Why Is Health Insurance Important Essay

Abstract:

Health insurance is an important risk mitigating tool. In this era where medical expenses are every day rising and with no much-increasing income it is an inevitable part of one’s life. It is also a very important mechanism for funding the health care needs of the people. This research paper deals with consumer willingness to buy health insurance. There are different areas in which it judges the health insurance consumers.

• It examines the respondents who are aware or not aware of health insurance
• It examines various sources of awareness
• To study the type of health insurance preferred by the respondents and to identify the perceived aim of taking health insurance
• To survey the barriers to the subscription of health insurance.
• Are they willing to take a health insurance policy and pay for it?
• It also examines how many consumers have filed a claim against their policy and the problems they have faced receiving it.
• It will also come out with suggestions that insurance companies can incorporate for their own benefit.

This study is conducted in the Mumbai suburbs area which has a horizon from Bandra suburb to Dahisar suburb. This study is based on primary data collected from a sample size of 120 respondents via a questionnaire method. About 83% i.e. 100 of them were found to be suitable for analysis. The results have been analyzed with the help of various statistical tools. The results have shown a low level of awareness and willingness to join in subscription of health insurance.

1. Introduction:

Staying healthy is very important and it is also the birthright of an individual. But it is very important that every human should get the correct health treatment. But one of the major concerns is it should be affordable & accessible. Now a day’s rural and urban areas both have become quite unaffordable in terms of hospitalization, surgical, or any medical treatment cost. Health insurance development can be dated back to the year 1999. At that time parliament bill was passed regarding the insurance business. IRDIA (Insurance regulatory & development authority of India) was incorporated in the year 2000 April. Since then it has done a lot of developmental activities for the insurance sector. One of the best things they did for the insurance sector was opening up the insurance sector which allowed foreign players to enter the Indian territories and do business in collaboration with Indian companies. Health and socio-economic development both are very important parts of any economy and they both are strongly interlinked. As they are closely interlinked it s extremely difficult to do without each other. But the biggest paradox is we are developing economically but health wise the infrastructure is still in the soup.

The Indian government has taken a lot of steps towards the development of health and they have achieved a lot of success also in doing the same. Eradication of smallpox, polio, and guinea worm; substantial decline in the number of Leprosy, Malaria cases, etc) (NHP, 2002). The moderation of our health achievements is done through international standards as the ranking of Indian Health Systems is 118 out of 191 WHO members ( WHO 2000).

There is a great deal of need for health insurance in India. The health insurance system basically works on very basic principles of pooling. In this system, all the risks are pooled together. In health insurance, the risk is that the person may fall ill and there will be the unexpectedly high cost of hospitalization, surgery, medication, etc. these all risks are pooled together and a premium is charged from the clients. All these premiums are also pooled together and whatever claim arises that money is reimbursed through that premium kitty.

To a large extent, the health indices of a country are determined with reference to the ways with which its health care gets financed. In India, the cost of health is steadily rising and it is also a fact that in India around 80% of the expenditure is borne by the individual itself which generates the concept of out-of-pocket expenditure which is again putting a lot of pressure on the financials of the individuals. When such a condition prevails then health insurance is the best mechanism to save on this out-of-pocket expenditure. Now the question arises who introduced us to this wonderful concept of Health Insurance? It was

Hugh the Elder Chamberlen from the Peter Chamberlen family, introduced us to this concept of health insurance in the year 1694. With this ever-increasing cost of health, it is the most sensible decision to buy health insurance coverage. Health insurance can be individual health insurance or it can be group health insurance. It could be either you have funded the health insurance scheme or it is funded by your employer. Some of the existing health insurance schemes currently available are individual, family, group insurance schemes, senior citizens insurance schemes, long-term health care, and insurance cover for specific diseases. To add to the misery world bank has released some of shocking and very important details about the financial health of the Indian population.

85% of the working population in India do not have Rs. 5, 00,000 as instant cash; 14% have Rs. 5, 00,000 instantly but will subsequently face a financial crunch; Only 1% can afford to spend Rs. 5, 00,000 instantly and easily; and 99% of Indians will face financial crunch in case of any critical illness. All this data points out at one juncture that health insurance is the most important part of anybody's life and there is no option left but to buy health insurance for themselves. Most of the care and expenditure on health is taken care of by private individuals. Now when the literacy levels and the income levels of the people are rising, now when all the media be it print or electronic media is reaching the most remote place of the rural areas people are getting more aware and this will definitely lead to people buying more health insurance and getting themselves insured.

During the last 50 years, India has developed a large government health infrastructure with more than 150 medical colleges, 450 district hospitals, 3000 Community Health Centers, 20,000 Primary Health Care centers, and 130,000 Sub-Health Centers. On top of this, there is a large number of private and NGO health facilities and practitioners scattered throughout the country (Kasirajan 2012). This study aims at evaluating the awareness of health insurance in the western suburbs of the Mumbai region.

II. Objective of the Study:

• A. To assess the awareness level and sources of awareness about health insurance.
• B. To examine the type of health insurance preferred by the respondents.
• C. To identify the purpose of taking health insurance.
• D. To survey the barriers to the subscription of Health Insurance.
• E. To determine the willingness to join and pay for health insurance.

III. Research Methodology:

Following research, the methodology was used to carry out the research work and arrive at the conclusion

• A. The study has been conducted in the Mumbai suburbs which mainly consists of Bandra till Dahisar area in Maharashtra district. It includes the east and west regions of suburbs. It is mainly based on primary data collected from a sample size of 150 respondents via a questionnaire method.
• B. Convenience non-probability sampling method was followed.
• C. The data has been collected from the general public by means of a well-structured questionnaire and was classified and analyzed manually.
• D. For this purpose 100 questionnaires were sent electronically but we received responses from only 50 respondents. Rest 70 were filled on one to one basis.
• E. The data relates to the month of February. 2017.-April. 2017.
• F. The analysis of data collected has been carried out by using simple frequencies, percentages, etc.

IV. Analysis of the Data

It is very evident from the chart that out of 100 people 67 people are from the age group of 26-50 which is a big chunk of candidates. 20 candidates are from the age group of 0-25 and 13 candidates are from the age group of 50 & above.

It is evident from the chart that it is the perfect mix of male and female audiences.

The maximum class of people is service class people. And the second career is a professional career.

This chart represents the residential area of different respondents. The area is from Bandra to Dahisar. This chart shows that it is a perfect blend of respondents from all areas. so the data is somewhat uniform.

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From the chart, it is evident that more than 50% of people are married so ideally, they should be more risk averse as they have dependents.

It is very clear from the chart that around 70 people of 100 people either graduate or postgraduates and any also have professional education. So ideally all these people should possess mediclaim policy understanding the benefits for the same they being belonging to the educated section of the society.

This chart is in sync with the marital status chart. As in the marital status chart, it was quite evident that the maximum number of people were married so the family size is more. In the above-mentioned chart again it is quite evident that the average family size of the people is 4to 5 members which means they have bigger families and bigger financial burden.

From the earlier charts, it is evident that the average size of the family is 4 to 5 members and from the above chart, it is evident that the average earning members in the family is 2 people. So ideally 2 people have to feed other people also.

From the chart, it can be analyzed that around 36% only have income above 200000 p.a. rest others in the range of Rs.50000 to 200000 which can make it quite costly for them to buy or maintain a mediclaim policy.

This chart is in sync with the education level charts. We saw in the education levels charts that maximum people are graduate so it goes with the above chart that 81% of the people are aware that what a mediclaim policy is. The awareness levels of a mediclaim policy are quite high which makes it quite encouraging for the insurance company for them to convert them into customers.

From the above chart, it is very evident that maximum reach is through family and friends. And this is quite obvious also as when a family or a friend suggests something it has a better weightage than that of an advertisement. And the second highest mode of the awareness-creating vehicle is through an agent. It is an eye-opener for the corporate that they should do more of word of mouth publicity and they should take more care of their agents as they are second cows for their business.

It is an irony that around 60 % of the people from the sample size are either graduates and out of that some are postgraduates also. Also, 81% is the awareness level of the mediclaim policy. But of that only 62% of the people possess mediclaim policy. So 20% of the people in spite of having the knowledge they do not possess it Maximum Consumers possess policies from Public sector undertaking companies like United India Insurance company ltd, National insurance company, etc. Many consumers have opted for private insurance players as well like TATA AIG, and ICICI LOMBARD. It is quite amusing to see that many consumers have attributed LIC as their mediclaim partner. after 80% of awareness of mediclaim policy, consumers are still confused between a life insurance corporation or a general insurance corporation. From these statistics, this is quite evident that LIC is on the top of the mind recall for consumers.

The above chart is quite an encouraging chart. maximum people have purchased health insurance keep in mind that it is the best risk mitigating tool. This means that people have bought health insurance with the correct intention. And they have understood the man essence of health insurance.

Now let us see what the different reasons are because of why people do not buy health insurance. Following are the reasons which are evident from the above mentioned for not opting for health insurance. They are as follows:

1. Many of them are not aware
2. They consider health insurance as an investment option. And for investment purposes, consumers have a viewpoint that as far as mediclaim is concerned it is not the right investment avenue.
3. Many consumers also face an acute financial crunch. For them carrying out their basic livelihood is of primary concern. So they are not left with high disposable income to invest in health insurance. They have other financial liabilities to cope with so they refrain from buying a health insurance policy.
4. A small sample is respondents also mentioned that they don’t trust insurance companies and they believe that insurance companies can cheat the customers and run away with their money.

In the previous charts, we saw that around 60% of the people from 100 % own a mediclaim policy. From the above chart, it is again quite evident that out of that 60% who have mediclaim policy 56% have made a claim, and 65% of people are quite happy and they have received the money deserved. This is quite an encouraging figure as when people get their deserved money the word-of-mouth publicity enhances and it invites others to invest in health insurance. Out of 65% of people who have made a claim around 79% of customers are satisfied with their companies which is again a very encouraging figure. This also means that now companies are also taking their customers seriously and they are also investing a lot of time and research into their customers to gain their trust. And this figure also suggests that these people will share their nice experiences with their family and friends which in turn will be beneficial for the companies and the customer.

Now it is very important for the customers and the company to understand why some people's claims were rejected and what problems people face so that the corporate also gets a chance to make changes in the process so that the process becomes less cumbersome and hassle-free and customers also should understand their mistakes so that they don’t repeat that mistakes in the near future to refrain themselves from the rejection of claim rejection.

Reasons for which claims were rejected:

1. One of the major reasons why the claims have been rejected is the loss was not covered in the policy. This proves that either the companies have been tactful and negligent in explaining the loss covers to the consumer or the consumer has not taken enough effort to understand the policy document. This also happens when the literacy levels among the consumers are low.
2. There are other factors also p contributing to the rejection of the claim i.e when the consumers have not submitted the appropriate documents to the company when the consumers have not paid the premium on time, or while taking the policy the consumer has hidden some facts. If the consumer has provided some misleading facts then it pertains to rejection of the claim.

Now consumers also face a lot of problems while filing a claim. It is the responsibility of the company to see to it that consumers face the least problems while filing a claim because that is the main interface when the consumer understands the authenticity of the company. Let us see what problems the consumer takes and also understands some recommendation which the companies should undertake to cub these problems.

Problems in filing a claim and Recommendations to curb it:

1. One of the major problems in filing a claim is that the insured is not able to comprehend the policy document. So it is very important for the companies to keep the policy document simple and while handing over the insurance policy they should explain the whole policy document to the consumer.
2. Another problem that the consumers faced while filing a claim was the insurance company doesn’t explain the procedure well. This majorly happens with public sector undertakings insurance companies. Also, another problem that the insured faces while filing a claim is that the insurance company asks for too many documents. So in this competitive arena, it is important for the companies to realize that the more the company makes the claim process the fewer chances of good word-of-mouth publicity is possible which is the most reliable way of projecting a good image about the company.
3. Companies should be more transparent in their approach also they should bring innovative products which are specially designed for economically weaker sections of the society. They should be more co-operative towards the consumers.
4. Nowadays in urban areas, maternity expenses are a big sum of money. Companies should design products to cover maternity benefits also.

Conclusion:

It is very important that health insurance companies should come out with clear-cut policy details, as many of the respondents had indistinct ideas about the various benefits and risks involved in a policy. The middle and low socio-economic groups are a potential market to be tapped as they are ready to spend a reasonable amount as a premium payable per annum rather than huge medical expenses in case of any adversities. If the private insurance players want to venture into the market, they should try to absorb trust in the people as most of the respondents preferred government health insurance schemes, the reason being a guarantee for their capital. To develop a viable health insurance scheme, it is important to understand people's perceptions and develop a package that is accessible, available, affordable, and acceptable to all sections of society. To conclude, most of the respondents were of the opinion that government should come out with a clear-cut policy, where the public can be made to contribute compulsorily to a health insurance scheme to ensure unnecessary out-of-pocket expenditures and also better utilization of their health care facilities