Modicare may lead to Underquoting – Star Health CMD

Private sector health insurer Star Health started its government backed insurance policies with Andhra Pradesh when YS Rajasekhara Reddy was the chief minister. It then signed up Tamil Nadu and managed the ambitious state government scheme. When AIADMK was elected to power in 2011, it was forced out as the government wanted a state owned insurer. Now, with Narendra Modi government announcing the largest medical insurance plan, by volume, in the world, V Jagannathan, CMD of Star Health says that pricing the policy and linking it to PDS (ration card) should be the starting point. Excerpts:

Star Health has vacated the government administered insurance space after starting it. Do you see yourself making a re-entry in that space?

We will surely enter in government sponsored insurance space. As regards Tamil Nadu, the restrictive tender to PSU companies made us not to participate. As regards Andhra Pradesh, the government has started administering the scheme by themselves through a trust.

The claims in government sponsored schemes are said to be very high making them unviable for private players. What is your suggestion for better claims management?

I do not agree with this. The profit depends on how the scheme is administered and the premium rate.

What do think should be the pricing of Modicare policies?

The pricing will be critical . I feel that a maximum of Rs 2000 for every family will be a good price for Modicare policy.

Based on your experience in AP and TN what are the areas that should be fortified before launching this (Modicare) program?

Treating Hospitals must enter into a tie up with insurers on rates agreed for each procedure. To check if hospitals are adhering to these rates, a robust vigilance set up will be necessary in addition to a well-developed IT system which will help in surveillance and analytics.

There are talks of use of Aadhaar for this rollout. Can you suggest the cheapest, yet effective rollout mechanism of this?

As Aadhaar does not give income level, ration cards (coloured cards currently in use ) for BPL families can form the basis for effective rollout of the scheme. For future use, a system should be ushered in to capture income level of a person in Aadhaar card.

Can you elaborate on the Ration Card over Aadhaar. How do you think this should work?

Aadhaar as of now does not provide for income limit. This will be an impediment to select the targeted coverage group. But the ration card provides the income limit.

Should other similar schemes like RSBY be subsumed by Modicare?

 Yes. There should be one policy for all government funded insurance schemes. Multiple schemes will only add to the confusion besides bring in distractions.
Since the scale of the project is mammoth, do you suggest a consortium approach to effective roll out?
Each company can be earmarked some areas on a draw of lot basis so that selection can be avoided. If the process goes through bidding, under-quoting can happen and eventually the scheme may suffer.

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