Medical Insurance Subsidy

Exactly a year back my mother was in hospital. She was there for three weeks before she died. The bill for the three weeks came to close to four hundred thousand rupees. She was covered under my corporate medical insurance so I passed on the cost to the insurer, who paid most of it. I didn’t really complain, the insurer was obliged to pay, and the hospital was more than happy to receive the fee.

The hospital follows an interesting business model. On one hand it dons the garb of a corporate hospital while on the other it is a charitable hospital. A large section of the patients are treated at extremely low cost, or even for free. The rest of the patients have insurance coverage. Those that have coverage are fleeced, and this money effectively cross-subsidizes the treatment of the poor. All works out well for the hospital. Except..

Do you realize that when you (or, in most cases, your employer) pay your premium for medical insurance you’re not insuring just yourself? That because of hospitals like I just mentioned, your insurance is also effectively paying for the treatment of a larger population? That the cost of treating some random patient in the hospital you were admitted to is paid for by you, as part of your medical insurance premium?

Changing tracks, I think the best thing about India’s healthcare industry is the diversity. You have government hospitals. There are university hospitals. There are large corporate hospitals you wouldn’t think of stepping into unless you had insurance. There are charitable hospitals which treat you for next to no cost. There are the neighbourhood nursing homes which essentially cater to the uninsured middle class. Reasonable facilities but not too expensive. And so forth.

There is no formal system of medical insurance in the country. There is no single large government system. If the current state of healthcare in the country is one of not having evolved much, I really wouldn’t mind it remaining this way. I hope we never get into the kind of equilibria that the US and the UK have gotten themselves into, which appear efficient but which ultimately prove expensive for people.

It is the diversity in the system that keeps the healthcare industry here competitive, and keeps costs low. And of course, you pay for other people too when you pay your medical insurance premium.