America’s healthcare system predatory? Lessons for India
The murder of Brian Thompson, CEO of UnitedHealthcare, in New York on December 4, 2024, has caused a massive public outrage – not so much about the man himself or even the act of murder, but about the broken healthcare system he symbolised. UnitedHealthCare is the largest health insurance company in the U.S., with revenues of nearly $360 billion in 2023, but the company was infamous for denying claims, turning down more than 30% of all claims.
This outrage surrounding the incident shines a harsh light on the exploitative practices of the unsurprisingly capitalist and intensely for-profit attitude of the American health insurance industry where the insurer’s opinion on treatment matters more than a doctor’s prescription.
Some examples of what a trip to the hospital can cost you in the USA:
Warning Signs for India’s health insurance
While India’s healthcare system is quite different, there are lessons to be learnt so our health insurance industry may avoid adopting similar predatory tactics. Data from the Insurance Brokers Association of India (IBAI) for 2023 highlights some alarming trends in health insurance claims.
- Private insurers need to catch up
Public sector insurers in India demonstrate far better claims payment, paying more than 97% of the amount claimed (not number of policies). In contrast, many private insurers pay less than 70%. (A certain insurer paid only about 55% of the amount claimed while reporting a healthier-looking 75% claims ratio by the number of policies.) This discrepancy raises questions about how insurers choose to publicise ratios which are more “marketable.” - Policy terms overlooked
Policies often include sub-limits that reduce pay-outs, as a result of which policyholders have to bear unexpected expenses. For e.g., room rent limits can significantly impact the coverage during hospitalization, especially in higher-tier hospitals.
Challenges for Policyholders
Health insurance in India (like in the USA) places the policyholder at the mercy of the insurer. On one hand, you have insurers citing fraud as a reason to deny claims, on the other, hospitals overcharge and exploit patients.
The lack of standardisation of hospital pricing further aggravates the situation. Hospitals are free to set their rates, often leaving patients with nowhere to turn when claims are denied or partially covered. What is more, some hospitals, once aware that a patient is “insured”, abuse the system and charge significantly higher for the same service than if they were uninsured.
How can Indian insurance improve?
The IRDAI has a responsibility to ensure that insurers are fair to their policyholders; but there is a lot that needs to be done:
- Transparency: Insurers must disclose claims ratios by the amount paid (not just the number of policies) which will help consumers make informed choices.
- Portability: Portability needs to be standardised to avoid gaps in coverage and ease of porting.
- Tougher consumer protection: While #InsuranceForAll2047 is important, it is critical to not lose sight of the need for consumer protection. There is a need for stricter penalties for insurers with poor claims practices.
- Medical expense regulation: Caps on hospital charges for standard procedures is urgently needed. Without regulating medical expenses, the insurance industry will remain a band-aid on a much larger wound of increasingly expensive treatment.
What should policyholders do?
- Read the terms and conditions: Understand your policy’s terms, especially sub-limits and co-payment clauses.
- Make informed decisions: Go for insurers with better claims ratios by the amount paid and transparent practices.
- Document everything: Keep all medical records and correspondence handy to strengthen your case during claims.
- Speak out: If you have complaints or feel exploited, don’t hesitate to escalate the issue with the insurer or approach an ombudsman.
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