What insurance data tells us about the spread of Covid-19 – and Indian healthcare

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Tabassum Barnagarwala

Maharashtra, Gujarat, Karnataka and Tamil Nadu accounted for 64% of the claims.

At least 24.34 lakh health insurance claims for Covid-19 treatment have been filed between last March, when the pandemic started, and September 7 this year. The claims amounted to a total of Rs 30,806 crore, data from the Insurance Regulatory and Development Authority of India shows. About 85% claims have been settled so far.

“In 2020, the number of people approaching me to buy health insurance doubled due to fear of Covid-19 hospitalisation,” said Tejas Shah, from Tej Dhaval Finance Services.

While the pandemic drove a surge in buyers for health insurance policies, insurance providers said they still suffered huge losses. This was partly because of the large number of claims, especially during the second wave this year, and partly because of the hefty cost of treatment for Covid-19.

Mayur Trivedi, associate professor at the Indian Institute of Public Health, said that in 2019-’20, the average health insurance claim hovered around Rs 30,000, indicating the average amount charged by hospitals for treatment. Data from the Insurance Regulatory and Development Authority shows the average insurance claim for Covid-19 treatment was Rs 97,302, more than three times the amount.

“The treatment of infectious diseases has never cost so much,” said Sanjay Datta, chief of underwriting, reinsurance and claims, at ICICI Lombard. Most claims were filed between April and June this year. They started tapering off in July.

Four states have the most claims

Four states account for 64.5%, or 15.71 lakh, of the country’s health insurance claims for Covid-19. They are Maharashtra (Rs 8,956 crore), Gujarat (Rs 3,587 crore), Tamil Nadu (Rs 3,308 crore) and Karnataka (Rs 2,677 crore). Arunachal Pradesh filed the lowest claims, a total of just
Rs 7.75 lakh.

Maharashtra has recorded the highest number of Covid-19 cases in the country. Karnataka and Tamil Nadu occupied third and fourth places respectively. Gujarat has the 12th highest number of Covid-19 cases.

Apart from having some of the highest number of Covid cases, these states also have thriving private healthcare sectors. “Maharashtra, Delhi, Tamil Nadu, Karnataka and Gujarat sell more health insurance policies because of industrialisation and the strong presence of a private health sector,” said Trivedi.

Insurance providers got most of their business from companies buying health insurance policies for their employees, he added. Individual policyholders formed a small chunk of the business.

Maharashtra recorded 19.5% of the total number of Covid-19 cases in India – 65 lakh out of a total of 3.3 crore. But it accounts for 33% of Covid-19 insurance claims – 8.11 lakh. Insurers have settled 6.97 lakh claims so far.

“It is not surprising to see that Maharashtra accounts for one-third of the country’s health insurance claims,” said Trivedi. “More people here take health insurance than in any other state.”

In 2019-’20, Maharashtra, Karnataka, Tamil Nadu, and Delhi accounted for the most health insurance claims, Trivedi said. But Covid-19 seems to have propelled Gujarat up the charts. “It accounted for 5%-7% of general health insurance claims in the country before 2020, but during the pandemic its share has increased to 11%,” Trivedi said.

The price of health

In 15 states, the average claim amount for Covid-19 treatment soared above Rs 1 lakh for the period from March 2020 to September 7, 2021, indicating higher hospital bills. In Delhi and Uttar Pradesh, it was particularly steep, about Rs 1.24 lakh on average.

According to the Insurance Regulatory and Development Authority of India data, Delhi saw 1.15 lakh claims, which came up to Rs 1,904 crore, and Uttar Pradesh saw 84,751 claims, making a total of Rs 1,344 crore.

Datta said Delhi hospitals were known to charge more than in other states. “In UP, most claims [filed with ICICI Lombard] came from Lucknow,” he said. Lucknow also has the most private hospitals in the state.

Compare the rates in Uttar Pradesh and Delhi to the states with the most claims: in Maharashtra, the average claim amount was Rs 77,648, in Gujarat Rs 93,718 and in Karnataka Rs 78,686. In Kerala, which had the second highest number of Covid-19 cases, it was Rs 59,952. The state has a large number of trust hospitals, which charge less than corporate hospitals.

As hospitalisations soared during the pandemic, several state governments reserved beds in private hospitals for Covid-19 patients and capped treatment costs. The pandemic saw the widespread use of personal protective equipment, oxygen, masks and medicines like Remdesivir and Tocilizumab for the first time. Hospital bills depended on how these new variables were priced.

Officials in Maharashtra, which managed to keep average claims below Rs 1 lakh, said they had introduced tight price caps and monitored beds reserved by the government. These measures were introduced early in the pandemic – the first notification was on April 30, 2020.

“We carried out a strict audit to ensure hospitals did not overcharge for oxygen, masks, and personal protective equipment,” said Dr Sudhakar Shinde, head of the Mahatma Jyotiba Phule Jan Arogya Yojana, Maharashtra’s health insurance scheme for economically backward classes.

This had encouraged private insurance providers to bargain with hospitals. “Maharashtra introduced price caps for masks, tests, PPE, RT-PCR tests for non-insured patients,” said Shinde. “Several insurance companies asked private hospitals to charge at par with government capping,”

In Maharashtra, the price of a personal protective equipment kit was capped at Rs 600 in normal wards and Rs 1,200 in intensive care units. The maximum price of an isolation bed was capped at Rs 4,000 per day, and of a ventilator at Rs 9,000 per day. In Mumbai, 70 auditors were appointed to take stock of bills in major private hospitals.

Some states were late in introducing price caps and were lax in implementing them. Dileep Mavalankar, who heads the Indian Institute of Public Health, said such states saw soaring hospital bills.

Delhi introduced price caps in June 2020, three months into the pandemic, on the recommendation of the Union ministry of home affairs. The government reserved 60% of private hospital beds for Covid-19 patients. But the cap – at Rs 10,000 per day for an isolation bed and Rs 18,000 per day for a ventilator bed – is about double the Maharashtra rates.

In May this year, the Delhi High Court said the Delhi government could not “turn a blind eye” to the crisis and must address exorbitant rates charged by private hospitals apart from scaling up government infrastructure. Earlier in September, Congress member of Parliament Manish Tewari wrote to the Union health ministry to investigate how a private hospital in Delhi billed a Covid-19 patient Rs 1.8 crore. He had been hospitalised for over 130 days, from April to early September.

Out in the cold

According to estimates by the Ministry of Health and Family Welfare, at least 23%, or about 76 lakh of India’s Covid-19 patients had to be hospitalised. Which means about 32% of hospitalisations were covered by government or private insurance. The vast majority of Covid-19 cases still remained outside the insurance net.

Given the high cost of insurance, most of this number would have been from the poor, or middle income group. “Health insurance doesn’t come cheap and affordability is a big factor in decision making,” said Datta, from ICICI Lombard.

Under the Pradhan Mantri Jan Arogya Yojana, a cashless health insurance scheme introduced by the Central government for low income groups, 3.27 lakh patients were hospitalised for Covid-19 in 2020-21. That is according to data shared by the Union health ministry in the Lok Sabha on August 6. At least Rs 1,157.66 crore was sanctioned for Covid-19 treatment under the scheme in 2020-21.

Among those who opted for more expensive private insurance, preferences may be changing. Datta, from ICICI Lombard, said people who bought new health policies last year opted for short-term insurance. This year, he said, more long-term policies were sold.

Courtesy Scroll.in

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