The problems with health insurance

Karthikeyan Jawahar

Third Party Administrators (TPAs)
The most important problem associated with them is the long turnaround time (TAT). The TAT for the payment of an insured patient's treatment in an affiliated hospital is 20 days for cashless treatment. Most TPAs fail to meet the deadline even if the insurance company has made the payment to them. This is due to the logistics involved in handling numerous hospitals and claims. Some hospitals become disgruntled with the delay and do not offer cashless treatment facilities. Also, some TPAs do not work on Saturdays, whereas most insurers do. This delays the processing of claims.
Solution: Insurance companies like Bajaj Allianz, Cholamandalam MS and Star Health have opted for direct settlement of claims, eliminating TPAs.

Hospitals
If you have a health cover, there is a 90 per cent chance that an empanelled hospital will charge you more. Higher tariffs for insured patients lead to a higher payout for the insurance companies which, in turn, leads to higher premiums. The increase is more than the rise in the cost of medical care. Another issue is the misuse of group insurance by hospitals and patients. Uninsured people are treated because the identity cards of many group insurance schemes do not have photographs.
Solution: Insurers have begun visiting hospitals to meet patients for claims under group insurance schemes. If found at fault, the group insurer refuses to renew the policy of the originator company. Also, most insurers now go for pre-agreed rates for surgeries and treatments. This prevents differential tariffs for the insured and uninsured patients. The hospital bills extra charges directly to the patient.

Customers
Many people are hospitalised for an illness that does not require it. Another issue is that they take a policy after a disease has been diagnosed. Health insurance does not cover pre-existing diseases. Also, patients do not read the policy document and expect all expenses within the limit of the cover to be reimbursed.
Solution: Read the entire policy document before taking a policy. Ask your salesperson for the 'policy wordings'. Do not make a false claim as you may not be able to make a genuine second claim in the same year if the limit has been exhausted. Also, the insurer may load future premiums in case of an abnormal claim.

Companies
To ward off pressure from their superiors and get incentives, salesmen mis-sell products. Sometimes, a wrong product is sold for a higher commission. As company Websites and brochures do not reveal all the terms of the plans, clients fall prey to the salesperson and do not buy the right policy.
Solution: Prospective clients should ask for more information. Irda's intervention in making brochures and other promotional material more transparent will help.

Karthikeyan Jawahar is a Certified Financial Planner