be gatekeepers , who end up blocking access to specialists and prevent patients from getting the expert care which they feel they are entitled to, just because this is expensive. Patients feel cheated and let down, because they feel that they have paid a huge amount for their health coverage, and are entitled to get the best care, no matter what it costs.

Insurance plans are thought of as being villains who devise lots of clever ways to delay claims payments so that they can hold on to their customer's  money for longer and earn more on this float. After all, this is how they are able to pay millions in the form of salaries and bonuses to their CEOs, at the expense of the poor patient, who is deprived of the care which is his legitimate right.

This has caused irreparable harm to the reputation of insurance companies in the US . Unfortunately, health insurance companies in India don't seem to be learning from these lessons . They seem hell-bent on making the same mistakes . This is a shame because the health insurance sector is the one group within the healthcare ecosystem which actually has its customers best interests at heart . It makes much more business sense for them to keep their customers healthy . This is in complete contrast to the other players in the healthcare ecosystem – the hospitals , doctors, pharma companies and medical device manufacturers , who only make money when the customer fall ill. All the other players are part of a sick illness care industry !

The health insurance companies in India can fix the problem by reinventing themselves and acting as patient guardians or patient champions . This way, they don't only interact with the patient when he falls ill, but rather they take a proactive role in order to keep them healthy . Because health insurance companies control the purse strings, as payers have a very important role to play - after all, the one who pays the piper plays the tune !

The good news is that a lot of health insurance companies in the US are starting to play an important role in promoting wellness , because they understand that a lot of chronic illnesses are preventable and occur as a result of poor lifestyle choices. The best way to improve their profits is to prevent huge hospital bills by keeping their customer healthy and well , so he does not need to go to a doctor !  It makes a lot of business sense for insurance companies to invest time, money and energy in order to keep their customers healthy. As the health insurance industry in India matures, hopefully they will learn these lessons as well and start providing better value for money for their customers !

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