The Insurance Regulatory and Development Authority of India (IRDAI) recently granted a health insurance license to Narayana Health. With the regulator’s approval, Narayana Health has become India’s sixth standalone health insurer. This article explains how Narayana Health Insurance is different from other players. 

But first, let’s see how the health insurance model is working at present:

Currently, health insurers and health service providers are different entities. You buy a policy from a health insurance provider, pay the premium and hope the policy would provide you financial cover when you or your loved ones are admitted to a hospital. 

In the present model, health insurers work as a financial intermediary only. 

When you have a health insurance plan, you tend to think that you would simply walk into a hospital when required, get the treatment done and walk out while the insurer will provide for the whole cost. But it doesn’t happen like this always. 

It has been seen that hospitals often inflate bills or add unnecessary procedures, consultations, investigations, treatment protocols etc. to get the most from insurers. 

In contrast, insurers try to minimise the payment by standardising treatment protocols. Even room rents are standardised, irrespective of the kind of the facility where the patient is admitted. 

Result: Patients and their relatives suffer in the conflict of interests between hospitals and insurers. The amount released by the insurer is often less than the actual expenses borne by the insured. You would have experienced this already if you or any of your insured relatives had been admitted to a hospital.

Enter Narayana! 

Narayana Health Insurance is promising to dramatically change the current practices. 

In a recent interview to ET Now, Dr Devi Prasad Shetty, Chairman and Executive Director of Narayana Health, shared some of the expected features of Narayana Health Insurance.  

• It would be like a managed care provider on the lines of Kaiser Permanente of the US, which offers health care and health insurance. The non-profit health plan of Kaiser Permanente finances all the healthcare needs of members/policyholders.  
• Narayana Health Insurance will manage all aspects of a patient’s health. Working like custodians of healthcare instead of just a payer for the treatment, it will cover all aspects of health care including primary care, secondary care and tertiary care. 
• It will address the conflict of interest currently prevalent among hospitals and insurers. As the company will be responsible for all aspects of the health needs of the insured, it will be incentivized by ensuring patients do not fall for it. 
• The insurer will initially focus on Bangalore and then Kolkata. 
• The policy would cover everything from day one. There will not be any cooling period. 
• The policy would cover OPD expenses also. Moreover, there will not be any co-payment. 

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Will Narayana Health’s insurance model work?

Narayana Health is a reputed health care provider. According to Dr Shetty, it is currently doing 16-17% of all heart surgeries in India. The company’s insurance model may work as most of the health insurance buyers want a hassle-free claim experience after paying the premium.

Benefits of Managed Health Care Model 

• There will not be an extra incentive for the hospital to inflate bills as both the caregiver and the payer will be the same. 

• The insurer will have the incentive of screening the insured aggressively to detect onset of diseases early, which will eventually reduce the payment burden of the insurer.

Currently, some insurance providers pay for health checkups and motivate the insured to adopt a healthy lifestyle by incentivizing fitness activities. But this model has not worked properly. Narayana Health Insurance will have an opportunity to change that. 

Risks

However, there are certain risks to the managed healthcare model that may arise in the absence of proper regulation and grievance redressal mechanisms. For instance, 

• The insurer may try to withhold appropriate treatment to reduce expenditure
• The insurer may try to target only the young and healthy population, neglecting the sick and old people. 
• The insurer may get the premium wrong by either charging too high or too low. In case the premium is set very low, providing appropriate treatment may become unviable. 

All the above risks can be successfully mitigated by strict regulations and by implementing best actuarial practices. As per Dr Shetty, his insurance firm will sell policies to everyone irrespective of pre-existing diseases, which is certainly a welcome move. 

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