Health Insurers Switch to Co-Payment Model as a Cost-Cutting Measure

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Health insurance is one of the essential needs of today which helps one fight the escalating number of diseases. With a goal to keep health insurance premium pocket-friendly to the insured, the key players are gradually switching to the co-payment model. Co-payment model implies that the insured needs to pay upto 25% of the claim value and the balance amount is to be borne by the insurance company. This co-payment model has proved to be a win-win proposition both for the insured and the insurer. For the insured, opting for co-payment reduces insurance premium; for the insurer, it reduces the payable claim amount.

According to the stated model, the co-payment ratio for the policyholder varies from 10 to 25 per cent of the Sum Assured. E.g. if you purchase a health insurance policy with 10% co-payment clause and claim for an amount of Rs. 2 lakh then you need to pay a sum of Rs. 20000 from your end whereas Rs.180000 is paid by the insurer.

But other cost suppression measures have shown a significant downfall during the past year. These include application of sub-limits on claim amount for common illness like kidney stone or cataract treatment. Another concern from insurers end would be treatment cost charged by the healthcare providers to the policyholders. They need to insure that the hospitals should not elevate their fee structure.

After a thorough analysis, industrial experts mention about many insurance companies which have introduced co-pay clause in their individual health policies designed for senior citizens. Segar Sampathkumar, general manger of New India Assurance, stated that more than 20% of their health insurance policies have a co-payment clause.

In a recent interview, Sanjay Datta, head of underwriting and claims at ICICI Lombard General Insurance, quoted that policyholders tend to behave more responsibly when they are insured under a co-payment based policy. For instance, they might prefer a normal room over a deluxe room as they are supposed to bear 10-25% of the claim amount themselves. Co-payment model is expected to bring an overall betterment of health insurance. 

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