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Health Insurance Awareness in India and its Problems

Team AckoAug 12, 2021

India is home to approx. 1.39 bn people. Some might argue that spreading awareness about health insurance is an easy task given the strong manpower. However, this is one of the biggest challenges of why health insurance penetration is low in India. We have strict rules about buying a motor insurance policy, but health insurance is not compulsory even though it ensures timely medical treatment. Let's deep dive into the issues related to health insurance awareness in India, through this article.

Health Insurance Awareness in India and its Problems

Importance of health insurance awareness 

Lack of health insurance awareness leads to people paying for the cost of medical treatment themselves. While this seems like a normal thing, it can become a serious issue if the medical bill burns a hole in your pocket. This issue is topped with the increasing costs of medical treatments.

Getting treatment for a simple medical procedure may need thousands of rupees if performed in a private hospital. Choosing the right health insurance plan can combat this issue. People can enroll under government health schemes like Arogya Sanjeevani to get holistic coverage at affordable premiums. 

What are the major difficulties in spreading health insurance awareness?

Apart from a large population and lack of reach, the following are the major challenges of health insurance awareness in India.

Illiteracy

According to a report of the Ministry of Statistics & Programme Implementation, the literacy rate in India stands at 77.7% in the year 2020-21. A significant part of the Indian population is still illiterate. Additional efforts must be made to specially design awareness programmes for people who are not sufficiently educated. They need to be made aware that health insurance can help mitigate the financial issues while availing of health care facilities. 

lliteracy Rate

As the chart indicates, the illiteracy issue is not limited to the rural areas but is present in the urban sections also. Thus, illiteracy and lack of awareness about health insurance are issues faced by people in cities as well.

Deep-rooted misconceptions about health insurance

One of the most common misconceptions about buying health insurance is that healthy people don’t need it. The seriousness is felt only while facing a medical contingency. However, by this time, the waiting period clause of the insurance plan activates and thus fuels another major misconception related to claim rejection. People believe that health insurance companies reject most claims. But in reality, health insurance claims are accepted when they are raised as per the terms and conditions of the policy.

Poverty

As per the United Nation's report, India is estimated to have nearly 364 million people that fall below the poverty line. This is nearly 28% of the Indian population. This section of the society fights with more pressing issues like lack of food and sanitation. Thus, spending money on health insurance is probably not on their priority list. 

Percentage of Poverty

Free health insurance programs along with good medical facilities will be helpful. These will be useful in increasing awareness and improving health insurance penetration in the country. 

The state of public hospitals

Public hospitals are the prime location where health insurance awareness can be magnified. However, the lack of basic facilities has led people to rely more on private hospitals in spite of higher costs. Public hospitals are also dependent on government funds to operate, but these funds prove to be insufficient. On the other hand, medical technology is changing rapidly but is fueled by high costs. Thus, public hospitals lag and cannot offer the latest medical treatment available in private hospitals. 

State-run health insurance awareness programs can help in educating the masses about its importance. Public hospitals must tie-up with health insurance companies on a local level to ensure better reach in places that lack medical facilities.

Lack of healthcare professionals

Health care workers play a pivotal role in spreading awareness about proper health care and possibly the importance of health insurance. If an adequate number of people are available to provide medical facilities, then these professionals can contribute towards educating patients as well. 

Number of Medical Professionals in 2018

Source: biomedcentral.com

As per the Economic Survey 2019-20, India has a doctor to patient ratio of 1:1456. Whereas, 1:1000 is the ideal ratio as per WHO. The rippling effect of the low number of healthcare professionals was evident during the COVID-19 pandemic.

Free coverage under Group Plans

Employee-centric organisations offer free health insurance plans to cater to their employee’s medical needs. Many people depend on this coverage and refrain from buying a comprehensive policy that offers flexibility and personalised coverage. Employees can thus become adamant to get coverage only under such corporate plans and may turn a blind eye to government health schemes. However, a corporate plan does not offer lifetime validity. The policy ends upon the end of employment which leave the ex-employee and the dependants exposed to medical liabilities. 

A possible solution

Spreading awareness about health insurance is similar to taking part in a relay race. Each team member is of equal importance here. The government, healthcare professionals, health insurance companies, and eventually the population can form the pillars of spreading awareness to the deepest parts of the country. 

Remember that a suitable health insurance policy will be the ultimate support in case of a medical emergency. Nowadays, health insurance is not limited to hospitalisation but includes many other services as well. Thus, buying a policy with adequate coverages and useful services from a reliable insurance company can make things go smoothly during a medical emergency.

Frequently asked questions

Here are questions related to health insurance in India. You can get in touch with ACKO by sending an email at [email protected] if you have more questions.

What are some examples of government-run health insurance schemes?

Following are a few health insurance plans that are government-sponsored.

What are Group Plans?

Group health insurance plans are offered by employers to cover the medical needs of their employees. These are usually free of cost and provide basic insurance coverage.

Is a health insurance policy ideal for tax saving and investment?

Though health insurance plans offer tax benefits under Section 80D of the Income Tax Act, health insurance should ideally be purchased with the objective of safeguarding yourself from financial liabilities during medical emergencies.

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