Health Cover for all Indians will change the scene

In one of my blog I had suggested that all senior citizens should be asked compulsorily to go in for health insurance.

On the same concept Indian Government is considering to cover all citizens with Health Cover during Five year Plan (2012-2017).

Let us see what it means to you, me or all of us. Different studies may come out with different statistics .If we make some assumptions;
India population: 120 crores
Family size: 5
Households: 24 crores



With growth in population the figure can be Rs 225000crores which is 28 times the present size of health insurance or 7 times the size of general insurance industry.

This is going to give a big boost to healthcare industry and generate employment opportunities.

Volumes can result in reduction in health care costs

Fortune India in their October 2010 issue has covered a detailed write up on Medanta Hospital, Gurgaon and it has some interesting facts.



Medanta has ambitious plan to increase the number of beds ultimately to 1800 beds. This will lead to efficiency in use of equipment / resources and this is the reason why Medanta is charging 15% to 60% lower than what other hospitals are charging. These facts support the fact that Large hospitals can be competitive.

Heart Diseases are responsible for maximum number of deaths

Civic run Hospitals in Mumbai have compiled data for 2001- mid 2010 period and 97677 persons died during this period due to heart attack/ailments. This is 34% or total deaths across these hospitals over the period.

According to Dr Pavan Kumar Consultant Cardiologist of Lilavati Hospital the reasons for heart attack can be.

• Poor Oral Hygiene
• Malnourishment
• Lack of adequate vitamin B-12/ Folic Acid in the diet
• Social Stress due to work pressure


According to Dr Brian Pinto, another authority and affiliated to Holy Cross Hospital the reasons for heart attack can be

• Not loading much physically active life
• Eating unhealthy foods

Costs related to hospitalization due to heart ailments in good hospitals are high and may be in the range of Rest. 1.50 lakhs to Rs. 5.00 lakhs .This fact should be kept in mind while buying health insurance .Sum assured of Rs. 1.00 lakh may turn out to be too less when the bill comes out to be Rs. 3.50 lakhs or Rs. 5.00 lakhs.

Yes medical expenses can be high

According to news paper reports Punjab Chief Minister medical expenses for 2 months were Rs 85 Lakhs.

This proves that medical expenses can be high. It is better to plan by buying health insurance unless you are a Minister/Chief Minister like Punjab Chief Minister as mentioned in this news.

Bajaj Allianz has also increased premium rates for Health Insurance.

Bajaj Allianz has also increased premium rates for Health Insurance.

Sometime back Reliance General Insurance Co. Ltd. had increased the premium rates for health insurance.

Bajaj Allianz General Insurance Co. Ltd. has announced increased rates and with this, their rates are 20% higher than that of premium rates of Reliance General.

Let us see comparison of old rates vs. new rates of Bajaj Allianz for a family floater policy where the age of head of the family is 32.


Let us see the comparison of Bajaj Allianz rates with Reliance General/Max Bupa


You may be surprised to see increase of the order of 20% but I was expecting this to happen for quite sometime.

As mentioned earlier in one of my earlier blog no insurance company can go on losing money for a long time as ultimately the shareholders want return on their investment.

As the companies have started getting ready for IPO as well as to release / figures in press (every 6 months) / website (every 3 months) this was expected to happen.

We understand that PSU’s are also going to release new rates where they will call the product as premium product and in this cashless treatment in good hospitals will be permitted. We expect the rates to be at par with rate of Bajaj Allianz General Insurance Co. Ltd. Let us wait for the announcement.

Should PSU’s create a common TPA or they should create a stand alone health insurance company?

Should PSU’s create a common TPA or they should create a stand alone health insurance company?

Creation of a common TPA is not looking at the future. The right thing for the PSU’s will be to set up a JV company (ownership being shared by 4PSU companies, may be 25 % each) and then have in house claim settlement department. If Bajaj Allianz, Star and others are having success in house claim settlement department then this company (let us say for discussion sake GIPSA Health Insurance Company Ltd) can also have in house claim settlement department, strong Business Development Department to negotiate with Health Care Providers, Medical Devices Manufacturers, even Pharma suppliers so that they can have economies of procurement, use of technology to best possible extent. With the first year target of Rs 10,000 crores this company will be strong enough to negotiate and emerge the trend setter for growth of health insurance industry in our country. What NTPC did for power generation and BHEL did for Power Generation Equipment can be expected from this strong health insurance company.

We feel JV TPA with any one who is selected will not work as TPA Company (26%) will be the driving force or 4 companies who will jointly own74% .This option is not going to work.

The only successful model will be a stand alone GIPSA Health insurance Company. This strong company manned by those who specialize in health insurance, who are dedicated to make career in health insurance, who have passion for health insurance will be the solution. In 5 yrs this company can reach level of Rs 25,000 crores, may be Rs 40,000 crores.

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