It is interesting to think about the real costs associated with managing health. We normally do not look at health management in cost terms  our instinctive reaction is to procrastinate, as we may believe we are healthy and nothing can go wrong with us. But if only delaying a problem would solve it!

THE REAL COST

The fact is that reactive management of health issues carries a lot of hidden costs, which we never take into account. Consider the case of a person affected by an accident.

The obvious costs which come to mind are those related to hospitalisation, the treatment, tests and medication. But the costs which escape our attention are numerous: Loss of income (because of absence from work), drop in productivity in the case of disability, change in lifestyle, negative effect on the lives of others in the household and the disruption thereof. Total costs pile up to more than what your initial guesstimate would have been.

The story essentially plays out the same way, whether an individual meets with an accident, gets affected by a lifestyle disease, or hospitalised for an illness. Costs add up fast the obvious plus the hidden ones.

REDEFINING CRITICAL

There are many definitions doing the rounds on critical illness  some coined by insurance companies and the latest, crisper version by the IRDA. The simplest way to understand what we should categorise as critical is anything which impacts our quality of life over a relatively longer time period. So, if a person meets with an accident and becomes an amputee  is that critical enough?

Yes. The quality of life is impacted dramatically; it may force the person out of work and cause mental and financial strain beyond hospitalisation. Similarly, consider a person hospitalised for a considerable period of time, although not for a disease considered as critical in the technical sense. The financial and mental stress undergone is in no way different from one suffering from, say, a heart valve disease.

In my view, critical should pertain to a much larger gamut  accidents, long-period hospitalisation of any nature should be considered critical. This is the holistic approach required today.

CRITICAL GROWING BUCKET

The risks of ending up in a hospital due to an illness, meeting with an accident, or developing a critical illness seem to be on the rise. Our sedentary lifestyles make us ever more vulnerable to lifestyle diseases such as diabetes and cancer. More illnesses are considered as critical today than the 11 which are generally accepted. Max Bupa believes these are 20.

Between three and four million vehicles are added each year in India, clearly outpacing the efforts to develop infrastructure. There is good reason to believe that road accidents are destined to increase. To add to the misery, healthcare costs have skyrocketed. The bottomline is that being assured against health eventualities requires meticulous planning.

It is clear that the number of illnesses which qualify to be called critical is growing.

Accidents are on the rise; the number of hospital-days (for technically non-critical ailments, but critical in the real sense) is also growing. What would help are plans which consider critical more holistically, taking into account the increasing risks and costs, obvious and hidden, associated with what I would call critical health situations.

HOLISTIC SOLUTION

The first step is to define what would perhaps be the characteristic features of a holistic solution.

Critical illnesses beyond the 11 defined by the IRDA. The 11 are really the lowest common denominator, but there are more critical illnesses, and this set is bound to grow

Accidents cover as part of critical illness. Although technically not critical, accidents cause the same distress as a critical illness.

Long-term hospitalisation has the same impact and should be part of this holistic solution.

Last, but most important, is the way the claim is fulfilled. When and how the claim is handled is most important.

Granting flexibility to the user on how the guaranteed cash could be used is very important. People can allocate resources differently, based on the context. A young person might choose to allocate most of the cash for recovering from the disease and post-hospitalisation care. An older person, perhaps with a daughter to be married, might chose to spend incrementally less on his treatment, but save more for the daughters wedding. And a daily wage earner who suffers from disability might just try and stretch the money to cover as many non-working days as possible.

Different contexts, different choices! And, not tying claims to cookie cutter rules can be a powerful benefit.

THE SEARCH IS ON

Industry players, especially innovators, have been active on this front. The industry is thinking of creating products for the needs of different consumer segments, rather than dishing out standard fare for all. Consumers would have options on critical illness policies to choose from.

(The author is NEERAJ BASUR, CFO, Max Bupa Health Insurance.)

http://www.thehindubusinessline.com/opinion/critical-issues-in-health-insurance/article4283629.ece