India’s Healthcare Challenges and the Need for Comprehensive Health Policy and Insurance Reforms

Healthcare is a fundamental human right, yet in India, access to affordable and quality medical care remains a challenge for many. Despite constitutional provisions and some government efforts, the healthcare system is still grappling with significant issues that require urgent attention. Medical insurance, which was intended to provide financial protection, is often more of a tax-saving tool than a reliable safety net.

The Current State of Healthcare in India

Overcrowded government hospitals, a shortage of beds, and outdated medical equipment are common problems in public healthcare.
There is a severe shortage of doctors, nurses, and other healthcare professionals, especially in rural areas.
India’s healthcare spending is only around 1.2%-1.5% of GDP, which is far below international standards.
As medical costs rise, more people are turning to private insurance, but many find themselves underinsured or without coverage at all.

The Medical Insurance Crisis

Many people buy medical insurance to claim tax deductions under Section 80D rather than to protect themselves from health risks.
Insurance policies often contain hidden exclusions, long waiting periods, and complicated conditions that make it difficult to claim benefits.
Insurers frequently deny claims, citing issues like non-disclosure or minor breaches, which can be unfair to policyholders.
Claimants are often forced into lengthy legal battles, which can be emotionally and financially draining.

Learning from U.S. Jurisprudence on Insurer Bad Faith

U.S. court cases have set important precedents for how insurers should handle claims. In the case of Harvey v. GEICO, the Florida Supreme Court ruled that insurers have a fiduciary duty to act in the best interest of their insureds when handling claims. The court found that GEICO’s failure to settle a claim within policy limits led to an excess judgment against the insured, and the insurer was held liable for the full amount of the verdict.

The court held that an insurer’s failure to act in good faith in handling claims exposes it to full liability for any excess verdicts, thereby “uncapping” policy limits.
Similarly, in USAA Texas Lloyds Co. v. Menchaca, the Texas Supreme Court clarified that insurers are liable for statutory violations, such as unfair settlement practices, even if the insured has no right to benefits under the policy itself.
These cases show that courts can impose significant financial consequences on insurers that act in bad faith, which helps to ensure fair treatment of policyholders.

Pradhan Mantri Bhima Yojanas: Achievements and Limitations

India has introduced low-cost insurance schemes to improve healthcare access for the poor and vulnerable. The Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY) offer accidental and life insurance coverage at very low premiums. These schemes have been successful in reaching semi-urban and rural populations, and they are linked to the Jan Dhan Yojana to promote financial inclusion.

However, the coverage amounts are still below what is needed to protect against real medical and life risks.
These schemes do not provide coverage for hospitalization, surgeries, or other general healthcare services.
There is also a lack of awareness and underutilization among the target groups, which limits their effectiveness.

Expanding the National Insurance Framework

Raising the coverage ceiling to ₹5-10 lakh could better protect people from financial ruin in case of serious health issues.
Including hospitalization and critical illness coverage would make these schemes more comprehensive.
Subsidizing premiums for marginalized groups would ensure that even the poorest can afford insurance.
Adding telemedicine and preventive healthcare services as add-ons could improve access to care and reduce long-term healthcare costs.

Addressing the Litigation Propensity of Indian Insurers

Many cases before the Consumer Dispute Redressal Forums involve insurance disputes, especially those related to claim denials and delays. Insurers often use technical arguments or delay tactics to avoid paying claims, which can be very stressful for policyholders. While Indian courts have criticized such practices, there is a need for stronger legal measures to hold insurers accountable.

Learning from Obamacare: Key Reforms for India

The U.S. Affordable Care Act introduced several key reforms that could be adapted to India’s context. These include guaranteed issue, minimum essential benefits, subsidized premiums, insurance exchanges, and a ban on lifetime limits for essential health benefits.

Mandatory coverage for pre-existing conditions would ensure that people with chronic illnesses are not excluded from insurance.
Establishing regulated insurance marketplaces could help people compare and choose policies more easily.
Subsidized insurance for vulnerable populations would make healthcare more affordable for low- and middle-income citizens.
Standard essential benefits should be included in all policies to ensure that critical healthcare services are covered.
Strict timelines and penalties for claim settlements would ensure that insurers act promptly and fairly.

Conclusion

Healthcare in India cannot be left to market forces alone. A combination of universal healthcare provision and strong insurance regulation is essential. Drawing on U.S. cases like Harvey v. GEICO and USAA Texas Lloyds Co. v. Menchaca, India must introduce strict penalties for insurers that act in bad faith. Additionally, expanding the national insurance framework and adopting key reforms from the U.S. Affordable Care Act can help create a healthcare system that is accessible, affordable, and fair for all Indians.