Have you ever found out the cost of different medical treatments and procedures before deciding the size of your health cover? When you buy a family floater health cover of, say, Rs 3 lakh, do you know the cost of a bypass coronary surgery or a liver transplant or any other critical illness?
If you do not, it is similar to buying a pair of small-size jeans without knowing your waist size. When you want to wear it, it might not fit.
That medical inflation far outpaces overall inflation is known. The oft-quoted figure for health-care inflation in India is 15 per cent a year compared to overall inflation of six to seven per cent in the past few years.
A health insurance report published by the Insurance Regulatory and Development Authority (IRDA) in 2011 says the average claim made in case of major diseases was Rs 134,550 in 2009/10 compared to Rs 98,101 in 2007/08, a compound annual growth rate of 17 per cent. Meanwhile, the overall average claim paid by insurance companies in 2009/10 was just Rs 23,000.
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The report was based on the 'amount claimed' as, according to IRDA, this refl ects the actual expenditure incurred, and thereby shows how medical costs have risen over the years. The report considered only those cases where the amount claimed was more than Rs 40,000. Claims of lower amounts would usually be for diagnostics tests and medicines without major treatment being involved and could have distorted the overall data disproportionately.
The report points to a 57 per cent rise in average claimed amount for circulatory diseases (heart attacks, high and low blood pressure, etc) from Rs 1.53 lakh in 2007/08 to Rs 3.56 lakh in 2009/10. The average claim made in nervous systemrelated diseases increased 14 per cent from Rs 1.10 lakh in 2007/08 to Rs 1.28 lakh in 2009/10. The average claim made in blood-related diseases increased 11 per cent from Rs 96,000 in 2007/08 to Rs 1.07 lakh in 2009/10.
The average claimed amount in the case of uterine cancer was Rs 74,717 in 2009/10 compared to Rs 66,000 in 2007/08, while the average cost of gall bladder stone surgery rose 13 per cent between 2007/08 and 2009/10 from Rs 63,664 to Rs 73,127. That of kidney stone removal increased from Rs 61,000 to Rs 65,000.
That was in 2009/10. What about 2011/12? There was no survey available, so we asked third party administrators, or TPAs, insurance brokers, hospitals and insurance companies. Not all were willing to share prevailing rates.
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One agency hired by insurance companies to service health insurance claims, however, shared the tariff list approved by the General Insurers' Public Sector Association (GIPSA). Also, Medimanage, an insurance broking company, provided a list of current rates for some common treatments and procedures, which it said was the average cost across the country in private hospitals.
The two lists, however, show wide disparity in rates. The average cost of coronary artery bypass surgery, according to GIPSA was Rs 1.4 to 1.8 lakh in 2011/12 while the average actual cost, according to Medimanage was Rs 2.5 lakh. Similarly, the cost of angioplasty was Rs 1.5 lakh according to GIPSA while the 'actual' cost was around Rs 2.5 lakh (See Stunning Spike.) Raju M.V., Vice President (Technical), TTK Healthcare, says GIPSA-approved rates do not refl ect actual costs.
GIPSA is an association of the four public sector general insurers who controlled the sector before it was opened to the private sector in 1998: New India Assurance, United India Insurance, National Insurance and Oriental Insurance Company. Their spokespersons claim they decided to standardise rates for 42 medical procedures across categories of hospitals for settling cashless claims because hospitals were saddling insured patients with infl ated bills, settling which in turn was taking the insurance companies into the red.
The network of hospitals that agreed to the GIPSA rates forms the preferred provider network (PPN). There are 928 hospitals in the PPN across eight cities in the country.
Why are health-care costs increasing at a double-digit rate despite the increased use of technology? According to Raju of TTK Healthcare, while technology has reduced the time taken for certain medical procedures, the expertise to use such technologies is scarce. "The cost of super-specialty equipment and robotics is also passed on to patients," he says.Courtesy: Money Today