Will insurance that covers doctor consultations and diagnostics help decrease long-term hospitalisations?

Visiting a doctor, buying prescribed medicines, and getting a few lab tests done may burn a hole in your pocket. And it is these outpatient department (OPD) consultations, according to reports, that make up around 70% of the total healthcare expenditure in India. Could robust OPD insurance coverage then save patients money and also contribute to longer-term health goals such as reduced hospitalisations?

A report by consultancy firm Mercer Marsh Benefits has indicated that it may actually do so.

While India’s out-of-pocket health expenditure, as a share of total expenditure has declined: from 64.2% in 2013-14 to 39.4% in 2021-22, it still remains one of the highest in the world. Out-of-pocket expenditure is money paid directly by households, at the point of receiving healthcare. This is when services are not provided free of cost through a government health facility, nor is the individual covered under any public or private insurance or social protection scheme. Doctor’s fees and medicines form a significant chunk of out-of-pocket medical expenses in India.

The Mercer Marsh Benefits report analysed data from over 300 organisations covering one million people and over 1.2 million claims. It reveals that the industry has witnessed a dramatic shift from fragmented healthcare benefits to a mainstream focus on OPD insurance. “Between 2016 and 2024, the concept of primary healthcare has gained significant traction. In 2016, only 13% of the organisations valued OPD benefits. Fast forward to 2024, and 36% of them have adopted OPD insurance in some form, with over a third of our clients offering these plans,” says the report. Doctor consultations and prescribed tests and medicines are normally covered under OPD insurance.

High prevalence of diabetes, hypertension

As perhaps expected, the report found that there was a high prevalence of diabetes and hypertension, along with high cholesterol levels among employees of the surveyed organisations. Doctor consultations (44% in clinics) and diagnostics (87% at labs) made up the maximum utilisation of OPD insurance coverage. Mental wellness consultations represented six per cent of all doctor consultations, highlighting better awareness about, and priority given to mental well-being.

The report also found that 7% of employees who had OPD insurance coverage showed improvement in their productivity on account of reduced hospitalisation days. There was also a 9% cost reduction in hospitalisations because of insurance coverage given for outpatient consultations.

The findings of the report indicate that perhaps coverage of prescribed medications, doctors’ fees and diagnostic tests could help address employee well-being and productivity, while also reducing long-term costs in terms of hospital stays. But the key issue of how this can be leveraged in the public sector remains.

A section of public health experts are of the view that comprehensive insurance coverage would be beneficial, from a social welfare perspective, for a large section of the public. T.S. Anish, professor, department of community medicine, Government Medical College, Manjeri, Malappuram, Kerala, cites the National Health Service, the publicly funded healthcare system in the United Kingdom: funds for the NHS are collected through taxes, and all citizens get healthcare services for free. Dr. Anish says, quoting studies, that as a whole, the cost of OP consultations, diagnostic tests, and medicines is often far higher than that of in-patient (IP) treatment. This is because many people seek treatment, go for tests and buy medicines. Hospitalisation and costs associated with it however, can be “catastrophic health expenditures” for families, he points out, due to the high costs levied by private healthcare institutions.

“Ill health should be seen as a social product. Society plays a major role in its people getting sick. And, it is the responsibility of the State to bear the healthcare costs of its citizens. But at present, society is playing a relatively small role when it comes to bearing healthcare costs,” he says. Private insurance companies, he underscores, have their own profit motives, and their own methods, to keep out of their purview, customers whose inclusion will not bring profits to them.

The Mercer Marsh Benefits report also points out that by promoting OPD insurance coverage and utilisation, organisations can gain insights into employee health, in order to frame future healthcare polices, address potential health risks and optimise resource allocation. .

India’s Ayushman Bharat Pradhan Mantri Jan Yojana or AB PM-JAY, launched in 2018, and touted as work’s largest health insurance scheme, provides a health cover of ₹5 lakh per family per year for secondary and tertiary care hospitalisation. The scheme is aimed at targeting over 12 crore poor and vulnerable families that form the bottom 40% of the Indian population, as per its website. Recently, PMJAY was expanded to cover all senior citizens over the age of 70, irrespective of income. Costs of implementation are shared between the central and State governments.

While the website states that the scheme covers medical examination, treatment and consultation, up to three days of pre-hospitalisation and 15 days post-hospitalization expenses such as diagnostics and medicines, the scheme has run into trouble in various States where empanelled hospitals claim they have not been paid their dues, leading to problems with taking in more patients. Hospitals have also criticised the low package costs, while experts have pointed out that many beneficiaries may not have access to an empanelled hospital near them.

T.P. Mubarak Sani, public health activist, and chairperson, subject committee on health, Kerala Sastra Sahitya Parishad, a people’s science movement, says that that only 20% of the needy population in India is currently covered under any health insurance in the country. While economically weak sections are covered under government schemes (such as AB PM-JAY) and those who can afford to pay hefty premiums opt for private insurance, a large number of citizens get left behind in the middle, with no cover at all. While States like Kerala plan to address this gap, financial challenges remain a big hurdle.

Dr. Sani says that an integrated insurance model, where both OP and IP treatments are covered, would be beneficial. “If OP consultations are covered under health insurance schemes, this will lead to more utilisation as more people would opt for them. However third-party monitoring, if a private insurance company is involved is crucial, he says. Treatment should also be ensured as and when required such as in emergency situations, he points out.

With evolving technology, the integration of telemedicine and the use of Artificial Intelligence (AI) tools all coming into play even while India tackles a rising burden of non-communicable diseases, enhancing access to care and promoting preventive measures is crucial — one way perhaps can be through OPD insurance, the report points out.