How Does the Health Insurance Industry Works?

In today’s healthcare system, the quality and access of care services to the public has always been a matter of concern. With the private health market rapidly developing and bridging the gap between government funded care and consumer demands, there exists a constant rise in healthcare expenses. Moreover, the proliferation of healthcare technologies, the emergence of NCDs, and increasing cost of care has all led public healthcare to become expensive and unaffordable for a larger section of the population, particularly, the middle-class and underprivileged. As a result, there comes the need for healthcare options that help people manage the financial burdens arising out of healthcare requirements. This is exactly where the need for health insurance arises, and this is how the health insurance industry flourishes.

The growing set of complexities in the private health sector in terms of growth, increasing costs, and the changing epidemiological patterns have contributed to the rise of the health insurance segment. Generally, healthcare can be very expensive, with doctor visits, hospital stays, and pharmacy drugs taking away hundreds and thousands of bucks from every patient depending on the need and type of care provided. Most of them could not even afford to pay large sums of money instantly when one gets sick or injured. This is when health insurance comes to the rescue, reducing the cost burden for the consumers and giving them the opportunity to get more reasonable, affordable, and quality healthcare at any given point of time.

The Health Insurance Industry – A View from the Top

In recent decades, the health insurance industry has been propelling its way into the health system, as one of the largest contributors to financial needs. The insurance sector, in general, offers risk management to businesses and individuals in the form of insurance contracts. The basic concept behind insurance is that one party, i.e., the insurer, offers payment for an uncertain future occurrence while the other party, i.e. the policy holder pays a premium to the insurer in exchange for the security against that uncertain future event. Different insurance companies offer different products to cater to the needs of their consumer base.

How Health Insurance Works?

The way in which health insurance typically works is that the consumer or the insured pays an upfront premium amount to the insurer, i.e., the health insurance company for the protection they provide during unforeseen circumstances of illness or injury. On the part of the insurer, the company shares the ‘risk’ with lots of enrollees, covering the expenses of the insured people with that of those healthy insureds who are paying the premiums. At any point of time, the need of the policy holders enrolled for insurance payment can be met with the premium amounts distributed over the entire insured enrollees. Since health insurance companies are well aware of the risk management, they aim to collect enough premium amounts from policyholders to cover the medical costs of all the enrollees, at any given point of time. In India, there are different types of health insurance policies having different rules and agreements depending on care.

Health Insurance Industry in India

The Indian health insurance industry has changed quite a lot in the last decade. The industry today focuses on delivering different consumer needs, different segments of people, and of different income levels. Currently, the country is taking about 40,000 crores of health insurance premiums from private sector firms in terms of health coverage.

The growth of the health insurance industry has been dramatic in recent years as it has grown rapidly at 18%-20% per annum, clearly outpacing the country’s GDP growth. The increasing quality of care, rising affluence in India, and the higher prevalence of lifestyle diseases have been fueling this industry growth further ahead. It has to be acknowledged that the Indian government has liberalized the insurance sector, catalyzing the growth and development of the sector.  However, the challenge is to see that health insurance benefits not only the affluent society, but the poor and underprivileged in terms of offering better health coverage and services at affordable costs, irrespective of the cost hikes and innovative technological advancements in the provision of healthcare. While India has limited indulgence in health insurance compared to Western countries, it is necessary to proactively make efforts that develop the sector in terms of universal coverage, providing equal access to all, while at the same time offering cost controlling measures.

With the healthcare industry burgeoning rapidly, the role of health insurance is contributing a lot to the growth of the sector. As a result, opportunities are immense in the health insurance industry, and it requires adequate skills/abilities along with academic knowledge and training to embark on a potential career. To that end, IIHMR, Delhi has been providing the needed education, exposure, and training to the aspirants enabling their transformation into skilled and capable healthcare professionals who can effectively contribute towards propelling the industry ahead. IIHMR offers executive training programs and management courses targeting the healthcare industry’s future needs and demands. With the cutting-edge curriculum and academic expertise, IIHMR has been equipping and preparing ambitious young minds to embrace the changing healthcare trends and deliver to their fullest potential to the industry.