Health insurance portability, due to begin from July 1, will be a boon to those who have health cover but are dissatisfied with the quality of service by their existing insurer. The new facility will enable them to switch to another provider without losing anything. This is a landmark development benefiting consumers, and is likely to set new benchmarks in service standards and delivery mechanisms across all insurance providers. It will be particularly helpful to those with pre-existing illnesses and those eligible for bonuses who felt compelled to continue with their existing provider in order not to lose any benefits.

Those with pre-existing illnesses would earlier, on switching to a new firm, be no longer covered for these diseases. This was a major inhibiting factor no matter how bad the service was. Now people will not have to wait as their existing policy would simply be transferred automatically to the new provider. This facility will also be particularly useful to someone moving to a different city or state where their current insurer does not operate; or when, on leaving a job with a group insurance policy, he or she will not have to sacrifice the premiums paid thus far.
It is necessary, however, for this progressive facility to be fine-tuned in the coming months by the Insurance Regulatory and Development Authority so that standard procedures are in place across all players in this sector by July 1. Many companies, for instance, do not give bonuses for period when a claim is not made. Certain companies allow the benefit of extra coverage for the same premium amount when an insured person does not make any claim for a year. But not all. In order, therefore, to enable portability, the insurance “product” will have to be standardised. It could be started with a few basic products to start with, and then gradually expanded.
It is expected that portability will encourage more people in this country to take out health insurance — for themselves and their families. Only two per cent of Indians currently have health insurance, which constitutes only 20 per cent of the overall insurance business — low by world standards. Just as banks prefer to loan large sums to the rich, insurance companies always like to issue policies to healthy people. They say that health insurance claims in India are extremely high compared to other countries. This is an irony as it is those in poor health who are in greater need of health insurance. This could be one reason why the insurance companies don’t really push health-related policies as aggressively as other kinds, and why health premiums remain so high.
Once portability is operational and glitches smoothened out, the government should also consider some kind of regulation of hospitals, where medical bills have spun completely out of control of late. The wild variance in the cost of hospitalisation, including for almost identical treatment for the same ailments, is sometimes truly mind-boggling. It might be argued that hotel and restaurant prices too differ enormously for similar kinds of food and drink, but in facilities which are considered an essential service this is far less acceptable. The galloping inflation in healthcare costs, several times more than the general inflation rate, must be tackled on a priority basis. This, in fact, is one reason why insurers dislike long-term policies since they cannot change premiums as healthcare costs go up. Until this is tackled, other reforms in health insurance might not prove very effective.