India is committed to achieving universal healthcare for all by 2030, which is fundamental to achieving the other Sustainable Development Goals, which is the backbone of the Ayushman Bharat program launched in September 2019. Since then, Covid-19 has devastated lives and livelihoods, claimed young lives and left families without bread earners and insurance coverage to pay for healthcare.
Universal Health Coverage (UHC) entails ensuring that everyone has access to quality health services, including prevention, promotion, treatment, rehabilitation, and palliation, without incurring financial hardship.
Scenario at hand
However, the reality of healthcare services available to the Indian masses tells a different story. Firstly, the financial implication of hospitalisation still brings a nightmare to most middle income families in India. Lack of capacity and quality of healthcare services in the public sector pushes unwitting Indians to resort to the private sector, where financial blows due to hospitalisation is only too relatable. Hence, about 30% of India’s population or about 40 crore individuals who are devoid of any financial protection for their health becomes the vulnerable segment, according to a NITI Aayog report.
Insurance coverage is a true metric of the economic well being of a nation and in developed countries like the USA and UAE, employers with 50 or more employees have to offer mandatory health insurance to employees. India, however, has lagged very much in this field.
Determining the gap
About 6.3 crore Indian MSMEs were hit by the importance of health insurance, almost instantaneously, as Covid-19 hit. With lakhs of people getting affected by the novel coronavirus, the need to provide better healthcare came down on the corporate sector. As a response to this need, the Government of India came up with a mandate to every employer, who continues their business operation post-Covid-19, to provide medical insurance to their employees. Moreover, it also highlights that businesses should provide medical insurance even after the Covid-19 situation subsides.
Health insurance is a mechanism of pooling the high level of out of pocket expenditure to provide greater financial protection against health shocks, improve efficiency in the organization and delivery of healthcare for better health outcomes. Increasing the scope of health insurance coverage will reduce catastrophic and impoverishing health expenditure by ensuring that a large part of the hospitalisation expense is covered.
Case of the ‘missing middle’
The existing health insurance structure including government subsidized schemes, social health insurance schemes, and private voluntary schemes can potentially cover 70% of the population, nearly 21.5 crore families. However, the actual coverage is much lower considering not all households eligible for subsidized insurance are currently covered, and due to the overlaps between different health insurance schemes.
NITI Aayog reports that at least 30% of the population, or 40 crore individuals are devoid of any health protection through insurance. This cohort has come to be known as the ‘Missing Middle’, referring to the non-poor segments of the population who remain prone to catastrophic, and even impoverishing health expenditure, despite having the financial capacity to pay for contributory health insurance. According to NSSO data, the missing middle is spread across all expenditure quintiles, in both urban and rural areas.
The ‘missing middle’ constitutes the self-employed (agriculture and non-agriculture) in rural areas, and a broad array of occupations in urban areas. Characterized in rural zones by informal and unorganized work, and interestingly, in the urban areas by semi-formal, managerial or technical work, this group remains vulnerable to health shocks which can lead to catastrophic health spending.
Road ahead for Indian MSMEs
The Government of India advisory was welcomed by Indians MSMEs to include health insurance for employees, however, there was a bigger challenge standing before them. The lack of comprehensive health benefits options dug into the bottom line. The need for startup friendly, cost-effective health insurance is at an all-time high now.
As the NITI Aayog report also points out, most insurance products are not designed to cover everyone. Private voluntary health insurance is specifically aimed at and designed for high income groups and the Government subsidized schemes are for the poor and underprivilege.
Understanding the needs of MSMEs and designing relevant insurance products will address the problem head on, and extend insurance reach to a greater section of the missing middle. There are three key areas that needs to be addressed with the newly designed products for this segment:
- High premium which limits its affordability for the missing middle segment;
- Long waiting period for certain diseases / treatments; and
- Age restrictions with those aged over 65 not allowed to enroll in scheme.
Benefits of Insurtech
Technologies that help in better risk identification and intelligence-based mitigation measures have become a powerful tool in the path of achieving UHC. Insurtech has enabled better data analysis and dispersal, with improved verification, and seamless digital processing of claims. Facilitating faster, efficient decisions, technology will be the backbone of the modern era of insurance, where involved parties will save time and cost.
AI-based solutions could help reduce friction throughout the customer journey. For group health insurance products, the application of technology will not only benefit the employee but also the employer with fraud detection, risk identification and faster claim settlements.
The role of corporate health insurance is also crucial in ensuring that healthcare is affordable, accessible and viable to this large segment, engaged in semi-formal and formal work. At the center of this, lies the fact that even though there are multiple benefits you can offer, there is one that tops them all: the benefits of corporate health insurance.
It is because corporate medical insurance doesn’t just ensure your employees’ great health, but also signals that you care about their well-being, which is a longstanding factor in maintaining business productivity, even amidst global health shocks such as the ongoing pandemic.
— Yogesh Agarwal, Founder and CEO, Onsurity.