HEALTH INSURANCE — UNDERSTANDING THE IMPORTANCE
The urban society do not know exactly the meaning, purpose
By SHAHZAD KHAN
May 09 - 15, 2005
Shahzad Khan has been working in Century Insurance Company Ltd since 1997 and has been associated with various departments such as Finance, Motor and nowadays dealing with Engineering, Miscellaneous and especially Health Insurance & Claims. He is doing his Advanced Diploma in Insurance from the Chartered Institute of London and Master of Arts (Economics).
Many people around us have future dreams and planning. It is quite natural for a human being to worry about those whom he loves; especially the people who are in charge of their families have their minds running for the care, safety and health of their dependents. A huge part of the urban population of Pakistan belong to middle class (whether upper or lower) having limited means of earning and find themselves struggling to be hand-to-mouth most of the time. Buying a new television, washing machine or simply going for a picnic with your family members during a vacation is a dream every common middle class person sees and to fulfill those dreams, work day in and day out, grabbing every penny with their teeth, they plan to save money for the pleasure of their families. But all of their planning and savings will be ruined if someone from the family gets ill.
Falling ill of someone dear to you is obviously a big emotional blow but at the same time it could be a source of financial breakdown. The recovery procedure is an added burden on the head of the family. Taking the beloved ones to a number of specialists and hospitals would in fact put a hole in the pocket and sometimes shake the budget so heavily that it might take a couple of months to fill the financial crack. At the same time, drastic environmental changes have created another hazard of various diseases once unknown to humanity. This is where the importance and the need of Health Insurance can be understood.
The people in our urban society do not know exactly the meaning and purpose of Health Insurance. Although the insurance companies have done appreciable work on their marketing and are making progress in this field through campaigning and approach a number of prospective individual and corporate clients everyday, but most of the clientele of the Health Insurance Companies comprise of corporate sector in which the trend has been induced from multi-national organizations to give health cover to their employees and the dependents.
Despite all the apparent progress, there is still a lot more to be done in this class of Insurance. The rural areas of the country are yet to be explored since there are none or very low grade medical facilities available. Therefore the percentage of deaths of mothers and infants during birth is very high in rural areas as compared to urban region. The responsibility of making the reforms in the rural side of Pakistan should be on the Government but the health insurance companies can also make a big contribution in this context. As the tendency of the crops being insured is growing (much credit should go to the banks giving loans and securing their asset through crop insurance), the awareness of health insurance should be given to the farmers and the rural people.
The banks rendering loans to the farmers can urge them to keep a health insurance policy which can also give the benefit not only to the farmers by assuring a maintained health necessary for the timely reaping of the crops but also to the banks and the insurance companies (those who insure their crops) be reducing their risks.
The Health Insurance companies can manage Mobile Doctors Teams which can monitor and facilitate the assured persons in far-off rural areas. In larger cities like Karachi and Lahore, this job is done through telephone service as there is an abundance of telecommunication facilities. Usually the cities are divided into different zones with a panel of doctors who, when required, can visit the hospital and make sure that the insured patient gets the necessary treatment.
STRUCTURE OF A HEALTH INSURANCE POLICY
Normally a Health Insurance plan covers the "family" (the definition of the word "family" includes wife and children) of the insured person. The standard policy covers hospitalization in the event of disease or an accident. The insured patient can also get the room rent and the fees being paid for the laboratory tests and other treatments which are allowed in the Health Insurance cover one has acquired.
The Health Insurance companies have their approved panel of the hospitals. As soon as the insured person gets admitted into one of the hospital on the panel, the hospital informs the insurers to send their doctor who has been assigned the job to visit the hospital within the defined region and zones to keep a track of the insured patients physical condition and the improvement as well as the quality of services rendered by the hospital. The process looks complicated but only seemingly; it is infact a chain of simple processes. All the insured person has to do is to inform the hospital about their health insurance plan they acquired from their Insurers.
Some insurers follow the process of reimbursing the approved amount to the insured persons on the basis of the limits allocated to them. In that case, the insured person has to pay the bill amount first from his pocket and then fill a claim form which is to be submitted to the company along with the necessary bills in original. The company after receiving the claim will verify the bills, the claimed amount, nature of illness etc in the light of the terms, conditions and the exclusions of the policy. This process is easier for corporate clients as they can arrange a centralized way of claiming the amount from their insurers and then reimburse that into their insured employees salaries.
There are some standard "exclusions" which are the essential part of any type of Health Insurance Policy. Exclusions are the circumstances under which the Health Policy is unable to reimburse the loss amount. Some of them are suicide or self-inflicted injuries, riot or civil commotion, war, mountaineering or racing (other than on foot), contamination by radioactivity, cosmetic surgery, infertility or abortion, pregnancy or childbirth (in some cases), pre-existing illness or injuries etc. most of the insurance companies exclude dental treatment and restrict them to the extent of treatment for pain relief only, but a custom-made policy allows the treatment or dental procedures while restricting the embedding of artificial tooth/teeth due to the fact that dental treatment is one of the most expensive treatments world-wide. So the insurers usually discourage the coverage under dental treatment. Cosmetic surgery is also an exclusion because a health policy covers sickness only and is not for beautification purpose.
Critical illness or Dread diseases are the main hazard which is being covered and the best part of health insurance plan. Nowadays the treatment for critical illness such as Heart Attack, Cancer, and Kidney Failure are much higher than the income range of a common man. The cost range for Angioplasty is from Rs125,000 to Rs500,000 in some cases. The cost of treatment for Cancer is between Rs100,000 to Rs450,000. The Heart By-Pass surgery costs from Rs150,000 to Rs350,000 in special conditions. Thallium Scan would range from Rs10,000 to Rs15,000. MRI Rs9,000 to Rs12,000, Cataract Rs14,000 to Rs24,000 and Hernia surgery might cost from Rs15,000 to a maximum of Rs35,000.
While taking a close look at the cost structure of the treatments given above, one can easily realize how difficult it might become when facing anyone of the illness. Now the question arises — what is the cost of acquiring these kinds of health covers?
In insurance terminology, the cost of obtaining a policy is called 'Premium'. Generally the premium rates are on "Per Person Per Annum" basis and the premium rates are decided on the age groups of the insured persons. The maximum age limit of which most of the insurers agree to cover is 60 years (in some special or custom-made policies it would increase up to 70 years). The premium cost for a young person may be around Rs2,400 to Rs6,000 and the premium for an elderly person of 55 years might be around Rs5,500 to Rs15,000 per annum, depending on the various divisions and plans offered by the Insurers.
In the light of the above analysis, I would suggest that in order to prevent one from the modern era diseases, which are already getting complicated, and to overcome the financial difficulty, we should consider taking the protection of Health Insurance for ourselves and the ones we love.