As the group health insurance costs for India Inc have shot up significantly, by around 25% in 2010, health insurers are making all-out efforts to reduce the costs through new measures. The insurers are now adopting co-pay practice which is not as prevalent in the country as it is in foreign countries.
For instance, co-pay arrangements require employers to share the health insurance premium with the employee so that the former doesn't bear the burden of rising premium.
However, as this practice of co-sharing the premium is not widespread in India, the cost of health insurance premiums is largely borne by the employer wherever it is a part of the benefit package..
"We have observed that co-pay practice in the health insurance has been gradually picking up for last two years, but the penetration is still very low in India as compared to other countries. It accounts for only 3-5% in the country, while it is widely prevalent in foreign countries. Our aim is to bring down the cost pressure on companies to around 10-15 % in 2-3 years, for which we need to bring an awareness among individuals to increase this practice to at least 40-50 % initially," said Apollo Munich Health CEO Antony Jacob.
If 10% co-pay practices are implemented in the country, then the costs of group health insurance premiums on companies will be brought down to around 5-7%," said SS Gopalratnam, managing director, Cholamandalam General Insurance. It may take 2-3 years to get fully implemented in India.
Sanjay Datta, head of Health Insurance of ICICI Lombard General Insurance explained, "In India, only 8-10 companies are partially active in the co-pay practice. I think as the cost of premium is so high, almost 90% of insured (individual) in our country shy away putting in their premium money in health care schemes. We are trying this new practice through group health schemes for companies first, then on individuals later."
Insurers are aligning their group health insurance premium in line with the market trend, leading to an increase in premium costs for the employers.
In order to address the rising claims ratio, companies have started capping maximum yearly limit on total claims amount and applying sub-limits on certain claims. Corporate buffer tops the list of actions that employers have undertaken to ensure an efficient healthcare benefit system.