Business

Swindler’s List

The profit motive has led insurers into a rapacious overdrive

Advertisement

Swindler’s List
info_icon

In India, we do not have social security. The infrastructure in government and municipal hospitals is pitiable; yet, the teeming masses who cannot afford private healthcare throng to these hospitals, which find it difficult to cope. In contrast, private hospitals have the latest equipment and top doctors, but the cost of healthcare is extremely high and beyond the reach of the average citizen. In this backdrop, the government wants to promote medical insurance as a social welfare measure—that is why it encourages medical cover with a tax rebate under section 80-D of the Income Tax Act.

But insurance companies think of health insurance as no different from any other insurance business, and want it to generate profits. They do not want loss-making policies. Insurance professionals implementing the mediclaim scheme lose sight of the fact that these policies are not for profit-making, but for social welfare. In fact, profit from other insurance sectors has to subsidise health insurance.

Advertisement

Look at the role of Third Party Administrators (TPAs), the claims processing agents of insurance companies. Originally, the insurance companies had in-house processing of claims. At that time, health insurance was making marginal profits. Later, with the introduction of TPAs, the situation has worsened. Now, insurance companies have to bear the additional cost of fees payable to the TPA.

The irony is that TPAs are independent. Their goal is to focus on profits. To cut costs, they often appoint doctors on their panel who are unqualified to opine on a claim. To understand the medical implications, it is necessary that the doctor opining on the claim must be from the same stream of medicine and has specialised qualifications. For instance, an ayurvedic doctor or even an mbbs cannot pass judgment on a specialised branch of surgery like neurology or orthopaedics. Consequently, claimants are needlessly harassed while processing claims.

Advertisement

While settling claims, TPAs are supposed to take the money from the insurance company and disburse it to the claimant. Yet, many TPAs resort to the unethical practice of taking the sanctioned treatment amount from the company, but disbursing only 80-90 per cent to the hospital under the cashless scheme. They illegally pocket the difference and enrich themselves. When this was brought to the notice of insurance regulator IRDA, the official claimed that the “rebate” was a result of market forces ensuring expeditious settlement of claims! On pointing out the legal provisions, he admitted that such rebates were illegal. The IRDA has thus miserably failed as a regulator.

Instead of appreciating the objective of health insurance, insurance companies are resorting to arbitrary, illegal and high-handed ways to curtail claims. Glaring instances  occur daily. In some cases, the premium is accepted year after year so long as there is no claim, but once a claim is lodged and the insurance company fears that the policy will become onerous, it refuses to renew it. Otherwise, the premium is loaded heavily so that the insured finds it economically unviable and discontinues the insurance himself. Also, diseases suffered during a policy period are excluded from the subsequent policy at the time of renewal.

Advertisement

Other illegal acts include unilateral change in the terms of the policy, such as putting a ceiling on the amount payable for certain illnesses or capping the doctor’s fees; and the introduction of the co-payment clause, requiring the insured to bear a percentage of the treatment cost. When such conditions were not in the original policy, the introduction of these new clauses is illegal, as held by the Supreme Court. Yet, insurance companies act in a high-handed manner, and get away with it because most individuals cannot afford to fight the might of the insurance company. Worse, IRDA has chosen to turn a blind eye to such acts that openly, blatantly flout the tenets of law.

Advertisement

The need for an effective functioning of mediclaim policies can best be summed up from the observations of the Supreme Court in the case of United India Insurance vs Manubhai Dharmasinhbhai Gajera & Others, in which it held that a contract of insurance must be construed keeping in mind the larger public policy and public interest guiding the nationalisation of the insurance companies. Clearly, IRDA needs to wake up and keep in mind that the primary objective of the mediclaim policy is for the welfare of the citizens and not for profit of the insurance company. Let’s make a start by discontinuing the TPA system.

Advertisement

(Gai is a consumer activist and has won the National Youth Award for Consumer Protection.)

Tags

    Advertisement

    Advertisement

    Advertisement

    Advertisement

    Advertisement

    Advertisement