Evolution of health insurance in India: 7 Notable changes over the past year

The very concept of insurance dates several centuries back when people used to pool risks according to their requirements. But, not until the 1990s, that the concept of health insurance officially came into being. Here, the risk pooling capacity was structured to cover the losses and damages of the comparatively smaller and weaker party.

Health insurance in India

Health insurance in India is a federal concept, exclusively regulated by the Insurance Act of 1938 and the IRDAI of 1999. The evolution of health insurance in India reveals that it still lags behind numerous other developing countries. The enhanced availability of advanced medical facilities, rising income along with medical costs, and rising health awareness have significantly contributed to the flourishing of the Indian health insurance sector.

Countless health insurance plans have gradually emerged. Zurich Kotak General Insurance has earned a significant name in this context.

Start of health insurance in India

The primary launch of health insurance in India dates back to the post-independence era. From 1948, several government programs were gradually introduced. This included the launch of the Employer State Insurance Scheme. This marks the primary milestone in the history of Indian health insurance.

ESIS was introduced as secured protection, especially for blue-collar workers in the organised sector. It allowed coverage for IPD and OPD costs, along with cash benefits for compensating income loss and other medical emergencies.

This age-old scheme still prevails and gets mutually financed by both the employers and employees.

Significant milestones of health insurance in India

Back in 1954, the Central Government Health Insurance Scheme came into being. It was designed to offer comprehensive healthcare services. This was specifically designed for the central government employees and their families.

This contributory health scheme is still in motion and caters especially to the central government employees along with their families. The employees and the government mutually contribute to this scheme as per their pay grades to run it.

In 1986, GIC or the General Insurance Corporation of India standardised all the relevant terms and conditions of health insurance and launched the country’s primary mediclaim policy. This voluntary scheme offered hospitalisation coverage, excluding PEDs, maternity and childbirth costs, HIV/AIDS, etc. Depending on the indemnity principle, all the relevant costs are reimbursed automatically through the third-party administrator policy.

After the revision of the economic policy in 1991, the government introduced the liberalisation procedure, which allowed the privatisation of the health insurance sector. The Indian Parliament passed the IRDA bill. This is a very significant milestone in the history of the Indian health insurance sector.

Between 1990 and 2000, the trend was to focus on public-private partnerships and spending on the public health sector, considering the poor patients.

During the era between 2000 and 2005, this sector has been discovered to focus primarily on regulatory strategies and mechanisms. This review inferred the importance of involving the node agencies, community health insurance and NGOs for the overall development of this sector, emphasising the importance of stakeholders.

In the late 2000s, several demographics started getting involved and the comparatively higher-income categories became more likely to buy health insurance than the lower-income people. Although government intervention prevailed, the private companies excelled.

Since the outbreak of the COVID-19 pandemic, it became mandatory for every health insurance, especially health insurance for senior citizens in India, to incorporate mental health coverage.

Conclusion

The Indian health insurance sector has come a long way but has a longer way to go to bridge the still existent gap between the population and the health insurance-covered people.

Related blogs

The impact of family history on health insurance premiums

Reasons why you need to get a medical insurance

How to use a health insurance premium calculator

Pillars of health insurance you must consider