Rural risk cover may include OPD

The subcommittee on rural health insurance set up under the aegis of the Insurance Regulatory and Development Authority (Irda) is likely to bring out its report within this month.

The report is likely to suggest coverage of outpatient department (OPD) services and adoption of self-funding and diagnostic-related group model for popularising health insurance in rural areas.

The subcommittee was formed for a period of six months effective from the date of the first meeting which was held in December 2005. So far, the subcommittee is learnt to have met four times.

According to industry sources, the deliberations of the subcommittee are through. However, it has sought an extension for filing the final draft of the report which is likely to be completed shortly.

Health insurance is estimated to comprise about 11 per cent of the total non-life insurance market in India. As per IRDA, the gross premium underwritten in the general insurance sector for 2005-06 stood at approximately Rs 20,380 crore.

"One of the issues that was discussed was that a single product cannot suit the rural folk across the country. It therefore calls for designing different health insurance products for various districts," an industry source said.

The committee also suggested that OPD services be covered under the health insurance scheme. A standard health insurance policy today mainly covers expenses pertaining to hospital room, nursing, medicines and surgery.

Meanwhile, one of the suggestions made by the subcommittee members was to promote diagnostic-related group model in rural areas.

In this model, based on factors like demographics, nutrition profile and healthcare expenses, a list of illnesses that need to be covered by an insurance policy for a group are made.

A price for the cover is then fixed by negotiating with different hospitals on the treatment of expenses. The model works on co-pay system wherein the person covered has to pay for a certain percentage of the expenses.

The subcommittee has also been evaluating whether a system of self-funding can be implemented in different regions.

In such a case, members of a group contribute to a common fund and healthcare expenses are then met, up to a certain percentage, from the fund. Once the expenses cross the fixed percentage, the insurance cover comes into play.

The drivers for suggestions of self-funding and co-pay system are high claims ratio (up to 180 per cent) for insurance companies in case of health insurance. Besides, health insurance has also been stated to be vulnerable to frauds and false claims.

The 13-member subcommittee primarily comprises representatives from the ministry of health, third-party administrators, hospitals, insurance industry and non-governmental organisations. It is chaired by K K Srinivasan, member of Irda.