"In India, out-of-pocket expenses are very high"
Ashish Mehrotra, Managing Director and Chief Executive Officer, Max Bupa Health Insurance, talks to Teena Jain Kaushal and Priyadarshini Maji about rising premium rates and factors that are driving the growth of the health insurance industry in India.
What is triggering the continuous rise in premium rates for policyholders?
The average cost of treatment in urban India has more than doubled in the past decade. The situation is similar in rural areas. So, the premium is bound to go up. Around the world, these premiums go up regularly, annually or once in two years. Today, the insurance sector is highly regulated. But as more players come in, initiatives by the government get implemented and a structure comes into play, things will change. As insurance companies, individuals paying for the treatment and healthcare providers - hospitals - start collaborating, we will see the benefits being passed on to the public. We are working with our network hospitals to get standard treatment protocols, what we call package rates, for some treatments corrected. This helps reduce the cost of treatment.
Can you elaborate on the standard treatment
We look at the standard treatment and try to get a better price on it. It is in my interest to ensure that my customer leads a healthier life. The healthier my customer is, lesser the cost and lesser the increase in premium. At the end of the day, that is the model companies will have to follow. So, for us, it is very important that customers get the right quality of treatment and we are able to keep them healthy.
What makes Max Bupa products stand out in the market?
In the beginning of the year, we promised '30 minutes' cashless payment. We are now going around and creating 'Point of Care' desks at hospitals. If you are a Max Bupa customer, you can walk into a hospital and we'll be there for you. That is our sole purpose. When you have to use our products, you should be able to use it seamlessly without any hassle. This is why we started '30 minutes' cashless approval. In 97 per cent cases, we are able to offer it in less than 30 minutes. Now we are talking to other providers to set up 'Point of Care' desks that will guide our customers when they reach hospitals.
Generally, there are a lot of exclusions (such as OPD and depression) in health insurance policies. Why can't we have a larger coverage of diseases?
We do cover some OPD expenses, irrespective of how OPD is used, in our Heartbeat Gold and Platinum products. We are also working on making OPD available to a larger segment of customers in our future products. There are two ways to look at it: one is to do with market maturity and the second is to look at where the spends are going. To my mind, OPD will become a big piece for us to offer because it comprises a large component of 62 per cent of what we call out-of-pocket expenses. In India, out-of-pocket expenses are very high. In developed countries it will be about 10-12 per cent (leaving US out as it is a more evolved healthcare nation). Out-of-pocket expenses in the BRIC countries are lower - about 6.5 per cent in South Africa, around 30 per cent in China, around 40 per cent in Russia and 25 per cent in Brazil. So, for all of us in the sector, it is important that we create a collaboration between the payer and the provider. We need to create a network with doctors next door to be able to finance OPDs. We are working towards it. And most of my colleagues in the industry are also working towards it.
There is a perception that Max Bupa caters mostly to the upper class section of the society..
That is a misconception. We serve customers in Uttar Pradesh through a rural bank called Sarva UP Gramin Bank. We work with our partners like Bajaj Finserv, Bank of Baroda and Federal Bank in Southern India, and a lot of them across the segments. You can buy a product worth Rs 1,000, Rs 300 or Rs 500, as also the Heartbeat Platinum for Rs 80,000. We serve across the spectrum.
How much growth opportunity do you see in the health insurance business?
Health insurance is at a fairly nascent stage and it is going to evolve dramatically. Firstly because it is under-penetrated - whichever way you look at the data, less than 27 per cent of the population has some kind of health insurance. When the retail inflation is well below single digit, medical inflation continues to stay high, at about 12-15 per cent. The average cost of treatment over the past 10-12 years has almost doubled. That is a big shift. Increasing awareness about why one needs to buy health insurance will drive penetration. Besides, as mentioned earlier, what gets funded through insurance is a small 3-3.5 per cent, pre-dominantly funded by the government. Almost 60-65 per cent is spent out of the pocket.
What do you think of the government's impending universal health insurance policy?
I think the government's objective is to look at it from a universal healthcare perspective, to try and provide cover. The current government has done fairly well in terms of achieving financial inclusion.