A recent dispute between general insurance companies and certain categories of health-care providers has snowballed into a major controversy calling into question the relevance of health insurance for meeting medical expenses. Over a month ago, the four public sector general insurance companies, who collectively hold a majority of health insurance policies, decided to withdraw “cashless” facilities offered by them either directly or through third-party administrators (TPAs). Initially projected as a marketing tool, the cashless option is now a common feature in all health insurance policies. Since the insurance companies undertake to settle the bills directly, the policyholder is spared the burden of making the payment upfront and then getting it reimbursed, a tedious process in the best of times. The number of network hospitals, those that participate in the scheme through a contractual relationship, has increased enormously, aided substantially by the cashless facilities on offer. Health insurance has become the fastest growing segment of general insurance — it registered, on average, an annual growth of 35 per cent over the last decade. With less than 10 per cent of the eligible population covered so far, there is obviously a great potential to be tapped.
Given this context, the withdrawal of the most popular feature of health insurance plans is a setback for not only the policyholders but also, in a larger sense, the orderly growth of the health insurance business. The insurers have alleged that the network hospitals, in collusion with doctors, inflate the bills that are settled by the TPAs under the cashless scheme. Health-care providers are largely unregulated, and there are no standard treatment protocols, no benchmarks of costs to be charged, and no standardised data maintenance. Insurers complain that the present business model is becoming unviable with loss ratios running in excess of 120 per cent. The public sector insurance companies are trying to provide some of the benefits of the cashless policies through a newly created category of preferred provider-network of hospitals with agreed payment schedules for standardised treatments. On the other side, the leading hospitals have their own reasons to offer: the cost of health care, like everything else, is rising, and in the course of treating the patients they cannot stint on tests and procedures that could turn out to be expensive. Policyholders and insurance companies as well as hospitals and doctors would all be better off if a greater degree of transparency is introduced in health insurance.