Should the GHI be compulsory in India?

Should the GHI be compulsory in India?, Health News, ET HealthWorld

Should the GHI be compulsory in India?By Abhishek Poddar

India’s current population of 1.38 billion is about 17.7% of the world’s population. Yet collectively we spend only $63.75 on health care per capita. It’s almost an enigma, a mismatch between access, quality and affordability. India is perhaps the only country in the world with sprawling healthcare facilities that are often inaccessible and unaffordable in times of need and emergency. The state of health care in a country like ours is dismal to say the least. That said, the medical inflation rate is currently 14%. India also has the maximum out of pocket health spending among G20 countries, pushing almost 60 million people into poverty every year (National Health Authority, 2020).

The scenario is no different in the insurance sector either. According to the India Brand Equity Foundation (IBEF), a growing middle class coupled with the growing burden of old and new diseases has accelerated the demand for health insurance coverage. With a growing demand for affordable and quality health care, the penetration of health insurance is poised to grow in the coming years. Therefore, the next step for insurtech is to bridge the gap between healthcare access and insurance penetration.

Think of the above as a problem statement. Now let’s look at the possible solutions.

Globally, in many advanced economies, insurance is provided by the state, such as in Australia, Canada, Norway and the United Kingdom. In India, due to our population density, the government cannot bear the burden of healthcare costs alone. This risk must be diversified. So either individuals buy their own insurance, as in many counties, or their employers provide them with adequate health care coverage known as group health insurance.

Niti Aayog’s Missing Middle Report reveals that 40 million of India’s population, or about 30%, lack financial protection and are termed as the missing middle. They face two major challenges: first, they don’t have access to quality health care, and second, they can’t afford products designed for the top of the pyramid. Therefore, it is up to employers to cover their employees.

Let’s do the GHI calculations.

Companies spend an average of Rs 3,500 per life. Depending on the policy, this may include only employees, employees + spouse, employees + spouse + children, and employees + spouse + children + parents. Compare that with the average annual premium of Rs 3,000 to 5,000 an individual pays for themselves. What it doesn’t tell you is that the premium paid for GHI has no waiting periods, can include parents and spouse (and children too), and also covers existing illnesses (since it is purchased in bulk).

In India, GHI is 100% tax deductible. This means that businesses receive full tax deductions under various sections of the Income Tax Act when paying for employee health care. The total amount paid for the bonus is recorded as a business expense.

Companies today are sparing no expense when it comes to employee health. A company in our portfolio has a sum insured of Rs 50 lakh per family and the average sum insured in our portfolio is around Rs 5 lakh per family. We are seeing more and more companies opting for parental coverage and including spouse and children in their Group Medical Coverage (GMC). Around 80% of them are first-time buyers of insurance. GHI coverage is also increasing in Tier II and III cities (as more companies cover parents and spouses of employees).

Here are five reasons why GHI should be mandatory:

No waiting period: An employee is covered by the employer’s collective health insurance from the day he joins the company. This contrasts with individual insurance where the minimum waiting period is 30 to 90 days.

Coverage for pre-existing conditions: If employees purchase their own insurance, their pre-existing conditions likely won’t be covered. Even if employees purchase an expensive policy, they would only be covered for pre-existing conditions after three to five years of coverage under the same policy. On the other hand, a GHI policy covers pre-existing conditions from day one.

More than just health coverage: GHI is not limited to health insurance or health checkups. It is a comprehensive health insurance policy and the first stop for medical emergencies. Going forward, insurance partners will be responsible for providing end-to-end care to members – from preventative care to primary and tertiary care. After the pandemic, companies realized the importance of comprehensive healthcare packages that include both preventive and curative treatments. According to industry reports, 70% of GenZs seek support from their employers for their mental wellbeing and health safety. Companies, on the other hand, are ready to offer a range of health benefits to attract and retain the right talent.

Companies want to take care of their employees: Previously, group health insurance was synonymous with large companies that could afford it. Today, even a startup with just two employees has access to comprehensive health insurance coverage. The pandemic has changed the perception of insurance that it is no longer a luxury item, but a basic necessity. According to LinkedIn Global Talent Trends 2022, 63% of employees said work-life balance was their top priority when applying for a job, followed by 60% favoring compensation and benefits, and 40% prioritizing colleagues and work culture.

Diversity and inclusion: Special covers under a GHI policy, which were previously unheard of, are now accepted and offered by companies that care. These include:

LGBTQ coverage: According to a recent report, LGBTQ people make up nearly 15% of India’s population. There has been a big shift in recent years toward LGBTQ health insurance that covers community members and resident partners. It costs nothing extra, but goes a long way in gaining employee trust.

Maternity and baby cover day 1: Although having a baby is an exciting and life-changing experience for a woman, her journey from the prenatal period to the postnatal period is often fraught with financial pitfalls. According to our recent survey on maternity insurance, the maternity benefits offered by companies are insufficient given the exorbitant cost of care (normal or caesarean section) for pregnancy and the health expenses of a newborn baby. Hence, Maternity and Baby Day 1 cover of Rs 1 Lakh and above under a GHI policy is slowly picking up among companies.

Mental health coverage: During the pandemic, mental health care, which was not covered by traditional benefits, has become a major concern for the workforce. A GHI policy provides mental health coverage that protects employees against stress, burnout and anxiety.

Coverage of IVF treatments: Health experts have observed an increase in cases of infertility. According to the Indian Society of Assisted Reproduction, one in six couples suffer from infertility, which is 27.5 million infertile couples trying to conceive. This has likely led to an increase in demand for IVF treatments, which can help couples start their own families. Since IVF treatment is an expensive procedure, we recommend companies purchase this coverage for their employees.

In addition to the above, we are also seeing companies opting for comprehensive coverage such as OPD, GPA (Group Personal Accident), hospicash for the self-employed and self-employed, lasik surgery and free dental care.

GHI is a loose safety net for millions of people, as it reduces the risk of falling into debt/poverty. It is affordable and inclusive and a legitimate way to cover a large population, where government and retail policies have their natural limitations. In short, we need to ensure two things: first, better access to health care and second, deeper penetration of coverage. For me, group health insurance is the answer not only for the employees but also for India’s missing link.

By Abhishek Poddar, Co-Founder and CEO, Plum

(DISCLAIMER: The views expressed are solely those of the author and ETHealthworld does not necessarily endorse them. shall not be liable for any damage caused to any person/organization directly or indirectly)

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