The Insurance Regulatory and Development Authority of India (IRDAI) has proposed the establishment of a common tariff structure for hospitals to regulate an inflation rate that currently stands at 10-15%. IRDAI argues that separate regulation for the healthcare industry is necessary, or alternatively, hospitals must be allowed to self-regulate.
The Current Challenges with Tariff Structures in Indian Hospitals
Indian hospitals’ tariffs are prone to frequent change. Without an existing body to regulate these tariffs and hospital grading, some hospitals were seen to exploit the situation during the Covid-19 outbreak last year by overcharging patients.
The high tariffs are impacting health insurance businesses negatively. If insurers continue paying whatever hospitals demand, the health insurance industry risks declining financial health. The sector is already handling a high number of claims.
In addition, the current system for empaneling hospitals in healthcare schemes and private insurance leads to inefficiency and duplicated processes. Moreover, without the proper infrastructure to regulate hospitals, and considering that healthcare is a state subject, the IRDAI faces challenges in implementing regulation.
About the IRDAI
The IRDAI is a statutory body established under the Insurance Regulatory and Development Authority Act, 1999. Its function is to oversee and develop the insurance sector in India.
Suggestions for Improvement
To address these issues, the IRDAI has proposed several solutions, including a unique common hospital registry, standardized empanelment process, and package cost harmonization. This would also involve grading hospitals to promote efficient use of healthcare infrastructure under the insurance program. A common empanelment portal, to be used by all schemes and insurance companies, is recommended. This portal should have standardized empanelment criteria focusing on standard safety and quality parameters.
The Indian Healthcare Sector
Healthcare in India, one of the country’s largest sectors in terms of revenue and employment, has developed substantially in recent years. Contributing factors include population growth, rising incomes, improved infrastructure, increased awareness, insurance policies, and India’s growth as a hub for medical tourism and clinical trials.
Government-funded health insurance enables India’s poor to receive timely medical care without out-of-pocket expenses. However, there are still significant issues in the healthcare sector that need to be addressed, such as uneven distribution of life expectancy and low government expenditure on health.
The Importance of Health Insurance
Health insurance offers a mechanism for pooling Out of Pocket expenditure (OOPE) in India, providing more financial protection against health shocks. Pre-payment through health insurance is an important tool for risk-pooling and safeguarding against catastrophic expenditure from health shocks.
However, at least 30% of the population, or 40 crore individuals, lack any financial protection for health. Government initiatives like Ayushman Bharat – Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) offer a sum insured of Rs. 5 lakh per family for secondary and tertiary care.
Government Schemes Related to Health Insurance
The AB-PMJAY scheme offers a sum insured of Rs. 5 lakh per family for secondary and tertiary care. The scheme aims to provide financial protection against health shocks to Indian families.
Despite all these measures, however, the health problems in India are cause for concern. More needs to be done to uplift the overall standard and access to healthcare in the country.
