Health Insurance Under A Cloud As COVID–19 Rages

Outlook Money|July 2020

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Health Insurance Under A Cloud As COVID–19 Rages
With a spike in cases insurance companies are acting pricey while private hospitals are changing patients for PPE kits
Jeevan Prakash, Anagh Pal and Nirmala Konjengbam
Everybody has seen those social media forwards. A picture of private hospital charges for COVID-19 patients: a list of services, with astronomical figures that could cause a cardiac arrest even in the healthy. That one picture frames the famine of health resources Indian consumers face right now. It’s a pincer grip—scarcity at one end, and sheer unaffordability at the other, unfolding just like a famine.

The early reprieve India got during the COVID-19 pandemic now seems a distant story. The very nightmare the lockdown sought to prevent is now upon us. Existing hospital capacities are swamped.

We have an active caseload of 2 lakh-plus, leaping up by 16,000+ every day. The turnover of the sick is so huge that governments, both at the Centre and in states, have inevitably turned to private hospitals. But that has brought in the inevitable question: who’ll foot the bill?

This is where the insurance drama begins. The biggest bone of contention: insurance companies refusing to reimburse patients. Consumers are understandably angry at private hospitals for seemingly profiteering from a calamity—at a time when India’s wallet is thin. Hospitals have their own reasons and sob stories; yet, the government has moved to cap charges in places like Delhi. But why are insurance companies acting pricey? Because a pandemic is an unprecedented situation even for them.

The Insurance Regulatory Authority of India (IRDA) says existing health insurance policies suffice to cover COVID-19 expenses. Alongside, it’s encouraging insurers to come out with new COVID-specific policies. But for consumers, the latter should still be a choice—an older policy should suffice to cover a new disease. But several insurance companies are dragging their feet and looking for ways to cut corners. As it stands, the number of distraught patients—crying about not being reimbursed—can itself become a small graph among India’s COVID graphs.

Thing is, a cumulative demand is putting strain even on insurance companies, just like a run on the bank would. Smaller firms are reportedly putting their policies on hold for new clients, fearing huge losses. Most are refusing to reimburse the cost of Personal Protective Equipment (PPE) kits—which typically form a big part of medical bills. Others, as consumer rights activist Bejon Kumar Misra says, “are refusing cashless treatment and asking patients to pay from their own pocket and get reimbursed later.”

Insurers point to the huge, unforeseen, extra burden on them. It’s not only PPEs that cost between ₹4,000-8,000 a day—which, as Deepesh Mehta, CEO, Grow Wealth, says “falls under a non-medical expense, and cannot be covered”. Take co-morbidities: it can go undeclared in a policy form, but a virus will unerringly smell it out and strike, creating an unseen mountain of risk for insurers during a pandemic.

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July 2020