Tuesday, June 17, 2014

What is wrong with health insurance today


Just like the healthcare system is broken, the health insurance industry is malfunctioning. They think of themselves as being in the insurance business , not the healthcare system. The problem is that they think of themselves as being financial intermediaries, who help customers to bear the financial shock of falling ill. This means that all they do is provide illness insurance – and not health insurance. This is why the IRDA ( Insurance Regulatory Development Authority) in India – the regulatory body for the insurance industry) is a part of the finance ministry , rather than the health ministry .

This is the reason they have such a short-sighted focus; and their primary interest is boosting their bottom line, rather than improving the health of their customers. This is why their interactions with their customers has always been so negative. They only engage with them for financial transactions – when they need to collect the annual premium; and when they need to pay the claim. Most customers are also very unhappy with health insurance companies, because they have an unsavoury reputation of denying valid claims ( for flimsy clerical reasons). Hospitals and doctors also do not like dealing with them, because they delay payments ; and try to play doctor after the care has been provided by using procedures such as utilization review to second guess the doctor.

The good news is that the health insurance industry in India is realizing that the old models can no longer continue to work. The entry of Cigna TTK in India  should help to shakeup and reinvent the industry. Their focus is on promoting health, rather than just paying for medical care and they are taking advantage of the years of experience Cigna has as a global health payer.

By putting the customer’s health first, they are creating a win-win situation. They gain customer loyalty because their customers can see that the company is helping them to improve their health. This is a great USP, which they use to differentiate themselves from the competition – especially for the highly profitable policies bought by individuals ( as compared to the group policies bought by corporate, on which most companies are still losing money) . In the long run, this focus will help them to improve their bottom line as well, as the claims ratio is likely to drop when their customers remain healthy and do not fall sick.

Hopefully, other health insurance companies in India will also soon follow their lead ! One of the most cost effective ways of doing this is by empowering patients with Information Therapy and health coaching. Population Health Management is a model which is still new, and by using a clever match of technology and low-cost doctors, India can become a world leader in this space.

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