India’s current population of 1.38 billion is approximately 17.7 per cent of the world’s population. Yet, collectively we spend just $63.75 on healthcare per capita. It is almost a conundrum, a mismatch of access, quality and affordability. India is perhaps the only country in the world that has sprawling healthcare facilities, which are often inaccessible and unaffordable in times of need and emergency. The state of healthcare in a country like ours is dismal, to say the least. That said, the rate of medical inflation is currently at 14 per cent. India also has the maximum out-of-pocket healthcare expenditure among G20 countries, which pushes nearly 60 million people into poverty every year (National Health Authority, 2020).
The scenario is no different in the insurance sector either. According to the India Brand Equity Foundation (IBEF), a growing middle class coupled with the rising burden of old and new diseases has accelerated the demand for health insurance cover. With increasing demand for affordable and quality healthcare, the penetration of health insurance is poised to expand in the coming years. Hence, the next step for insurtech is to bridge the gap between healthcare access and insurance penetration.
Imagine the above as a problem statement. Now let us examine the possible solutions.
Globally, in many evolved economies, insurance is provided by the State such as in Australia, Canada, Norway and the UK. In India, owing to our population density, the government alone cannot bear the burden of healthcare costs. This risk has to be diversified. So, either individuals buy their own insurance, as in many counties or their employers provide them with adequate healthcare cover known as Group Health Insurance.
Niti Aayog‘s report on the missing middle reveals that 40 million of India’s population, which is roughly 30 per cent, lacks financial protection and is termed as the missing middle. They face two key challenges: one, they lack access to quality healthcare, and two, they cannot afford products designed for the top of the pyramid. Therefore, it comes down to employers covering their employees.
Let’s do the GHI maths.
Companies on an average spend Rs 3,500 per life. Based on the policy this can include only employee, employee + spouse, employee + spouse + kids, and employee + spouse + kids + parents. Compare that with the average annual premium of Rs 3,000-5,000 an individual pays for self. What this does not tell you is that premium paid for GHI does not have waiting periods, can include parents and spouse (and kids too), and also cover existing illnesses (since it is purchased in bulk).
In India, GHI is 100 per cent tax deductible. This means companies get complete tax deduction benefits under various sections of the Income Tax Act when they pay for employee healthcare. The entire amount paid for premium gets accounted for as a business expense.
Companies today are sparing no expense when it comes to employee health. A company in our portfolio has Rs 50 lakh sum insured per family and the average sum insured in our portfolio is roughly Rs 5 lakh per family. We are seeing more companies opting for parental cover and including spouse and kids in their Group Medical Coverage (GMC). Roughly 80 per cent of these are first-time insurance buyers. GHI coverage is also increasing in tier II and III cities (as more companies cover parents and spouses of employees).
Here are five reasons why GHI should be mandatory:
No waiting period: An employee gets covered under an employer’s group health insurance policy from the day s/he joins the company. This is in contrast to individual insurance where the minimum waiting period is 30-90 days.
Pre-existing Diseases coverage: If employees buy their own insurance, their pre-existing diseases will most likely not be covered. Even if the employees buy an expensive policy, they would be covered for pre-existing diseases only after three to five years of coverage under the same policy. On the other hand, a GHI policy covers pre-existing diseases from day one.
More than just a health cover: GHI is not limited to health insurance or checkups. It is a comprehensive healthcare policy and the first port of call in medical emergencies. Going forward, the onus will lie on insurance partners to provide end-to-end care to members – right from preventive to primary and tertiary care. Post-pandemic, corporates have realised the importance of comprehensive healthcare packages that include both preventive and curative treatments. As per industry reports, 70 per cent of GenZs demand support from their employers for their mental well-being and health security. On their part, companies are willing to offer a range of health benefits to attract the right talent and retain it.
Companies want to care for their employees: Earlier, group health insurance was synonymous with large enterprises that could afford it. Today, even a startup with only two employees has access to a comprehensive health insurance cover. The pandemic has changed the perception of insurance that it is no longer a product of luxury, but a basic necessity. As per LinkedIn Global Talent Trends 2022, 63 per cent employees said work-life balance was their top priority while applying for a job, followed by 60 per cent favouring compensation and benefits, and 40 per cent giving precedence to colleagues and culture at work.
Diversity and inclusion: Special covers under a GHI policy, which were earlier unheard of, are now being accepted and offered by companies that care. These include:
● LGBTQ cover: According to a recent report, LGBTQ persons constitute nearly 15 per cent of India’s population. There has been a big shift in recent years towards LGBTQ health insurance that covers members of the community and live-in partners. This comes at no extra premium, but goes a long way in gaining employees’ trust.
● Maternity and baby day 1 cover: While having a baby is an exciting and a life-changing experience for a woman, her journey from antenatal to postnatal is often fraught with financial difficulties. According to our recent survey on maternity insurance, maternity benefits offered by corporates are insufficient given the exorbitant cost of treatment (normal or C-section) for pregnancy and health expenses of a newborn. Hence, maternity and Baby Day 1 cover of Rs 1 Lakh and above under a GHI policy is slowly picking up among corporates.
● Mental health cover: During the pandemic mental healthcare, which was not covered under traditional employee benefits, became a major concern for the workforce. A GHI policy offers mental health cover that protects employees against stress, burnout and anxiety.
● IVF treatment cover: Healthcare experts have observed a rise in infertility cases. According to the Indian Society of Assisted Reproduction, one in six couples suffers from infertility, amounting to 27.5 million infertile couples trying for conception. This has likely resulted in the increased demand for IVF treatments, which can help couples start their own family. Since IVF treatment is an expensive procedure, we recommend companies to buy this cover for their employees.
In addition to the above, we are also seeing companies opt for comprehensive coverage such as OPD, GPA (Group Personal Accident), hospicash for gig and freelance workers, lasik surgery and free dental care.
GHI is a safety net at bulk for millions of people, as it reduces the risk of slipping into debt/ poverty. It is affordable and inclusive and a legitimate way to cover a large population, where the Government and Retail policies have their natural limits. To sum up, we need to ensure two things: one, better healthcare access, and two, deeper penetration of coverage. To me, group health insurance is the answer, not just for employees but also for India’s missing middle.
By Abhishek Poddar, Co-founder & CEO, Plum
(DISCLAIMER: The views expressed are solely of the author and ETHealthworld does not necessarily subscribe to it. ETHealthworld.com shall not be responsible for any damage caused to any person / organisation directly or indirectly)