Health is the well being of both body and mind. Your body can be insured with health insurance. Unfortunately, insurance companies are hesitant to cover mental illnesses in India. Keeping in mind the agony of people with mental illness, the Parliament of India passed the Mental Health Care Act 2017.
Section 21(4) of the Act says that every insurer should make provisions to cover the treatment of mental illness in health insurance policies. There have been no tangible developments so far. But on August 16th 2018, the Insurance Regulatory and Development Authority of India (IRDAI) intervened and issued a circular, ordering insurers to adhere to the provisions of the Mental Healthcare Act, 2017 with immediate effect.
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Health insurance policies will not have blanket exclusions on mental illnesses. As a result, health insurers will now have to treat people with mental illness as equal to people with physical illness in the provisions of healthcare.
A significant number of people will benefit from this step as it widens the scope of health insurance coverage. India is facing mental health issues and these are growing at an alarming rate. On the directions of the Union Ministry of Health and Family Welfare, the National Institute of Mental Health and Neuro Sciences conducted the Mental Health Survey of India for FY16. The study revealed that nearly 15% of Indian adults need active intervention for mental health issues.
Also, for a population of 125 Crores, there are only 3,000 psychiatrists who are concentrated in the metros. Therefore, treatment for mental illnesses is not affordable to the masses.
Concerned with this situation, the IRDAI has been forced to step in. Companies worldwide cover mental illness after a waiting period of 2-3 years. However, in India, health insurance policies typically exclude mental and psychiatric conditions. The treatment of mental illness, stress, psychiatric or psychological disorders are not covered.
This step may encourage mental health literacy in the country. Mental health illness needs two types of coverages:
According to the Act, mental healthcare not only includes analysis and diagnosis of a person's mental condition and treatment, but also care and rehabilitation of these people.
This will create awareness, acceptance and inclusion of mental illness in India. It will also normalize and reduce myths and stigma associated with mental illness.
This step may not cover mental illness in entirety, and there may still be exclusions. Pricing may also be affected.
According to the Act, mental illness means disorder in thinking, mood, perception, orientation or memory that impairs an individual’s judgment, behavior and the capacity to recognize, reality. It also impacts the ability to meet the ordinary demands of life.
What is included in the health insurance policy depends on the terms and conditions of the policy. The Act directs insurers not to discriminate between mental illness and physical illness when it comes to coverage.
A health insurance policy pays for in-patient treatment. It doesn’t pay for out-patient treatment. Consultation fees and medicines bought are not paid by the insurer. Similarly, a health insurance plan may pay for the treatment of mental illness, only if you are hospitalized.
The truth is not many people with mental illness actually need hospitalization. Majority of them only need out-patient care like consultations or medication which doesn’t fall under in-patient treatment.
This will narrow down the scope of health insurance in covering mental illness. Indian Insurance market is under-developed when it comes to out-patient treatment. The reason is the Indian healthcare sector is unregulated. Experts say that this circular by IRDAI may focus on developing OPD insurance products.
Though it is too early to assess, this move will naturally have an impact on the pricing of health insurance plans.
With the inclusion of mental illness coverage in Health Insurance policies, premiums will need revision. This revision will depend on IRDAI’s definition of ‘mental illness’.
The insurance industry in India must design innovative and meaningful OPD products. If this doesn’t happen, the insured may only enjoy limited benefits.
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