Tuesday, May 26, 2009

The Cost of Living

It was late night when the accident occurred. He roads were supposed to be empty, or so the car driver thought as speeded through the main road without noticing a rickshaw slowly crawling carrying its lone passenger, the weary driver getting ready to set his last passenger down before heading home.

The inevitable happened and the two crashed. The cycle rickshaw was reduced to a mass of twisted metal while the driver was thrown of his seat but escaped with a few minor scratches. The lone passenger, a doctor heading back after along day was however hit hard and lay writhing in pain. Some one from the gathered crowd, called his wife by recovering the doctor’s cell phone that ran out of her home and rushed her husband to the nearest hospital casualty.

The young doctor on duty ordered the mandatory X-rays and discovered more than one broken bone. He consulted the orthopedic surgeon on call, who advised immediate surgery and suggested that the patient be prepared for this while he arrived. In due course, after the patient was administered pr anesthetic procedures, the surgeon arrived. But just as he was about to begin, a messenger rushed in from the Billing Section to inform that the cash deposit paid on arrival was insufficient and the operation could not begin till an adequate advance was paid.

It was midnight and the wife was in a fix. Her husband was lying on his surgical table, the surgeon was waiting to start but money was short. The amount of money required was not available at home, the ATM would dispense would only a limited amount; and so the only way finally was to phone all of her office colleagues living in the area and some how take up a collective offering. The money deposited, the surgery finally took place after a harrowing wait of close to two to three years.

After recovering the ordeal, the family has become one of the most strident advocates of health insurance, which they did not have as they were entirely dependant on medical reimbursements offered by their employers. Of course the family hardly lacks company. According to National Council of Applied Economic Research (NCAER), health insurance penetration in India stands at a dismal 1.2 percent. On a macro level, very few households in India have contingency plans to meet their health expenses. Health risks in India are perceived differently than the western population. Prior planning in health issues is yet to be a major priority.

Without an aggressive thrust on insurance, things can only get worse. India is the most privatized health market in the world. Public support for healthcare has been historically low in India, averaging less than 1 per cent of the GDP, but what is worse is that in the last decade public health investment and expenditure has seen a secular declining trend.

The poor have to increasingly resort to taking debt or selling assets to meet costs of hospital care. It is estimated that 20 million people each year fall below the poverty line because of indebtedness due to healthcare. This is worrisome given the fact that more than two-thirds of the country’s population is already either poor or living at subsistence levels

There are a couple of reasons that Health insurance has not taken off a great deal in the country. Firstly, unlike life insurance, which is marketed in India, largely as an investment product , the value o health insurance kicks in only if and when one is seriously ill ; or else the premium is paid is seen as a waste of money. In some places, talking explicitly about illnesses and planning to deal with them is considered a sure fire invitation to sickness and an ill omen. So with al these complexities, the private insurance industry in India is still at a nascent stage and growing. To date, only approximately 20% of the total insurable population of India is covered under various life insurance schemes. Let us hope that the health insurance industry will not exploit this market but also educate it about the social net that health insurance can provide.

1 comment:

Rahul Anand said...

I think the main reason health insurance sells so well in developed countries is the unbearable health care costs. Even a regular checkup or say a minor fracture can be very expensive, and people have no option but to buy insurance.

India has relatively lower health care costs.

One example I know about: A surgery for Goiter (Iodine deficiency) costs about $95,000 ( about Rs.47 lakhs) in the US, which usually costs less than Rs. 5 lakhs in India.

But I think the trend of buying insurance will surely catch up gradually.