Health insurance portability is a paradigm shift that can lead to a universal model
With the introduction of health insurance portability from 1 July this year, the sector will transform into a new world where individuals, and not groups, become the decision makers. In essence, from a group insurance driven business model, health insurance companies will go retail, which will give the insured choices and put him at the centre of attention. This giant leap can bring in a lot of structural changes and order to the otherwise chaotic health insurance business.
This announcement is yet another initiative by the Insurance Regulatory and Development Authority (IRDA) to develop the sector. The move will benefit the consumers as much as it will benefit the insurers. Consumers can hope for a lot from this development.
Finally armed with a choice, the policyholder does not have to suffer arm-twisting by insurers into continuing his policies at the fear of losing the waiting period if he moves to a new insurer. This also forced several policyholders to silently keep paying higher premiums because the insurer raised the rates during the policy’s tenure.
There are more potential benefits: like motor insurance, where the no-claims bonus is transferred, health plans may also allow carrying forward such benefits including pre-existing clauses. The option will allow employees moving jobs to carry forward their insurance cover and, maybe, even a conversion to an individual plan. However, in all this excitement, there is a possibility of the insurer declining a customer with an existing insurer.
As for insurers, this move will fuel competition among them and they will need to improve their offerings, pricing and service standards if they wish to match the consumer’s mood swings. But, what is paramount for insurers with this move is the possibility of working towards standardisation of costs incurred on treatments. This will bring in accountability and insurers will get more transparent about costs.
The move is also likely to see the inclusion of more activities within its fold than outsourcing, especially toward claims settlement. This will also impact third-party administrators (TPAs), given the way they handle claims. Inspired by the American
Health Insurance Portability and Accountability Act (HIPAA), the regulator’s move is a step in the right direction that can also be dovetailed into creating a universal healthcare system.
Portability will help in maintaining healthcare records in an electronic format to the advantage of both the insured and the insurer. But systems need to be incorporated to keep a check on frauds and to guarantee patient record security. There is nothing more terrifying than someone gaining access to your healthcare information, leading to misuse since as healthcare records are sensitive information.
Despite all these positives, my fear is about the enforcement of portability. After all, the proof of the pudding is in its eating. Insurers are not obligated to accept policyholders seeking to shift to a new insurer. This may go against the spirit of portability. One will have to wait for the regulator to come up with some guidelines to make this happen. Else, portability will exist only on paper.
Also, it will cost money to make all the systems portability- compliant. All the extra paperwork needed to make the ecosystem of insurers, TPAs, hospitals and the insured portable compliant will incur some expenses. In the short run, it may create new jobs and ruffle up the existing hospital set-ups with systems and procedures on standardisation. Overall, portability is a move that will see some turbulence in the market, but it is for the better.