A welcome move

Health insurance portability.

The insurance regulator's proposal to allow consumers to migrate from one health insurer to another is welcome.

Portability of health covers will give consumers more choice, increase competition, lower tariffs and improve service standards. Of course, portability makes sense only if the list of diseases that are eligible for cover remain unchanged.

If a health policy covers pre-existing ailments only after four years and a consumer decides to shift to another insurer in the fourth year, she should not have to wait for four more years for pre-existing diseases to be covered.

Further, policyholders should also carry forward bonuses that have accrued for claim-free years. Migration will work well when a consumer does not lose existing benefits. This is only logical.

Today, insurers sell many health insurance plans, unlike in the past when only a standard medicliam was sold to policyholders.

Consumers will be keen on swapping plans to get comparable, yet better products, at affordable premiums. However, portability in health plans is a concern for insurers underwriting the business.

A consumer who switches from one health service provider to another also brings in liabilities such as history of chronic ailments or frequent claim experience.

Insurers can be selective in accepting customers who want to migrate to curb underwriting losses. They could deny migration benefits to the elderly or those with a history of chronic ailments.

The Insurance Regulatory Development Authority (Irda) should have safeguards to prevent such practices. Building a database on claim history is also a must.

Issues such as data migration and interpretation of existing policy wordings have to be addressed before portability in health insurance is implemented.
    
Innovative models are also needed to tackle rising health costs. A health savings account, where a policy holder accumulates premium payments, makes sense.

Insurers can operate and manage these accounts. In tandem, the healthcare sector should lower the costs of medical care and make quality healthcare affordable and accessible, leveraging India’s huge volumes.