Health Insurance Growth in India

The health insurance industry in India has come leaps and bounds since the launch of the first Mediclaim policy was enacted in 1986. It is the fastest growing segment of the Indian insurance industry, as evidenced by the fact that it makes up 30.5% of the non-life insurance segment of the Compound Annual Growth Rate since the years 2005-06. This is particularly remarkable when one considers that the non-life insurance sector has shown the highest premium growth rate amongst emerging markets. Before the year 2000, there were only four public sector insurance companies providing health products in India. Currently, there are 26 private companies providing health insurance, including five stand-alone health insurance companies.

The health insurance coverage in India is split among central, state, employer, and commercial markets. Various government social schemes since 2003 have led to an enormous boost to the number of people with some form of health insurance coverage in the country. Today, nearly 370 million Indians (29%) have some form of insurance through central or state government, employer based, or private health insurance. Commercial, for-profit insurance is comprised of public and private commercial insurance companies that provide individual or family retail and group medical plans for members. State sponsored health insurance schemes offer protection to the lower income groups, and many government employee based schemes cover government, railways, and defense personnel.

Indian Health Insurance Overview graphic 1 resized 600

While these numbers show impressive growth in the India healthcare insurance industry, the overall penetration is still low. Of the 29% Indians covered under insurance, 85% are primarily covered through social and state health initiatives. Commercial insurance is only adopted by affluent urban populations and corporate groups, while social health insurance schemes target low-income groups in both urban and rural areas. There is still a huge gap in coverage for people in the working class, lower-middle class, or those living in tier-two or tier-three cities. There is substantial opportunity to improve access to health insurance across all segments and to launch additional comprehensive health benefits for Indians.

A few government employee-based programs include inpatient benefits in addition to outpatient benefits at public healthcare facilities or within a tight private provider network. The commercial and social health schemes are primarily annual Mediclaim-type indemnity products with maximum sum assured limits and sub-limits for certain benefits. Group medical policies offered to employers/commercial players offer enhanced benefits (maternity, no pre-existing exclusions) within a maximum sum assured limit.

Recently, the main innovations in health insurance products have been a substantial increase in maximum sum assured, the introduction of life-long coverage, improved portability amongst insurers, and a wider range of benefits with accident protection, hospital cash, and critical illness riders. A few health insurers have floated disease-specific insurance coverage (e.g., cancer, cardiac surgery, and, more recently, diabetes), as well as limited outpatient attendance in the individual/family health market.

The four existing public sector companies in India continue to lead the market share, but stand-alone health insurance companies and private sector companies are making inroads. The government opened the market in 2000 and allowed a 27% stake for foreign investors that triggered the influx of foreign players into the health insurance market, providing a wider range of choices to the consumer and driving up competition.

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Operationally, however, the expenses for the insurers remain higher than they are in other markets. High incurred claims ratio (ICR) is encountered in a very price-sensitive environment and profitability is limited. In the last financial year, there have been trends of rises in premiums and reduction of claim ratios and profitability by a few non-life companies, as well as one of the stand-alone health insurance companies. The experience is different across individual, family, government, and group medical policy portfolios, as well as across public, private, and stand-alone specialists. Private non-life companies have been controlling claims ratios well, however, they continue to lose out on corporate covers. Public sector companies are showing improvements but still have a long way to go.

Indian Health Insurance Overview graphic 3 resized 600

Various factors predict a favorable outlook of the industry in the coming years. The current majority government is expected to bring in stability and catalyze economic growth. A proposed bill to increase the equity share of foreign partners to 49% will invite more foreign players to the health insurance market, which will result in better choices for members, added capability, and more competitive plans. There is interest from a range of foreign insurers who look at India as a major opportunity for growth. The government’s declared mandate to introduce universal health insurance will continue to expand focus to other low- and middle-income groups and will give further impetus to the social health insurance sector. World Bank predicts India to bring in coverage to 50% of its population under some form of health insurance plan by the year 2015.

Health Data Analytics for Identifying Wasteful Services

Eliminating inefficient and unnecessary medical services improves overall healthcare efficiency while reducing costs. In 2009, the Institute of Medicine (IOM) identified $750 billion of wasted spending, with unnecessary services accounting for $210 billion (Source: www.iom.edu/bestcare). The Congressional Budget Office has estimated that 30% of medical care in the U.S. is unnecessary care. (Source: Institute of Medicine article “Best Care at Lower Cost: The Path to Continuously Learning Health Care in America”, 2013.) Removing this waste and unnecessary care from the system will reduce costs, and is an opportunity to improve quality and patient safety.

Wasted healthcare spend

There are a number of use cases for analyzing health claims data to find wasteful and likely to be wasteful services.

  • Quantify necessary vs wasteful services
  • Identify opportunities for cost savings
  • Provider profiling and pay for performance risk sharing reporting
  • Employer Group Reporting to convey the value of health plan services provided to employers

In a wasteful services pilot study, Milliman looked at one health plan’s claims data for Medicare and Commercial over a one year period (November 2012 – October 2013). Observations from that study found that 21% of members had at least one wasteful service, 25% of all services provides were wasteful and 2.12% of the total claim cost allowed dollars were wasteful. Further data analysis found that 80% of the wasteful dollars came from only four measures:

  • Stress cardiac imaging or advanced non-invasive imaging (58% – $8,568,369)
  • Annual EKGs or cardiac screening (12% – $1,779,260)
  • Lower back pain image (6% – $940,363)
  • ED CT Scans for Dizziness (4% – $533,876)

To assist in identification of wasteful services, Milliman, along with VBID Health, has developed the MedInsight Waste Calculator, which is an analytical tool that provides actionable data to support healthcare quality, efficiency, and effectiveness reporting. The calculator brings together clinical expertise and powerful data analytics—allowing healthcare managers to target and reduce wasteful spending.

 

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To learn more about identifying and eliminating waste in the healthcare system, join us at our next MedInsight webinar:
Spending Growth, Cost Containment, and Elimination of Waste in the Healthcare System
September 17, 2014, 2:00-3:00 PM ET
Although spending growth has slowed recently, pressure to continue to hold the line on spending has increased. Competition in the exchanges, increasing fiscal pressure from employers, and government reduction in payment to health plans all suggest insurers must devise new ways to control spending. For providers, new payment systems such as global and bundled payment models impose economic and clinical accountability in which financial success requires elimination of waste—because greater volume is accompanied by greater cost but not greater revenue. This new environment requires new measurement systems. The MedInsight webinar will focus on policy issues related to spending trends and will present ways to help payers and providers quantify waste in their system.
Presenter:

Michael Chernew, PhD, VBID Health, Harvard Medical School
Dr. Chernew is a founding partner of VBID Health, a professor at Harvard Medical School, serves as the Co-Editor of the American Journal for Managed Care, and as Editor of The Journal of Health Economics. He is a member of the Congressional Budget Office’s Panel of Health Advisors as well as a Research Associate of the National Bureau of Economic Research.

Utilization Health Waste in the US Healthcare Marketplace

The American Healthcare system is experiencing rapid change, largely driven by the recognition by both public and private payers that the trajectory of healthcare spending growth must be slowed. Despite the recent slowdown in healthcare spending growth, which many attribute to the recession, efforts to transform benefit design and payment systems are proceeding rapidly. For example, public payers are both cutting payment rates and experimenting with bundled and global payment models. Private payers are adopting similar payment models and developing more sophisticated benefit designs that encourage patients to seek care from low cost and maybe high value providers, and to avoid expensive and maybe low value services.

In this environment it is crucial to try to eliminate waste. The new payment models allow providers to share some of the savings if utilization of wasteful services can be curtailed. The challenge of course is identifying which services are wasteful. The fact that waste exists in the healthcare system is widely accepted. Berwick and Hackbarth (2012) estimate there is about 200 billion dollars in waste due to over treatment in the US healthcare system, almost 10% of total spending. 

But eliminating that waste may be a challenge. Like everything in healthcare, the waste is likely to vary across geography and more importantly, across providers. Identifying which providers to focus on is a challenge. More fundamentally, aggregate measures of waste are not necessarily helpful to providers. Detailed, operational measures that can be applied to provider systems are needed. Fortunately, there has been a recent increase in effort to identify wasteful services. A number of lists exist. Perhaps the most prominent of these efforts is the Choosing Wisely campaign, sponsored by the American Board of Internal Medicine Foundation, challenged specialty societies to identify wasteful practices. Other panels, such as the United States Preventive Services Task Force, have identified services that might be wasteful. Thus clinically meaningful knowledge of what is wasteful exists.

Translating the knowledge of what is wasteful into tools that can be applied to identify that waste at the system level is difficult. Claims data is not ideal in many cases to identify waste. Often the measures of waste depend on patient history. Clinical knowledge and IT expertise are needed. Academic efforts to quantify waste using subsets of available measures are just beginning. For example, using a limited number of services, Schwartz et al. (2014) find 0.6% – 2.7% of Medicare spending may be wasteful and between 25% – 40% of beneficiaries have received at least 1 low value. Moreover, they found that there was significant regional variation in spending on low value services, suggesting some providers are more prone to use low value services than others. Finally, different measures of low value services were correlated across regions suggesting that measures of low value services based on a small number of services may be indicative of broader patterns of waste.

Commercial tools to quantify practice patterns will be crucial to many cost containment activities. Data can help focus efforts on reducing waste and thereby improve value. Such tools could be used to support payment reform, provider education, tiered benefits or even value based insurance designs.  One way or another spending growth must be contained. Our goal must be to do so in a way that improves value.

 

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To learn more about identifying and eliminating waste in the healthcare system, join us at our next MedInsight webinar:

Spending Growth, Cost Containment, and Elimination of Waste in the Healthcare System
September 17, 2014, 2:00-3:00 PM ET

Although spending growth has slowed recently, pressure to continue to hold the line on spending has increased. Competition in the exchanges, increasing fiscal pressure from employers, and government reduction in payment to health plans all suggest insurers must devise new ways to control spending. For providers, new payment systems such as global and bundled payment models impose economic and clinical accountability in which financial success requires elimination of waste—because greater volume is accompanied by greater cost but not greater revenue. This new environment requires new measurement systems. The MedInsight webinar will focus on policy issues related to spending trends and will present ways to help payers and providers quantify waste in their system.

Presenter:

Michael Chernew, PhD, VBID Health, Harvard Medical School
Dr. Chernew is a founding partner of VBID Health, a professor at Harvard Medical School, serves as the Co-Editor of the American Journal for Managed Care, and as Editor of The Journal of Health Economics. He is a member of the Congressional Budget Office’s Panel of Health Advisors as well as a Research Associate of the National Bureau of Economic Research.